Energy Reports 8 (2022) 670–679

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Energy Reports
journal homepage: www.elsevier.com/locate/egyr

Research paper

Impact of poverty and income inequality on the ecological footprint in

Asian developing economies: Assessment of Sustainable Development
Goals
∗
Salim Khan a,b , Wang Yahong b , , Asma Zeeshan c
a
Business School, Zhengzhou University, Zhengzhou 450001, Henan, China
b
School of Tourism and Management, Zhengzhou University, Zhengzhou 450001, Henan, China
c
Management studies department, Bahria Business School, Bahria University, Islamabad, Pakistan

article info a b s t r a c t

Article history: Poverty, widening income inequality, and environmental degradation are very critical challenges to
Received 20 April 2021 sustainable development while in the light of Sustainable Development Goals (SDGs), these challenges
Received in revised form 19 August 2021 have been addressed in numerous past empirical studies. However, increasing environmental degra-
Accepted 1 December 2021
dation is a big constraint in the path of sustainable development, poverty alleviation, and controlling
Available online xxxx
income inequality as well. Hence, in this study, we empirically investigate the theoretically ambiguous
Keywords: and complex relationship between poverty, income inequality, and ecological footprint (EFP) for 18
Poverty Asian developing countries over the period 2006–2017. Empirical results obtained from the Driscoll–
Income inequality Kraay (D–K) standard error approach confirmed that poverty headcount contributing to environmental
Ecological footprint degradation in terms of EFP. Further, widening income inequality has a detrimental and harmful effect
D–K regression
on the environment in Asian developing countries. The findings of this study also confirm the inverted
Asian developing economies
U-shaped Environmental Kuznets Curve (EKC-Hypothesis) for investigated countries under the D–K
SDGs
methodology. This study provides some important policy implications for policymakers in the light of
SDGs and Millennium Development Goals (MDGs) for the investigated region.
© 2021 The Author(s). Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND
license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

1. Introduction such policies that accelerate economic growth as it is generally

believed that economic growth is favorable for the reduction of
To control Environmental Degradation along with poverty and poverty (Akinlo and Dada, 2021). In the meantime, the higher
income inequality arise as a major concern and for researchers, economic growth also rise income inequality and increase stress
particularly, after the ‘‘United Nations (UN) conferences on ‘‘En- on ecological processes and resources. This creates a more com-
vironment and Development’’ in 2002 and ‘‘UN World Summit plex nexus and challenging situation. The economic growth might
on Sustainable Development’’ in 1992 (Shuai et al., 2019). Alle- be cooperative in the alleviation of poverty, particularly if it is
viation of extreme poverty and increasing income inequality in not linked with increasing income inequality and environmental
its all forms everywhere, along with environmental pollution are pollution. Many environmentalists believed that the nexus be-
tween poverty and environmental pollution along with income
the top priorities and main concerns of United Nations Sustain-
inequality is paradoxical and inconsistent. The alleviation of ex-
able Development Goals (Jomehpour, 2017). Though sensible and
treme poverty, increasing income inequality, and environmental
functional efforts have been instigated to accomplish the Sustain-
degradation is like ‘‘killing two birds with one stone’’ (Dhrifi et al.,
able Development Goals (SDGs) for the reduction of poverty and
2020; Masron and Subramaniam, 2019). Therefore, to secure a
income inequality, nevertheless, in the majority of developing sustainable future for the next generation, it is important to
countries the rate of poverty along with income inequality is still understand theoretically ambiguous issues of poverty, income
high. However, finding the solutions to reduce extreme poverty inequality, and environmental pollution.
and income inequality along with environmental protection are Issues related to environmental degradation, poverty, and in-
complex and challenging issues for developed as well as for de- come inequality have been subject to widespread debates and
veloping countries. One of the conceivable solutions to formulate therefore have gained extensive attention. In the past few years,
the complexity and significance of the nexus between poverty,
∗ Corresponding author. income inequality, and the quality of the environment have been
E-mail addresses: [email protected] (S. Khan), progressively highlighted in the literature of environmental eco-
[email protected] (W. Yahong), [email protected] (A. Zeeshan). nomics and sustainability. In recent years, it has been contended

https://doi.org/10.1016/j.egyr.2021.12.001
2352-4847/© 2021 The Author(s). Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-
nc-nd/4.0/).
S. Khan, W. Yahong and A. Zeeshan Energy Reports 8 (2022) 670–679

