IS THERE ANY RELATIONSHIP BETWEEN GEOPOLITICAL RISK AND CLIMATE CHANGE?

Abstract

Purpose: The aim of this study is to point out the impact of geopolitical risk on climate change. The CO₂ emissions per capita is used as a proxy for climate change.

Methodology: In this study, the data sample covers annual data from 1990 to 2015 for 12 selected Latin American and Asian countries. After standard preliminary tests (Cross-sectional dependence tests, CIPS unit root test, and slope homogeneity test), we employ the second-generation estimator – the AMG (Augmented Mean Group) method to explore the long-run relationship between geopolitical risk and CO₂ emissions per capita.

Results: The AMG findings document that a 1% rise in geopolitical risk escalates CO₂ emissions per capita by 0.001%. In addition, economic growth and fossil energy consumption foster CO₂ emissions per capita, whereas renewable energy contributes to decreasing CO₂ emissions per capita.

Conclusion: In recent years, scholars have attempted to explore the impact of geopolitical risk on environmental degradation. According to our results, in Latin American and Asian countries, decreasing geopolitical risk and conflict can impede environmental degradation. In the long run, a robust clean energy policy should be considered in case of geopolitical conflict by the government. Besides, the government should focus on renewable energy policy and substitute non-renewable energy resources with more technology-intensive resources.