Investigating the Nexus between Economic Growth and Environmental Quality in Bangladesh: The Role of Renewable Energy

Environmental quality and climate change have become popular topics in all scientific disciplines in recent decades due to their effect on human wellbeing and economic growth. This paper investigates the effect of urbanization, physical capital, financial development and renewable energy consumption on environmental quality in Bangladesh over the period 1990 to 2020 by utilizing the ARDL Bounds Test. This research employs secondary data sourced from the World Bank. The expected outcomes have been decided by multiple quantitative time-series evaluation techniques, including the Augmented Dickey-Fuller assessment, ARDL (Autoregressive Distributed Lag) bound test, and the Granger Causality analysis. The Augmented Dickey-Fuller test has verified that none of the series is integrated of the second order. The F-bounds test results verified the presence of a sustained connection among the analyzed variables. Empirical research demonstrates that urbanization, together with physical capital and financial development, exacerbates environmental degradation, but renewable energy usage mitigates it over the long term. The short-term findings indicate that urbanization and physical capital correlates favorably with environmental damage, while financial development and renewable energy consumption correlates negatively with the environmental damage. The Granger causality test outcomes indicate that carbon dioxide emissions and urbanization, as well as carbon dioxide emissions and renewable energy usage, mutually Granger cause each other in a bidirectional manner. All outcomes are logically coherent, and the policy recommendations are derived from our study.