Iranian Economic Review

Iranian Economic Review

Understanding Environmental impact of Natural Resources within The Load capacity curve framework: New evidence from oil-exporting Sub-Saharan African countries.

Document Type : Research Paper

Author
Department of Economics, University of Nevada, Reno, Reno, USA.
10.22059/ier.2026.411536.1008411
Abstract
The paper examines the environmental effects of natural resources in seven oil-exporting SSA economies for the period spanning 2000-2023. With the growing pursuit of climate action worldwide, the high dependence on natural resources, which remains the major source of revenue for oil-exporting SSA economies, exerts both environmental costs and benefits. This is because as the extraction of these resources expands, their economies grow through rising GDP, which in turn increases oil-related emissions. Hence, this highlights a development dilemma in which expansion rooted in natural resources can undermine the sustainability of oil-exporting SSA economies. Thus, this paper used panel-corrected standard errors, feasible generalised least squares, and Driscoll-Kraay standard-error (D-K) techniques within the load capacity curve framework to determine whether natural resources amplify or aggravate environmental quality in oil-exporting SSA economies. The results showed that rising levels of economic activity have a detrimental effect on environmental sustainability rather than improving it as would be predicted by a traditional U-shaped Load Capacity Curve. Natural-resource rents are positively associated with environmental sustainability, as a 1% increase in total natural-resource rents as a share of GDP is associated with approximately a 0.4% increase in the load capacity factor. Further, a percentage increase in industrialisation undermines environmental sustainability by 0.22%. In comparison, a 1% increase in renewable energy improves environmental sustainability by 0.47% in the oil-exporting SSA countries. The study recommends that policymakers promote environmental reinvestment. This can be done by channelling revenue from the natural resource exploitation into renewable energy, reforestation, and sustainable development programs.
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Articles in Press, Accepted Manuscript
Available Online from 14 September 2026