Do Social Consumption and Investment Patterns Drive Environmental Quality?

Abstract

To further understand the dimensions of responsible consumption and investment, this investigation explores how environmental quality is impacted by the consumption of social goods and services and the patterns of investments. By considering a panel of 30 Chinese provinces over the period 2007–2019 and comparing the fixed effects and random effects estimators, the results summarily indicate that expenditure on science and technology (with elasticity of ~0.07) and investment in research and development (with elasticity of ~0.01) are the only investment instruments with emissions abatement impacts while both the levels of investment in fixed assets (with elasticity of ~0.01) and consumption of social goods and services (with elasticity of ~0.7) constitute environmental degradation. Additionally, fixed assets investment, population density, government financial spending, and economic growth are contributing to environmental degradation, while natural resources and labor force are environmentally beneficial. This outcome further helps China's strategic policy that promotes sustainable and responsible consumption and investment behavior.