Study On The Relationship Among Biomass Consumption,Economic Growth And The Environment Based On The Moderating Role Of Biotechnology:A Comparative Analysis Between China And Japan

In 2018,carbon dioxide emission was at all-time high and related studies anticipate further increase in 2019.In addition,sustainable economic growth is threatened by the depletion of fossil feedstocks.Thus,the need to elucidate the factors that contribute to the rise in carbon dioxide emission and sustainable economic growth is ever high.One possible solution to this global challenge is the utilization of biomass.Biomass is the largest renewable energy source on earth.Moreover,biomass has several uses including food,feed,fuel,feedstock,fibre,and fertilizer and thus,the utilization of biomass has become more important given the fact that carbon dioxide emissions are up in 2018 and sustainable economic growth is threatened.Notwithstanding,there is dearth of empirical studies on biomass consumption,economic growth and carbon dioxide emission nexus.In addition,the few studies that have examined this relationship have missed an important variable,biotechnology,which may give efficiency to biomass production and process and facilitate the contribution of biomass to reduce carbon dioxide emission and boost sustainable economic growth.It is against this background that our study comes in handy.This study is focused on the relationship among biomass consumption,economic growth and environmental sustainability based on the moderating role of biotechnology in China and Japan.Our study investigates the following objectives:?1?This study investigates the relationship among biomass consumption,economic growth and CO₂ emissions based on the moderating role of biotechnology,taking Japan and China.?2?This study also investigates relationship among biomass consumption,economic growth and environmental pollution in the presence of biomass consumption and biotechnological innovations within the extended form Environmental Kuznets Curve Theory.?3?Our study also examines the nonlinear trend of biotechnological innovations adoption over time within the Diffusion of Innovation Theory in China and Japan.?4?This study investigates the causal relationship of bioeconomy and economic development in Japan and China.?5?This study predicts the relationship between carbon dioxide emission and economic growth in the presence of biomass consumption and biotechnological innovations in China and Japan.?6?The study finally compares and contrasts the findings on the relationship between carbon dioxide emission and economic growth in the presence of biomass consumption and biotechnological innovation in China and Japan.To perform the empirical analysis,our study first conducted preliminary tests such as unit root test,structural break test,normality test etc.to inform the researchers of the appropriate analytical tools to employ in this study.Based on the preliminary tests,our study utilized recent econometric approaches such as Dynamic Ordinary Least Square?DOLS?,Gregory Hansen Structural Cointegration,the Auto-Regressive Distributed Lag?ARDL?bounds test.In addition to the above recent techniques,this study departs from other similar studies as we employed the recently developed Nonlinear Auto-Regressive Distributed Lag?NARDL?bounds test as a robust check on the ARDL.Unlike the ARDL,the NARDL is able to detect cointegration relationship even if the time series is non-linear.The NARDL incorporates the possibility of asymmetric effects of positive and negative changes in the independent variables on the dependent variable.However,in if the asymmetric effects of the positive and negative changes of the explanatory variables are found to be same,then NARDL model becomes identical to the standard symmetric ARDL model.For this reason,our study computed the long-run and short-run NARDL as a robust check for the ARDL estimates.The ARDL is used in many studies but it is venerable and these studies may have generated wrong estimates if their time series is non-linear hence,the NARDL is preferred.Our study also utilizes the VECM Granger causality test to determine the causal relationships among the variables in this study.For prediction,our study used the Variance Decomposition Analysis to predict the future relationship between economic growth and carbon dioxide emission in the presence of biomass consumption and biotechnological innovation for the next fourteen?14?years.To determine whether or not the variables we employed to predict CO₂emission and economic growth are appropriate for such predictions,our study used the Artificial Neural Network to compute the Mean Squared Error?MSE?and the Regression value?R-squared?for this analysis.The results showed that the variables can predict both CO₂ emission and economic growth in China and Japan.Our study runs a series of diagnostic tests to check the robustness of our models.The tests show that we do not depart from significant standard assumptions