Biomass energy consumption and sustainable human development: the role of financial development in EAC member countries

Abstract

Researchers are still in conflict on how biomass energy usage affects the environment, the economy, and human development. Moreover, since its inception, climate change has become one of humanity’s greatest challenges, inspiring massive efforts to lessen its effects and concentrate on sustainable development. This study examined the relationship between biomass energy consumption and sustainable human development in East African Community (EAC) member states between 1990 and 2019. This study uses econometric approaches to address the challenges of cross-sectional dependence and slope heterogeneity. We used the CIPS and CADF unit root tests together with the Westerlund cointegration test to address these issues. Additionally, Contemporaneous Correlation estimators (Feasible Generalized Least Squares – FGLS) and Panel Corrected Standard Errors – PCSE) and the Fully Modified Ordinary Least Squares (FMOLS) were employed. We also used the Dumitrescu-Hurlin panel causality test. Our analysis revealed that the East African Community (EAC) members’ sustainable human development (SHD) is threatened by biomass energy consumption (BEC), which has a coefficient of -0.920. The BEC-SHD nexus is found to be reversed by the moderating impact of financial development, with an interaction coefficient of 0.329. Finally, we successfully demonstrated the existence of a bidirectional causal relationship between BEC and SHD as well as BEC and EG.

Keywords

• Biomass energy consumption
• sustainable human development
• East African Community
• Climate change
• Financial Development
• Economics and Development