The role of renewable energy and natural resources for sustainable agriculture in ASEAN countries: Do carbon emissions and deforestation affect agriculture productivity?

The adoption of Sustainable Development Goals (SDG) in 2015 shifted the attention towards sustainability-related concerns in both developing and developed counties. The aim of this paper is to examine how agricultural productivity – a key driver in achieving many of these SDGs – is affected by carbon emissions, deforestation, renewable energy consumption, natural resources, and regional integration for the ten Association of Southeast Asian Nations (ASEAN) countries. Using the Mean Group (MG) class estimators, able to tackle the cross-sectional dependence in the data, empirical findings reveal that environmental degradation (in the form of CO2 emissions) reduces agricultural productivity in the region. Both the forest area and natural resource variables negatively affect the productivity of the agricultural sector, while the use of renewable energy sources positively contributes to the agricultural sector. However, despite being one of the highest integrated regions in the world, regional integration among the ASEAN members does not boost their agricultural productivity. The causality tests confirm the existence of bidirectional causality between agricultural productivity and renewable energy consumption, and unidirectional causality across a few other variables. Accordingly, the study provides policy recommendations for the governments of ASEAN economies on improving the environmental performance of agriculture and achieving the SDGs by 2030.