Analysis of the drivers of CO₂ emissions and ecological footprint growth in Australia

This paper investigates the determinants of environmental degradation in Australia from 1990 to 2017, using ecological footprint analysis and the well-established logarithmic mean Divisia index (LMDI) decomposition method. Additionally, decoupling factor analysis was performed to examine the link between environment related variables (CO₂ emissions and ecological footprint) and their determinants such as real income and population. The decomposition analysis considered the impact of five different factors on CO₂ emissions: income effect, population, energy intensity, energy structure, and carbon intensity. For decoupling factor analysis, the link between ecological footprint and its two determinants, real income and population, was examined. Furthermore, the possible decoupling between CO₂ emissions and these determinants was also analyzed, because CO₂ emissions are the main cause of the country’s increasing ecological footprint. The present study has a more comprehensive approach because it analyzes the factors affecting environmental degradation in Australia by assigning two proxies (CO₂ emissions and ecological footprint) as dependent variables. The results confirmed that Australia’s ecological reserve substantially declined over the past three decades due to deforestation and energy industries. The LMDI results demonstrated that income effect, population, and carbon intensity were the main factors that raised Australia’s CO₂ emissions, whereas the energy intensity factor substantially curbed them. The reducing impact of energy structure on CO₂ emissions was minimal; thus, Australia was not able to prevent an upward trend in CO₂ emissions. Lastly, an analysis of Australia’s CO₂ emissions according to economic activities was conducted for the period between 1990 and 2017 in order to understand other factors that may have affected environmental sustainability.