Oil and natural gas rents and CO2 emissions nexus in MENA: spatial analysis

Haider Mahmood; Najia Saqib; Anass Hamadelneel Adow; Muzaffar Abbas

doi:10.7717/peerj.15708

Oil and natural gas rents and CO₂ emissions nexus in MENA: spatial analysis

PeerJ. 2023 Jul 12:11:e15708. doi: 10.7717/peerj.15708. eCollection 2023.

Authors

Haider Mahmood¹, Najia Saqib², Anass Hamadelneel Adow³, Muzaffar Abbas⁴

Affiliations

¹ Department of Finance, College of Business Administration, Prince Sattam bin Abdulaziz University, Alkharj, Saudi Arabia.
² Department of Finance, College of Business Administration, Prince Sultan University, Riyadh, Saudi Arabia.
³ Department of Accounting, College of Business Administration, Prince Sattam Bin Abdulaziz University, Alkharj, Saudi Arabia.
⁴ Department of Business Administration, Community College, Prince Sattam Bin Abdulaziz University, Alkharj, Saudi Arabia.

Abstract

Background: Oil rents (OR) and natural gas rents (NGR) have significant contributions to the income of the Middle East and North Africa (MENA) economies and may increase emissions. Moreover, spatial autocorrelation is expected in carbon dioxide (CO₂) emissions due to the geographically closed economies in the MENA region. Thus, we examine the impact of OR and NGR on CO₂ emissions caring spatial dimensions and analyze the environmental Kuznets curve (EKC).

Methods: We apply the spatial Durbin model technique on the effects of OR, NGR, and economic growth on CO₂ emissions in 17 MENA nations from 2000-2019, i.e., Algeria, Bahrain, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, Tunisia, the United Arab Emirates (UAE), and Yemen. Moreover, diagnostic tests are applied to reach the most appropriate spatial specification and to have the most robust results.

Results: The results disclose that CO₂ emissions have spillovers and emissions of any country can damage the environment of neighboring countries. The EKC is corroborated with a turning point of 38,698 constant 2015 US dollars. Israel and Qatar are in 2^nd phase of the EKC, and 15 MENA economies are in 1^st stage. Thus, the economic expansion of most economies has ecological concerns. The effect of natural gas rents is found statistically insignificant. Oil rents have minute negative effects on emissions of local economies with an elasticity coefficient of -0.2117. Nevertheless, these have a positive indirect effect with an elasticity coefficient of 0.5328. Thus, the net effect of oil rents is positive. One percent increase in oil rents could accelerate 0.3211% of emissions. Thus, we suggest the MENA countries reduce reliance on oil rents in their income to avoid the negative environmental effects of the oil sector.

Keywords: CO2 emissions; Natural gas rents; Oil rent; Spillovers; The MENA region.

Publication types

Research Support, Non-U.S. Gov't

MeSH terms

Carbon Dioxide* / analysis
Middle East
Natural Gas*
Spatial Analysis
Tunisia

Substances

Carbon Dioxide
Natural Gas

Grants and funding

The authors received funding from the Deputyship for Research & Innovation, Ministry of Education in Saudi Arabia through project number (IF2/PSAU/2022/02/21824). The funders had no role in study design, data collection and analysis, decision to publish, or preparation of the manuscript.