The Effect of Human Capital on Air Pollution in OPEC Oil Exporting Countries

Document Type : Research Paper

Authors

1 Economic

2 economic

Abstract

Abstract
Introduction
Many associations and groups supporting nature and the environment have undertaken numerous measures and activities aimed at increasing knowledge and awareness to promote proper use of natural resources and reduce pollutants. However, in developing countries-particularly those where government revenues depend heavily on natural resources-and despite the presence of rentier governments and the allocation of resources to unproductive sectors, environmental groups have often been unable to prevent increases in air pollution. Therefore, this study focuses on examining this issue in OPEC oil-exporting countries, whose economies rely on the extraction of natural resources, including fossil fuels, for domestic consumption and export. For higher economic growth and development, these countries often expand the industrial sector, frequently relying on polluting industries. Additionally, human activities associated with oil operations-such as exploration and extraction of gas mines, drilling oil wells, refining crude oil, flaring natural gases, and transportation and storage of oil and gas-lead to environmental degradation and increased air pollution. These activities pose a serious threat not only to countries dependent on oil revenues but also have environmental consequences for other nations. The present study addresses the question: What effect does human capital have on air pollution in OPEC oil-exporting countries?
 
Research Method
Spatial panel models are applicable in studies that control for relationships across time, space, and between units. In the spatial panel method, fixed, random, and spillover effects are examined between variables. The most important application of the general spatial model is to examine spatial spillovers, or the transmission of effects from the variable under study to adjacent areas. When spatial dependence exists, spatial measurement methods are used; in the absence of spatial correlation, general measurement methods are applied. Spatial correlation implies that areas exhibit similar values of variables compared to neighboring areas. Spatial correlation can be classified as either positive or negative.
Results and Discussion
Based on the results obtained, human capital has a positive and significant effect on air pollution. Specifically, a one percent increase in human capital corresponds to a 0.14 percent increase in air pollution, holding other factors constant. The direct effect of human capital is positive, and its indirect effect is also positive and significant. This indicates that human capital contributes to increased air pollution both domestically and in neighboring countries.
The effect of the logarithm of GDP per capita on air pollution is positive and significant. A one percent increase in GDP per capita leads to a 2.25 percent increase in air pollution, other conditions remaining constant. Urbanization has a positive and significant effect on air pollution, with a one percent increase in urbanization resulting in a 985.4 percent rise in air pollution. This is largely due to urbanization-driven increases in energy consumption and fossil fuel use, leading to higher greenhouse gas emissions-particularly carbon dioxide-and consequent environmental degradation.
Oil revenues also have a positive and significant effect on air pollution. A one percent increase in oil revenues results in a 21.5 percent increase in air pollution. In oil-rich countries, activities such as oil exploration, extraction, and refining release greenhouse gases that negatively impact soil, air, surface and groundwater, organisms, plants, trees, and human life, thereby increasing air pollution.
Foreign direct investment (FDI) has a positive and significant effect on air pollution in OPEC member countries. A one percent increase in FDI leads to an 87.3 percent rise in air pollution. In developing countries, FDI contributes to increased air pollution due to its impact on economic growth, consistent with the Environmental Kuznets Curve. According to the pollution haven hypothesis, FDI inflows into developing countries often exacerbate environmental degradation.
Conclusion
Although human capital can drive economic growth, in OPEC countries, where governments rely heavily on oil revenues, increases in human capital often strengthen oil-based industries. Consequently, this leads to higher fossil fuel consumption, which contributes significantly to air pollution.
 

Keywords

References

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History

  • Receive Date: 10 February 2025
  • Revise Date: 14 April 2025
  • Accept Date: 19 April 2025

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