that poverty and income inequalities are substantial drivers and inequality might leads to less protection to the quality of the
the main factors of environmental pollution, particularly in de- environment and in the long run responsible for higher toxic
veloping countries (Gulzar et al., 2020). In developing countries, emissions because it could generate problems in the policy of en-
most of the people live under vulnerable conditions while it is a vironmental protection (Grottera et al., 2017). Meanwhile, many
challenge to achieve the UN’s goals of sustainable development. past research studies in the literature argued that fair distribu-
Therefore, this study is based on developing countries (mostly tion of income support environmental protections, and at the
from Asia) because these economies are still trying to raise the same time environment can be one of the most important factor
quality of life of their vulnerable people by encouraging economic in the reduction of extreme poverty (Cho, 2018). The presence
development, reduce poverty, and all kinds of inequalities. Higher of natural resources in the environment could help to reduce
economic growth targeting to reduce the extreme level of poverty extreme poverty by providing good health conditions, increase
is causing higher consumption of energy and thus environmen- food security, and generating handsome income in the field of
tal quality in developing countries because mostly the structure economic activities. It also indirectly raises the morbidity and
of energy supply is based on fossil fuels (Papakonstantinidis, rate of mortality of poor people (Kim et al., 2019). Alternatively,
2017). However, the nexus between poverty and ecological pol- the quality of the environment could be improved by reducing
lution along with income inequality is still inconclusive and has extreme poverty, mainly in developing economies of the region.
been ignored by the developing world including developing coun- It is observed that poverty and the quality of the environment
tries of Asia. The degradation of the environment might place are strongly related because poor people are mostly dependent
a substantial impact, as the majority of developing economies on environmental and natural resources. The dependence on
are extremely vulnerable and having less capability to counter natural resources, less-privileged misused and manipulate the
the negative impact of the environment (Apergis et al., 2018; quality of natural resources in an unmaintainable manner that
Awodumi and Adewuyi, 2020). further aggravating pollution and quality of the environment
From the last few years, the negative impact of environmental (Tan, 2017). Moreover, extreme poverty along with urbanization
pollution and climate change in response to accelerated economic and high population growth deteriorates the absorbing capacity
activities are expected to be more severe in the developing world, and reduces the quality of environmental and natural resources
particularly in Asian countries (Kong and Khan, 2019). The major- (Schleicher et al., 2018).
ity of economies in Asia are emerging and growing progressively, In the literature, we have found a few research studies that
but it still contains poor regions of the world. Many economists have argued the association between poverty and environmental
have observed that under the prevailing economic situation, the pollution by incorporating carbon emissions (Co2E) as a proxy
extreme level of poverty might not be reduced in the majority of for pollution. Contrasting from the past researches, we aim to
countries in Asia by 2030; but, policymakers can alleviate it by analyze the relationship between poverty and income inequality
accelerating economic growth and equal income distribution to on environmental pollution by incorporating ecological footprint
deprived regions. Because of increasing income inequality, many per capita (EFP) as a measure of pollution for the cross-panel of
Asian countries could not reduce extreme poverty and failed 18 Asian developing economies. The selection of EFP for envi-
to achieve Millennium Development Goals (MDGs) (Ullah and ronmental pollution because of that the influence of poverty and
Awan, 2019). Notwithstanding, serious steps made to reduce the income inequality on the quality of the environment might not
extreme poverty level but more than 40% of Asia’s economies be limited to other environmental pollution proxies (such as Co2
are still a victim and target of poverty, the lack of basic facilities etc.) (Baloch et al., 2020a; Yilanci and Pata, 2020). Conversely,
of life such as food security, low-income growth, poor health the extreme rate of poverty might influence the quality of the
condition, lack of education, and safe drinking water (Jain, 2019; environment at a higher level along with natural resources, for
Parker and Bhatti, 2020; Yahong and Khan, 2021). Although the example, water, mining, soil, and forestry (Solarin and Bello,
global poverty rate dramatically decreased from 94% to 10.7% 2018). As we have discussed, the main aim of economic activities
during the last two centuries. Nevertheless, the Asian’s countries is to accelerate the reduction of poverty, which leads to depleting
(particularly south Asian’s countries) share to global poverty has environmentally friendly resources such as depletion of quality
increased from 27.3% (1990) % to 33.4% (2013), sendoff behind of the water, land, minerals, and forestry. Meanwhile, incorpora-
only to sub-Saharan Africa which accounts for 51% (the largest tion of Co2 emission as a measure for environmental pollution
share) to global poverty level (Bourguignon and Morrisson, 2002). could only focus on a narrow aspect of environment quality and
However, the association between income inequality and the therefore, may not cover the main activities that are badly causing
quality of the environment is still questionable. In the globe, the sustainability of the ecosystem. By analyzing human activities
majority of poor countries belong to Asia, which are facing the which influence the quality of the environment, EFP includes the
problem of income inequality and at the same time environmen- total capability of the earth, and thus, has been used in many
tal pollution along with low economic growth and development. recent research studies because EFP is a complete and wide-
Because of progressive growth in the industrialization process, ranging indicator of environmental quality (Abbas et al., 2021;
many countries in the region are suffering from serious issues of Baloch et al., 2020a; Bello et al., 2018; Destek and Sinha, 2020;
environmental pollution as the emissions of toxic (such as carbon Huimin, 2013; Majeed et al., 2021; Ozcan et al., 2018; Solarin
dioxide) increase the air pollution and waste the quality of water. and Bello, 2019; Ulucak and Lin, 2017; Wackernagel et al., 2019;
Moreover, numerous economies are agrarian, therefore the higher Zhiying and Cuiyan, 2011). According to Global Footprint Network
