Twenty-first International Conference on Environmental, Cultural, Economic & Social Sustainability

Abstract

The Belt and Road Initiative is a vast infrastructure and economic development project spanning multiple countries, and understanding the impact is crucial for balancing economic growth with environmental sustainability. However, in recent years, several studies have investigated the impact of energy consumption and economic growth on BRI countries’ environmental quality. The studies overlooked the impact of climate finance, agriculture development funds, and BRI investment on environmental performance in BRI countries. This study bridges an existing knowledge gap by analyzing the potential impacts of BRI investments, climate finance, and agricultural development funds on the environmental performance of countries participating in the Belt and Road Initiative (BRI) for 2002 to 2022. In this study, panel unit root tests, the Westerlund cointegration test, as well as augmented mean group (AMG), and cross-section augmented distributed lag (CS-ARDL) estimators were applied to assess both long-term and short-term outcomes. The primary results show cross-sectional dependency, slope heterogeneity, and cointegration among study variables exist. AMG results reveal that BRI investment, climate finance (CLF), and agriculture development funds (ADF) have a positive effect on environmental performance (EP). In contrast, population growth, foreign investment inflows, and energy intensity adversely affect environmental performance. Furthermore, our subsample analysis results of CS-ARDL show CLF has a negative relation with EP in low-income countries, while positive in middle- lower and middle-upper countries in both the short and long run. The study findings offer valuable insights and policy recommendations for achieving harmonious development and environmental sustainability within the BRI framework.