Do natural resource rents condition the growth–environmental sustainability nexus? A Panel Quantile Analysis of the E7 economies

Abstract

The load capacity factor (LCF), the ratio of biocapacity to the ecological footprint of consumption, measures environmental sustainability on both the supply and the demand side of the ecological ledger, making it a more complete criterion than emissions or footprints alone. This study asks whether natural resource rents alter the rate at which economic growth draws down that capacity in the Emerging Seven (E7) economies: Brazil, China, India, Indonesia, Mexico, Russia and Türkiye, over 1992 to 2025 (N = 7, T = 34, 238 observations). Existing work establishes that income and rents each affect environmental quality but treats the two as additive. We instead specify a mean-centred interaction between log income per capita and resource rents and estimate it by panel quantile regression with fixed effects, an estimator chosen because the Pesaran–Yamagata test decisively rejects slope homogeneity and because the ecological consequences of growth plausibly differ between ecologically stressed and ecologically abundant observations. Second-generation unit root tests, a Pesaran cross-sectional dependence test, and fixed-effects estimation with Driscoll–Kraay standard errors support the specification and the inference. Three findings emerge. Income growth lowers the load capacity factor at every quantile, with an elasticity between -0.185 and -0.205, so the linear load capacity curve does not hold in this panel. Resource rents depress sustainability directly, and increasingly so towards the upper quantiles. The interaction term, however, is positive and significant from the 25th to the 75th quantile and vanishes at the 90th, which means that rent dependence flattens rather than steepens the growth–sustainability slope. Attenuation is not reversal: the total marginal effect of growth stays negative until rents exceed roughly 38 percent of GDP, far above the sample mean of 5.86 percent. The environmental resource curse in the E7 therefore operates through the level of rents, not by making growth more ecologically expensive. Keywords: Load Capacity Factor, Natural Resource Rents, Economic Growth, Panel Quantile Regression, E7 Economies, Resource Curse.