usage of fertilizers and pesticides also disturb the quality of water (advancing the science of Sustainability), the EFP indicates the
(ground-water) very badly. Similarly, lack of afforestation in the consumption of bio-capacity by a county’s inhabitants, while it is
majority of countries in Asia and higher population growth along the most amenable to change by the individuals through changes
with urbanization further worsen the quality of the environment. in their consumption. It is also observed that EFP is an important
Regarding the unequal distribution of income, it accelerates measure that signifies the naturally productive capability areas
a miscellaneous effect on many social and economic classes of around the world, the natural water and land areas required to
the regions (La Rovere, 2017). The most underprivileged gen- absorb waste, and to what extend countries utilize biologically
eral public of the region gets affected the most from income productive areas (Ansari et al., 2020; Wackernagel et al., 2017).
inequality as these underprivileged people of the society are an For the analysis of the current study, we have selected a cross-
extremely vulnerable and susceptible part of the region. Income country panel of 18 developing countries in Asia, and investigate
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the possible association between poverty, income inequality, and pollution. To better understand the impact of poverty and income
EFP (a proxy for environmental pollution). The selection of Asia inequality on environmental pollution, some of the past empirical
is because of the reason that most of the poor people live in studies are presented in Table 1.
Asia. According to the statistic of World Bank (WB), Asia belongs The rest of the research article is well organized as follows:
to nearly 45% of the globe’s poorest people (32.9% live in South Section 2 ‘‘Summary of related literature review’’ provides a very
Asia and 9.1% live in East Asia and the Pacific), while more brief review of past research studies on the impact of poverty, in-
than 800 million people are extremely poor and live below the come inequality, and environmental pollution in tabulated form.
international poverty line (US$1.92 a day) (Baloch et al., 2020b). Section 3 ‘‘Material and Method’’ offers detailed of data and its
At the same time, the largest emitter of Co2E in the world sources, specification of the model, and estimated methodology.
is Asia pacific, in 2019, about 18 billion metric tons of Co2E Section 4 ‘‘Results and Discussion’’ presents the empirical results
were recorded. In addition, China produced nearly 29% of the and their interpretation while Section 5 ‘‘Conclusions’’ drown
world’s Co2E, however, Australia, Canada, and the United States brief conclusions along with some policy implications.
of America are the top three Co2 emitters in the world (Lee et al.,
2018; Huijnen et al., 2016; Zaidi et al., 2019). The majority of 3. Material and methods
people living below the poverty line in this region and are en-
gaged with agriculture and mainly dependent on environmental We have employed the panel data of 18 Asian developing
resources. While poor people are not well educated, therefore countries from 2006–2017 (for a list of investigated countries,
most of the Asian economies failed to achieve the target of please see Appendix Table 4). The data for targeted variables
poverty reduction. Because of low education levels, mostly poor have been collected from World Development Indicators (WDI),
people degrading the quality of land along with deforestation and other databases. The variables used in the regression model
because of the unsustainable practice of farming. Certainty, the are per capita ecological footprint (EFP) as a measure for envi-
impact of poverty along with income inequality on environmental ronmental degradation, poverty headcount ratio (poverty) as a
pollution has seemed within or beyond our expectations (Masron measure for extreme poverty level, Gini coefficient (estimated by
and Subramaniam, 2019). World Bank) as a proxy for income inequality, GDP per capita
To the best of our knowledge, the current study adds to the (constant 2010 US$) as a proxy for economic growth, foreign
existing literature in the following numerous ways. direct investment (FDI), annual population growth, Inflation (CPI
annual %) access to electricity (calculated in percentage), Forest
• No research so far critically conducted the relationship be- area (% of land area), and Manufacturing, value added (% of GDP).
tween poverty, income inequality, and EFP. In the past The current study considers EFP as a measure of environmental
recent the research work of Baloch et al. (2020a) and Khan degradation based on the previous studies (Baloch et al., 2020a;
and Yahong (2021b) have only empirically investigated the Hao et al. 2016; Hassan et al., 2019; Ulucak and Bilgili, 2018). The
trade-off between poverty, and EFP for 46 Sub-Saharan description and definition of the variables are given in Table 2.
African countries. The investigation of the current study was The data for mostly variables such as poverty, Gini, GDP, FDI,
inspired by the work of Baloch et al. (2020a) and Khan Pop, AE, FA, INF, and IND are collected from WDI while the data
and Yahong (2021b) to incorporate EFP as a measure for for EFP was collected from Global Footprint Network (GFN). For
environmental pollution instead of other measures such the measurement of environmental pollution, Rees (1992) devel-
as Co2E etc. Along with other control variables, we have oped EFP which include pollution due to overall consumption of
analyzed the influence of poverty, income inequality on EFP. human being with regenerative biological capacity. As we know,
In this manner, as per our knowledge, the present study EFP captured the depletion of the environmental and natural
would be new and influential towards struggles regard- resources because of economic activities and also directly mea-
ing the reduction of poverty and income gap along with sures the emission of pollution due to these economic activities.
environmental sustainability. For example, accelerating the process of industrialization and
• No single research study has been empirically conducted on manufacturing could be harmful but not always, but the EFP cov-
the relationship between poverty, income inequality, and ers both the consumption effect and direct effect of production
EFP by focusing on the panel of developing countries in (Danish et al., 2019). The selection of study’s variables based on
Asia. In the light of the study objective, this study seeks to the SDGs objectives, i.e. the reduction of extreme poverty; narrow
answer this research questions that, what impact do poverty down the income gap; and protect the quality of environment
and income inequality have on the ecological footprint in (reduce environmental pollution); ensuring sustainable economic
