Factor Affecting Disinvestment in Environmental Protection of MENA Countries(Panel Data Instrumental Variables Method)

This paper aims to explore the relationship between the economic growth and the pressure on nature from the environmental sustainability perspective. The pressure on nature is measured by the natural disinvestment component of the Adjusted Net Savings data of the World Bank; which is the sum of energy, mineral, net forest depletions and carbon dioxide damage. Our panel consists of 15 countries and spans the period between 1990 and 2011. We employ a panel Fixed-Effects Instrumental Variable (IV) methodology. Regression analysis reveals that there is a positive relationship between income and pressure on nature in MENA, yet the effect is much stronger in low-income than in high-income countries. We found that increasing trade, all else equal, increases the pressure on nature.