Unravelling the efficacy of green innovation and taxation in promoting environmental quality: A dual-model assessment of testing the LCC theory in emerging economies

The increasing impact of anthropogenic activities on the environment has led researchers to conduct a comprehensive analysis of its determinants and propose sustainable solutions to mitigate the negative effects. Given the situation, the load capacity factor (biocapacity/ecological footprint) is used in this study as a comprehensive indicator of environmental sustainability that takes into account the supply-side consequences of ecological concerns while evaluating the theoretical dynamics of the Load capacity curve (LCC) in emerging countries. In doing so, the study employed the novel Method of Moment Quantile Regression (MMQR) to analyze the role of green innovation, green taxation, and economic growth under the LCC framework, from 2000 to 2018. The results affirm the presence of a U-shaped curve between environmental sustainability and income implying that growth may cause to harm the environment but after reaching a certain turning point it maintains the ecological quality. Also, green measures of taxation and innovation could curb carbon dioxide emissions at various quantiles for the selected bloc of countries. Noticeably, the LLC hypothesis is verified for both models establishing a positive association of determinants with load capacity factor. The results recommended policy implications for emerging countries seeking to promote sustainable economic growth while preserving the environment.