the context of Asian developing economies. This study in- growth and development along with encouraging FDI; controlling
deed would fill the above-mentioned research gap, while we population growth rate and unstable general price level; reduc-
believe that this study could provide valuable insight. ing energy consumption based on fossil fuel while encouraging
• For the analysis of the current study, we have incorporated renewable energy; controlling unproductive manufacturing to
the most recent and advanced econometric techniques of protect forest area and pollution (United Nations, 2015).
‘‘Driscoll and Kraay’’ (1998) method or ‘‘D–K standard error For the analysis of panel data, we used D–K regression intro-
panel regression model’’. This method provides reliable and duced by (Driscoll and Kraay, 1998). D–K standard error approach
robust output. has been incorporated earlier in related research work of Baloch
and Wang (2019), Khan (2020). D–K standard error approach
2. Related literature handles the problems of serial correlation, heteroscedasticity, and
the most common problem of cross-sectional dependency (Baloch
In the past, several research studies focused on the impact of et al., 2020a,b). In addition, the D–K standard error approach
poverty and income inequality on environmental quality while ensured and handles the most common issues of missing val-
the majority of studies that take CO2e as a measure of environ- ues while it is suitable for balanced as well as for unbalanced
mental quality and obtained significant outcomes. Many research panel series. It permits a large dimension of time and flexibility
studies have founded that poverty and income inequality degrad- by incorporating a non-parametric approach while generating
ing the quality of the environment, while some of the studies a standard error however taking the mean of the product of
stated the negative impact of income inequality on environmental predicted variable along with residual and applies the required
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Table 1
Related literature and its summary.
Author(s) Country/region Periods Methodology Results
(Baloch et al., 46-Sub-Saharan 2010–2016 Driscoll–Kraay (D–K) The findings suggest that a trade-off situation exists between
2020a) African developing standard error poverty and EFP in Sub-Saharan African countries.
countries approach
(Bhattacharya, Panel of 14 1981–2014 Several regression The findings of the study showed a negative and insignificant
2020) states/provinces of methods impact of income inequality on environmental pollution
India before liberalization: conversely, after liberalization, the
empirical study found a significant and positive relationship
between income inequality and environmental quality.
(Chen et al., Chinese Economy 1997–2014 Carbon emissions’ For productions units and residential units, a declining trend
2017) Gini index (CEG) have been observed in CEG. However, CEG is found greater for
production units while the effect of spatial CEG is subject to
the type of energy that is used in both production and
residential units of China.
(Danish and N-eleven economies 1971–2014 Mean Group-Common The findings suggest that rapid growth in urbanization leads
Wang, 2019) Correlated Effect to increases EFP, But the moderation effect between economic
(MG-CCE) growth and urbanization reduces EFP.
(Danish et al., Economy of Pakistan 1971–2014 ARDL The study suggests that both bio-capacity and economic
2019) growth increase EFP, while there is no causality between
economic growth and EFP.
(Demir et al., Turkey 1963–2011 Auto-regressive The findings of the empirical study revealed that income
2019) Distributive Lag inequality significantly and negatively influence the
(ARDL) model environmental pollution. Meaning that tapered the income gap
worsens the quality of the environment.
(Dhrifi et al., Least developed 1995–2017 Three Sages Least Reported that there is a trade-off between poverty and the
2020) countries Square (3SLS) quality of the environment. While FDI significantly reduces
poverty.
(Hassan et al., Economy of Pakistan 1970–2014 Auto-regressive The findings obtained from ARDL co-integration confirmed
2019) distributive Lag that natural resources increases environmental degradation in
(ARDL) model term of ecological footprint
(Islam and ASEAN economies 1995–2014 A simple linear There is a positive relationship of poverty with environmental
Ghani, 2018) regression model pollution and consumption of energy.
(Jin et al., Chinese economy 2007–2014 Three-Stages Least The nexus between poverty and employment is negative,
2018) Square (3-SLS) while in the primary, secondary, and agriculture sectors this
Method relationship is positive.
(Khan, 2019) ASEAN economies 2007–2017 GMM The extreme poverty level harming the quality of the
environment, however, utilization of environmentally friendly
energy could help to alleviate extreme poverty.
(Khan and Pakistan 1971–2015 Linear and Non-linear Increasing levels of poverty, population, and economic growth
Yahong, 2021a) ARDL models increase environmental pollution in the long as well as in the
short-run. While income inequality has no impact on
environmental degradation in the short-run.
(Koçak et al., 46-developing 2010–2016 Quantile regression Revealed that energy consumptions and more access to
2019) countries of approach electricity significantly reduces the intensity of extreme
Sub-Saharan Africa poverty level, but at the same time it degrading the quality of
the environment
(Masud et al., ASEAN economies 1985–2015 Panel regression and The overall impact of income inequality on environmental
2018) Granger-causality quality was reported as mixed while the reverse causality
tests exists between them for the bottom 40%.
(Ota, 2017) 20 Asian developing 1990–2000 Trend Analysis The different empirical findings were found from
economies multitudinous surveys between income inequality and
environmental pollution.
(Padhan et al., N-eleven economies 1971–2013 Panel Co-integration The empirical evidence found that income inequality and
2019) econometric approach environmental have a positive association in the Next-11
countries
(Remuzgo and Data from all the 1990–2010 Many regression The empirical results of the study confirmed a 22% decreasing
Sarabia, 2015) regions of the world approaches and Theil trend in global income inequality and carbon emissions during
index for income the estimated period.
inequality
(Rizk and The group of 145 1996–2014 Various panel The findings of the study confirmed the asymmetric
Slimane, 2018) economies regression approaches relationship between poverty and environmental pollution
(Ulucak and Low, middle, and 1961–2013 Continuously Update The findings confirmed U-shaped EKC-hypothesis in many
Bilgili, 2018) high-income and Fully Modified countries that accounting for the ecological footprint as one of
economies (CUP) and the most important indicator of environmental pollution.
Bias-correlated (BC)

