LAUSR

Abstract Transportation considers the highly volatile sector that deteriorates the environment with carbon dioxide (CO2) and greenhouse gas (GHG) emissions. Such emissions are not only responsible for climate change, but also escalate the natural resource rents that are mediated with national scale economic indicators to diffuse the sustainability agenda across the globe. This study mainly focused on air-railways transportation, energy demand, bilateral aid flows, population density and environmental degradation in a panel of Next-11 countries, for the period of 1975–2015. The results confirmed the existence of environmental Kuznets curve (EKC) for air-railways passengers carried and per capita income with CO2 emissions, while there is a U-shaped relationship between railways passengers carried and GHG emissions. The monotonic increasing relationship of air transport passengers carried and bilateral aid flow is established with the natural resource rents. Railways goods transported, energy demand, and population density escalates CO2 emissions, while energy demand and population density further increase GHG emissions. The air transport freight has a positive relationship with the GHG emissions and negative relationship with the natural resource rents in a panel of countries. The causality estimates confirmed the bidirectional relationship of environmental factors and railways transportation with the per capita income, while there is a unidirectional causality running from energy to bilateral aid and growth. The results of variance decomposition analysis show that air transport passengers carried, energy demand, and bilateral aid is the key predictor that will largely influence CO2 emissions, GHG emissions, and natural resource rents, for the next ten year period.