Modeling the Influence of Mineral Rents and Low-Carbon Energy on Environmental Quality: New Insights from a Sustainability Perspective

Abstract

In recent decades, the detrimental impacts of climate change have been increasingly felt worldwide. This is due to the extreme consumption of natural resources to fuel economic activity. Confronting a widening ecological deficit, humanity must urgently accelerate its journey toward sustainable development goals (SDGs). This demands active efforts to curb environmental pollution and protect natural resources, safeguarding the planet for future generations. Since Brazil has high biocapacity and ecological areas, the impact of energy resources on ecological sustainability policies cannot be excluded. Moreover, Brazil holds a vital position in the world for global foreign direct investment flows. In this regard, this paper considers the asymmetric impact of mineral rents and foreign direct investments when investigating Brazil's environmental sustainability. In addition, it evaluates elements like economic growth and low-carbon energy consumption from 1970 to 2021. To this end, the research applies the Fourier nonlinear autoregressive distributed lag model and draws three significant conclusions. First, resource extraction undermines environmental sustainability. Second, the inflow of foreign direct investment reduces the load capacity factor, implying that the pollution haven hypothesis holds for Brazil. Third, low-carbon energy consumption contributes to environmental sustainability. Our findings highlight the critical role of regulating mineral resource rents in achieving SDGs in Brazil. Moreover, increasing investment in clean energy sources and transitioning toward low-carbon energy can promote sustainable development in Brazil. The Brazilian government should abandon mineral extraction, focus on low-carbon energy consumption, and prevent companies from destroying nature by introducing strict environmental regulations for foreign investment flows.