value in a weighted Heteroskedasticity- and autocorrelation- study takes advantage and incorporating D–K standard error
consistent (HAC) approach. This approach is robust and reliable algorithm for Pooled Ordinary Least Square (Pooled-OLS) tech-
against cross-sectional dependencies. In summary, the current nique through a multiple linear regression model which can be
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Table 2
Variables’ definition and data sources.
Symbols Variables Definition Main/control
Dependent variable
EFP Ecological footprint Ecological Footprint consumption per capita Main
Independent variables
Poverty Poverty Headcount ratio (US$ 1.90 a day, %) Main
Gini Gini index/coefficient Gini index/coefficient estimates the degree to which the gap Main
of income among households or individuals deviates from a
perfectly equal distribution. where: 100, indicates perfect
inequality, and 0 signifies perfect equality
GDP Economic growth GDP per capita (constant US$ 2010) Main
GDP-Sq Square of GDP Square transformation of GDP per capita (constant US$ 2010) Control
FDI Foreign direct investment The inflow of foreign direct investment per capita Control
Pop Population growth Population growth (annual %) Control
AE Access to electricity Access to electricity (% of total population) Control
FA Forest area Forest area (% of total land area) Control
INF Inflation Inflation, consumer prices (annual %) Control
IND Manufacture value added Manufacturing, value added (% of GDP) Control

