Environmental stress and well-being in OECD countries: testing EKC, LCC, and PHH models

This study investigates the interaction between economic growth, environmental stress, and well-being in OECD countries from 1990–2022. Using the Environmental Kuznets Curve (EKC) and Load Capacity Curve (LCC) hypotheses, alongside the Pollution Haven Hypothesis (PHH), the analysis explores the roles of renewable energy consumption, globalization, population density, financial development, and foreign direct investment. Panel-corrected standard errors (PCSE) and Driscoll-Kraay standard errors confirm the EKC and LCC hypotheses; they reject PHH under LCC but accept it under EKC, albeit statistically weakly. Results show that renewable energy significantly improves ecological capacity and reduces CO₂ emissions, whereas globalization exerts a negative effect on environmental quality. Population growth weakens ecological capacity but has no significant impact on emissions. Financial development exhibits mixed effects, with weak evidence of environmental harm. OECD economies, which account for over 60% of global GDP yet remain heavily reliant on fossil fuels, represent a critical test case for sustainability. Policy recommendations emphasize prioritizing renewable energy adoption, integrating environmental safeguards into globalization processes, and channeling financial flows toward green technologies. These findings contribute to the literature by combining traditional and innovative models, offering actionable insights for policymakers seeking to balance economic growth with ecological resilience.