except for heteroscedasticity problem.To correct for heteroscedasticity which may lead to inefficient estimations,our study followed literature and used?Newey&West,1986?standard errors with lags determined based on the Schwarz Information Criterion?SIC?for the estimated coefficients from the models.We used data mainly from the World Bank Indicators from 1970 to 2016.We investigated the nexus among biomass consumption,economic growth and carbon dioxide?CO₂?emission in China and Japan.We found empirical support for the growth hypothesis in China which means,biomass consumption and biotechnological innovations give rise to economic growth in China.We also found that biomass consumption and biotechnological innovations lead to a significant reduction in carbon dioxide?CO₂?emission in China.We found that biotechnology moderates biomass consumption and economic growth nexus as well as biomass consumption and CO₂ emission nexus in China.Our findings imply that China can achieve economic growth and environmental sustainability simultaneously when biomass consumption and biotechnological innovations are considered.However,we find a different result in Japan.Our study confirms the neutrality hypothesis in Japan which means,biomass consumption and biotechnological innovations do not have significant impact on economic growth and CO₂ emission in Japan.Again,our study examined the economic growth and CO₂ emission nexus within the extended form of the Environmental Kuznets Curve?EKC?theory when biomass consumption and biotechnology are incorporated in China.We found an inverted N-shaped path between CO₂emissions and economic growth in the long run when biomass consumption and biotechnology are incorporated in the extended form of the EKC in China.The theoretical justification for the inverted N-shaped is based on the process of economic shift from an agro-based,which is less polluted to an industrial economic base,as it is the case of China,which is relatively heavily polluted,then to a service sector which is also less polluted.The statistical significance of biomass consumption and biotechnological innovations underscores the critical need to develop these sectors of the Chinese economy in the quest of seeking sustainable economic growth.In Japan,our study confirms the N-shaped path between CO₂ emissions and economic growth in the long run when biomass consumption and biotechnology are incorporated in the economic growth-environmental pollution nexus.Our study is consistent with recent studies from other jurisdictions.Our study also investigated the nonlinear trend of biotechnological innovations within the Diffusion of Innovation Theory in China and Japan.In China,we confirmed the S-shaped pattern as postulated by Rogers's Diffusion of Innovation Theory.We found that China's biotechnological innovation has not reached the maturity stage where the rate of increase will flatten and then decline in line with the Diffusion of Innovation Theory.Our study shows that there is a huge number of biotechnological innovation adopters who have not yet adopted in China.Thus,China should continue to promote biotechnological innovations and application and this will bring efficiency to biomass production and usage in the country.In the case of Japan,our study failed to confirm the Diffusion of Innovation Theory as the figure does not depict an S-shape in biotechnological adoption in recent times.To get a broader picture,our study investigated the relationship between bioeconomy and economic growth in Japan and China.In Japan,we found that forestry and forestry products such as wood and woody products are the leading contributing bioeconomy subsectors to the Japanese economic growth.We find a unidirectional causality running from Japan's bioeconomy to GDP.This confirmed growth hypothesis which means that Japan should embark on expansionary bioeconomy policy to achieve sustainable economic growth.In China,our study found that the leading contributing bioeconomy subsectors to China's economic growth is the manufacturing subsector such as manufacture of wood and wood products.Like the case of Japan,this study confirmed the growth hypothesis in China.This also implies that China should undertake expansionary bioeconomy policy to drive sustainable economic growth.To this end,our study predicted the relationship between economic growth and carbon dioxide emission in the presence of biomass consumption and biotechnological innovation for the next fourteen?14?years.In general,we predict that biomass consumption and biotechnology will grow their influence on CO₂ emission and economic growth in both China and Japan.Specifically,we predict that by the end of 2030,biomass consumption and biotechnology will explain 5%of economic growth in China whilst the duo explain 12.3%of economic growth in Japan.We also predict that by the end of 2030,biomass consumption and biotechnology will explain 6.7%of CO₂ emission in China whilst the duo explain 4.6%of CO₂ emission in Japan.