expressed as follow: and environmental resources such as natural food, water, and
energy for their survival. The excessive usage of natural resources
Eit = β0 + Xit β1 + εit also leads to poor quality of the environment. According to the
Where: i=1, 2, 3, . . .. . ., N , t =1, 2, 3, . . . , T (N represents panel work of Broad and Cavanagh (2015), the higher level of poverty
of countries, while T represents of years). Eit represents EFP is the main offender behind environmental pollution in the least
(dependent variable); Xit comprises all independent variables developed countries, because of the unavailability off basic educa-
(all independent variables mentioned in Table 2); and εit is the tion facilities and less awareness about environmental protection.
stochastic or random term in the model. The D–K standard error Consequently, impoverished people repeatedly misuse and ex-
regression technique is the most common and suitable economet- ploit natural resources in an unsustainable way for their survival,
ric method in the recent work of (Baloch et al., 2019; Khan, 2020; and thus it leads to increase environmental pollution. Thirdly,
Danish et al., 2019). one of the most important reason behind the positive impact
of poverty on environmental pollution is that addressing envi-
ronmental concerns need few economic compromises (control
4. Results and discussion
urbanization, industrialization, etc.) that are causing environmen-
tal pollution. However, these economic compromises could lead
To check the impact of poverty and income inequality on
to slow the speed of economic growth and economic activities
environmental pollution in terms of EFP in the panel of Asian
and thus, poverty remains an unresolved problem for the region
developing countries, the study has applied the D–K regression
(Dhrifi et al., 2020). The empirical results of the current study
approach. Besides, the variables used in the D–K panel model
are in line with empirical findings of (Khan, 2019) for southeast
have been converted into log form; so that, the calculated coef-
Asian countries, Masron and Subramaniam (2019) for developing
ficient of variables can be interpreted as elasticities in the long
countries, (Jin et al., 2018; Azam et al., 2019) for the Chinese
run. The analysis of the D–K regression model along with the
Economy, and Baloch et al. (2020a,b) and Kocak et al. (2014) for
interpretation of the current research study has been conducted
Sub-Saharan Africa countries. While our findings differ from the
in five models. In models 1, 2, 3, 4, and 5, we use multiple control
empirical result of Dhrifi et al. (2020) for developing countries,
variables not only for sensitivity analysis but also to assess their and Islam and Ghani (2018) for ASEAN economies. The empirical
impact on EFP. findings of the current study differ from some studies because of
Overall empirical results of Models 1, 2, 3, 4, and 5 of Table 3 the unlike economic dynamics of the Asian region as compared
show that poverty has a statistically significant and positive im- to other regions of the globe. Besides, for the analysis of the
pact on EFP in the case of Asian developing countries. As shown current study, we have applied an advance regression approach
in full model (Model 5) of Table 3, a 1% (or a unit) increase in (D–K standard error approach) to obtain a robust estimate.
the level of poverty will push to an increase in EFP by 0.006% Regarding the impact of income inequality on environmental
(or unit). These findings have proven and suggesting that some degradation, the empirical results are presented in all models
serious steps are required to take for the reduction of extreme (Models 1 to 5) of Table 3. The estimated results of the Gini coeffi-
poverty which is a responsible factor of environmental pollu- cient (income inequality) are statistically significant and positive
tion in many Asian developing economies. In other words, an even at a 5% level of significance. The positive effect of income
increase in the level of poverty would be degrading the quality inequality indicating that higher income inequality degrading en-
of the environment in terms of EFP. There might be many possi- vironmental equality in Asian developing countries. Particularly,
ble interpretations for the positive relationship between poverty according to Model 5 (full model), a 1% increase in the Gini index
and environmental pollution. Firstly, the higher economic growth would contribute with a 0.037% increase in EFP. The current find-
and industrialization process for alleviation of extreme poverty ings of our empirical analysis offer some evidence that the Gini
may negatively affect the quality of the environment. Such as, index of income inequality and ecological footprint are strongly
encouraging domestic industries is the most important factor related. Therefore, it could be concluded that higher income in-
to accelerate economic growth and eradicate the intensity of equality is one of the main reason that increase environmental
extreme poverty level; however, it degrading the quality of the pollution in terms of EFP in Asian developing countries. One of the
environment (Jin et al., 2018). Secondly, the positive influence of important justification could be that widening income inequality
poverty on environmental degradation is also justifiable for the (Gini index) in less developed economies may increase the rate
developing countries of Asia. As, numbers of impoverished people of illiteracy and decreases Purchasing Power Parity (PPP) of gen-
exist in developing countries and they are use (misuse) natural eral people to buy environmentally friendly and energy-saving
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Table 3
D–K regression estimates along with model statistics.
Model-1 Model-2 Model-3 Model-4 Model-5
D–K standard error estimates
Poverty 0.005*** 0.006** 0.005** 0.005** 0.006**
(0.003) (0.001) (0.002) (0.002) (0.001)
INEQ 0.030*** 0.035*** 0.036*** 0.037*** 0.037***
(0.001) (0.004) (0.004) (0.005) (0.005)
GDP 0.880*** 0.800*** 0.813*** 0.739*** 0.739***
(0.024) (0.044) (0.048) (0.101) (0.100)
GDP-sq −3.73e−9*** −2.97e−09*** −3.51e−09*** −2.81e−09*** −2.71e−09***
(2.96e−10) (7.23e−10) (4.69e−10) (8.64e−10) (8.72e−10)
INF −0.002 −0.014* −0.014* −0.014 −0.014
(0.004) (0.007) (0.008) (0.008) (0.008)
FA −0.268*** −0.313*** −0.303*** −0.300*** −.300***
(0.018) (0.031) (0.030) (0.034) (0.035)
FDI 0.298*** 0.299*** 0.300*** 0.299***
(0.058) (.058) (0.058) (0.059)
Pop 0.051 0.054 0.057
(0.047) (0.052) (0.053)
AE 0.003 0.003
(0.003) (0.003)
IND −0.017
(0.012)
Constant −6.564*** −6.188*** −6.410*** −6.161*** −6.14***
(.194) (.334) (.463) (.464) (.465)
Model statistics
R2 0.581 0.724 0.725 0.727 0.727
F-test 7277.99*** 589.80*** 477.43*** 587.38*** 593.75***
Max: lag Auto Auto Auto Auto Auto
Root-MSE 0.482 0.392 0.392 0.392 0.393
Observations 216 216 216 216 216
Groups 18 18 18 18 18

