Pathways to ecological sustainability in the United States: assessing the role of policy stringency and green energy using wavelet quantile correlation

Abstract The United States ranks among the most developed countries in the world in terms of economic development, technological innovation, and human capital development. Furthermore, the US is among the countries with the largest ecological footprint (EFP), with its EFP per capita higher than the global average. This questions the stringency of environmental policies in the US as well as the role of green energy in alleviating the country’s ecological well-being. The objective of this study is to scrutinize the association between environmental policy stringency (EPS), green energy, and EFP in the United States. To achieve this, innovative methodologies (namely, wavelet quantile correlation and the causality approach) are employed, utilizing data from 1990 to 2022. The findings reveal that EPS warrants a substantial reduction in the EFP in the US. Although notable heterogeneous effects exist, the evidence suggests a strong negative relationship between EPS and EFP. Akin to the impact of EPS, green energy consumption produces a varying negative and positive impact on EFP over the distributions. Nevertheless, a critical observation herein is the predominant negative contribution of green energy consumption to EFP. Except in the lowest and uppermost quantiles, the contributions of green energy thereafter remain insufficient to engender ecological sustainability. Further findings reveal that both green energy and EPS significantly Granger-caused EFP across the time and quantile dimensions. Thus, this research highlights that policymakers consider a combination of market tools such as emission limits, carbon pricing, and waste reduction to optimize environmental outcomes and alleviate environmental stress.