Poverty = headcount ratio; INEQ = Gini index of income inequality; GDP = Gross domestic product (economic growth); GDP-sq = Square of GDP; INF = inflation;
FA = Forest land; FDI = Foreign direct investment; Pop = population growth; AE = Access to electricity; IND = Manufacturing, value added (% of GDP) Max-lag =
maximum lags; Root-MSE = Root mean square error.
*Represent significance at 10%.
**Represent significance at 5%.
***Represent significance at 1%.

goods (sources). Consequently, lack of education, low PPP, and to our observation, the current contradiction in our research is
less awareness leads to increase consumption of non-renewable due to the utilization of advance method (D–K standard error
energy and thus higher environmental pollution in terms of EFP. method) as mentioned above, and another contradiction with our
Many researchers have also confirmed the positive relationship study is because the dataset incorporated in the current research
between income inequality and environmental pollution. For ex- is different i.e. developing countries of Asia.
ample, Boyce (1994) hypothesized and confirmed that higher As shown in models 1 to 5 of Table 3, the association between
income gap between rich and poor creates further power gap GDP per capita (proxy for economic growth) and EFP are statis-
in a society and that could be the main cause of environmental tically significant and positive. Explicitly in Model 5 (full model),
pollution. Because the poor people of the society cannot take the a 1% increase in economic growth will escalate EFP by 0.739%,
advantage of the environmental quality and all environmental thus suggesting that the GDP per capita of developing economies
costs are imposed on them. This theoretical position and em- in Asia increases environmental pollution. From this empirical
pirical findings of Liu et al. (2019) also urged that widening evidence, it could be easily concluded that the higher economic
income gap cause individualism and consumerism which is a growth in Asian countries is helpful to defeat the extreme level
very serious and big problem in the way of worthy environment. of poverty but with high environmental costs (environmental
With increasing the gap between rich and poor, deprived people degradation). Our empirical results are in line with the em-
misuse and exploit environmentally friendly resources for their pirical findings of Behera and Dash (2017) for developing and
survival. Therefore, this phenomenon suggests that widening in- middle-income economies, Naz et al. (2019) for the economy
come gap is not just an economic and social issue but also related of Pakistan, and Zhang and Zhang (2018) for the Chinese econ-
to environmental quality. The empirical findings of the current omy. In addition, the GDP per capita square (square of economic
study are in line with the empirical work of Bae (2018) for G-20 growth) has a negative and statistically significant impact on EFP,
economies, Baloch et al. (2018) for Pakistan, Baloch et al. (2020b) which provides evidence about the presence of the Environmen-
for 46 sub-Saharan Africa countries Knight et al. (2017) for high- tal Kuznets Curve (EKC-hypothesis). This hypothesis documented
income economies, Masud et al. (2018) for five ASEAN economies, that economic development and growth leads to environmen-
and Liu et al. (2019); Zhang and Zhao (2014) for Chinese economy. tal degradation at the initial stage, but after a certain level of
Similarly, the current results contradict the work of Demir et al. growth, society begins its relationship with the environment, and
(2019) for the emerging economy of Turkey, and Grunewald et al. the degree of environmental degradation decreases. Our current
(2017) for middle-income and low-income economies. According outcome and EKC-hypothesis are supported by previous research
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work, for example, the work of Bölük and Mert (2015) for Turkey, therefore the selected countries should ensure equal income dis-
Baek (2016) for the United States of America, Lee and Oh (2015) tribution policies to tackle harmful environmental effects caused
for China, Ali et al. (2017) for Malaysia, (Chen et al., 2019) for by unequal income distribution. Second, environmental pollution
Pakistan, and Usman et al. (2019) for India also supported the can be controlled if the concerned authorities of targeted coun-
presence of EKC-hypothesis. tries implement some policies that individuals from the upper
To minimize omitted variable bias, in this study we have class should not transfer their income/wealth into EFP. For ex-
incorporated and controlled for several important environment- ample, the government of developing countries should provide
influencing factors, while some of them were emphasized for special services for these people to use environmentally friendly
the first time. However, the relationship between other control technologies (renewable energy technology) that can sustainably
variables and environmental degradation are presented in Models fulfill their energy demand. Third, to handle complex situation
of poverty and income inequality along with environmental pol-
1, 2, 3, 4, and 5 of Table 3 as follow:
lution requires a long-run economic tactic that boosts economic
(I) Inflation (INF) has a negative and statistically insignificant growth, sustainable economic development (pro-poor policies),
impact on EFP. increase opportunities for economic activities, and control the en-
(II) Forest area (FA) has a significantly negative effect on EFP vironmental vulnerability. For that reason, the concerned author-
(III) Foreign direct investment (FDI) has a positive and statisti- ities of Asian developing countries should devise comprehensive
cally significant effect on EFP. and wide-ranging policies that ensure the gains from economic
(IV) Population growth (Pop) has an insignificant relationship growth must benefiting the poor and needy people of the region.
with EFP. As the higher economic growth, rapid urbanization, and indus-
trialization in Asian counties are badly affect the environment,
(V) Access to electricity (AE) has an insignificant effect on EFP.
so, the policymakers should not only pay attention to high eco-
(VI) Manufacture value added (IND) has a positive but insignif-
nomic growth but also focus on environmental quality. Therefore,
icant effect on EFP.
the state’s policy should implement environmental regulation
It is important to declare that this study also used D–K stan- and should ensure the use of environmentally friendly energy.
dard error (panel regression) approach for all control variables Regarding environmental regulations, it significantly stimulates
to test the validity and reliability of the main variables’ empirical technological innovation procedure that would lead to rise effi-
findings. The empirical results obtained from Model 1 (without ciency of energy production and thereby mitigate environmental
control variables) are in line with Model 5 (with control variables) pollution.
and confirm the robustness of our findings. Additionally, the empirical findings of the study highlight
the significance of the equal distribution of income along with
sustainable economic growth to accomplish Millennium Devel-
5. Conclusion and policy implications
opment Goals (MDGs). Under the umbrella of many economic
corridors, the investigated region should emphasize more and
The current study evaluates the impact of poverty and income
more on expanding its energy mix, with a higher percentage
inequality on environmental degradation in term of ecological towards clean/environmental-friendly (renewable energy), and
footprint by using panel data of 18-developing countries in Asia ensure that this energy consumption does not harm the quality
from 2006 to 2017. For this purpose, advance econometric tech- of the environment. Whereas, Emission Trading Approach (ETS),
niques of the D–K standard error model are employed to inspect and imposing taxation on emissions like Carbon Pricing Approach
empirical association among the variables of the study. Contrast- (CPA) can provide additional revenue and facilitate in reduc-
ing past related research studies on developing countries, this tion of poverty and environmental pollution. The investigated
is the new study, which provides important insight on simul- countries should form a favorable policy to encourage residential
taneous targets of Sustainable Development Goals (SDGs), while consumers and industrialists towards green investment like tax
provides empirical evidence on the effect of poverty and income allowances on purchase or import of environmentally friendly
inequality on environmental degradation. By employing D–K re- technology (energy efficient) and energy. The public sector along
gression approach, the empirical results indicate that poverty with the private sector of the investigated region should also
headcount increases environmental degradation in terms of eco- devise a policy that allows economical credits to residential
logical footprint (EFP) in developing countries of Asia. More- consumers and industrialists for setup environmentally friendly
over, the Gini index of income inequality is also an important energy such as solar energy. The installation of solar energy will
environment-influencing factor in developing countries of Asia. not only mitigate the problem of energy shortage but will also
The findings also suggest that GDP per capita (economic growth) overcome environmental degradation. Although the empirical
in Asian developing countries is an important factor in environ- results are significant for policymakers of the targeted region,
mental degradation, while these findings support the existence of but with some limitations, that must be taken into account for
EKC-hypothesis in these countries. future research studies. For example, we were failed to assess
Estimated findings obtained from D–K regression suggest both the multi-regional-wise poverty and income inequality effect on
environmental pollution due to the unavailability of data. The
higher rate of poverty along with widening income gap con-
current study has incorporated the Gini index for income in-
tributes to environmental pollution in developing countries of
equality and EFP for Environmental degradation, thus, the future
Asia, therefore some economic policies should be formulated
researcher could also focus on the impact of poverty and income
to reduce higher level of extreme poverty and narrow down
inequality on environmental degradation by incorporating other
widening income inequality without deteriorating the quality indicators. Using other indicators would extend the study ob-
of the environment. Thus, policies regarding poverty alleviation jective and verify whether the empirical results obtained in this
might have to further increase the income gap and environmental study are robust to other indicators of poverty, income inequality,
pollution in terms of EFP. Regarding policy implications, first, and environmental pollution. Further, the current research could
developing countries of Asia should not depend only on greater be motivation and leave the gap for future studies to investigate
GDP per capita (economic growth), but they should handle the similar relationships for other Least Develop Countries (LDCs).
complex economic situation by providing immediate social relief Finally, in this study we failed to find the causality among the
through employment opportunities to poor people, increase mi- variables of the study due to the unavailability of the extended
cro financial support, and other social safety nets. The findings dataset, therefore, it could be better and more interesting to
confirmed that income inequality is harmful to the environment, emphasize this limitation in the future.
676
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Bangladesh Indonesia Myanmar Thailand Baek, J., 2016. Do nuclear and renewable energy improve the environment?
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CRediT authorship contribution statement
African countries. Sci. Total Environ. 740, 139867. http://dx.doi.org/10.1016/
j.scitotenv.2020.139867.
Salim Khan: Data curation, Conceptualization, Methodology, Baloch, M.A., Mahmood, N., Zhang, J.W., 2019. Effect of natural resources, renew-
Writing. Wang Yahong: Writing – review & editing, Funding. able energy and economic development on CO2 emissions in BRICS countries.
Asma Zeeshan: Revision, Validation. Sci. Total Environ. 678, 632–638. http://dx.doi.org/10.1016/j.scitotenv.2019.
05.028.
Baloch, A., Shah, S.Z., Noor, Z.M., Magsi, H.B., 2018. The nexus between income
Declaration of competing interest inequality, economic growth and environmental degradation in Pakistan.
GeoJournal 83 (2), 207–222. http://dx.doi.org/10.1007/s10708-016-9766-3.
The authors declare that they have no known competing finan- Baloch, M.A., Wang, B., 2019. Analyzing the role of governance in CO2 emissions
mitigation: The BRICS experience. Struct. Change Econ. Dyn. 51, 119–125.
cial interests or personal relationships that could have appeared
http://dx.doi.org/10.1016/j.strueco.2019.08.007.
to influence the work reported in this paper. Behera, S.R., Dash, D.P., 2017. The effect of urbanization, energy consumption,
and foreign direct investment on the carbon dioxide emission in the SSEA
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S. Khan, W. Yahong and A. Zeeshan Energy Reports 8 (2022) 670–679

SK is a Ph.D. Scholar in the School of Business, Zhengzhou University China, tive Economics, Tourism, Environmental economics, Political economics, and
and his research interests include Development Economics, Environmental Eco- Development economics.
nomics, Applied Economics, Public Economic Management, and Political Eco-
nomics.
Asma Zeeshan is lecturer in the management studies department; Bahria
Business School, Behria University Islamabad. Her research interests includes
WY is professor and research supervisor in the School of Tourism and Man- environmental Economics, Rural Development, and Business Economic Manage-
agement, Zhengzhou University China. Her research interests include Norma- ment.

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