1. Introduction

Rapid economic growth, accelerated industrialization, unplanned urbanization, and increasing consumption of natural resources have placed growing pressure on ecological sustainability, particularly in the MENA region. The Load Capacity Factor (LCF), defined as the ratio of biocapacity to ecological footprint, has emerged as a comprehensive indicator for assessing environmental sustainability, providing a more balanced measure than single-dimensional indicators. The MENA region is recognized as one of the world's most environmentally vulnerable areas, facing numerous challenges including severe water scarcity, desertification, soil erosion, air pollution, and degradation of marine and terrestrial ecosystems. The region is also highly vulnerable to global shocks due to its heavy dependence on oil revenues. Oil price volatility, international sanctions, and global financial and health crises profoundly affect these countries' economies, with profound environmental consequences. Despite the rich literature on environmental sustainability in this region, no study has yet systematically investigated the impact of uncertainty on ecological sustainability and its moderating role by identifying specific transmission channels. This research gap constitutes the primary motivation for the present study. This research contributes to the literature by examining the moderating role of uncertainty through four channels: economic structural changes, renewable energy consumption, urbanization, and trade liberalization.



2. Materials and Methods

This study utilizes panel data from 14 MENA countries (Jordan, Algeria, UAE, Iran, Tunisia, Kuwait, Iraq, Saudi Arabia, Oman, Qatar, Lebanon, Libya, Morocco, and Egypt) over the period 2001–2021. The dependent variable is the Load Capacity Factor (LCF), calculated as the ratio of biocapacity to ecological footprint. Independent variables include GDP per capita and its square (to test the Environmental Kuznets Curve hypothesis), economic structural changes (services sector value added to GDP ratio), renewable energy consumption (share of renewable energy in total final energy consumption), urbanization (share of urban population), trade liberalization (sum of exports and imports as percentage of GDP), and the World Uncertainty Index (WUI). Data were obtained from the Global Footprint Network, World Bank's World Development Indicators, and the World Uncertainty Index database (Ahir et al., 2022). All variables except WUI were transformed into natural logarithms. The theoretical framework is based on the STIRPAT model. The econometric methodology employs panel data models with fixed effects, selected based on the Hausman test. Given potential cross-sectional dependence, heteroskedasticity, and serial correlation, the Driscoll-Kraay standard errors method (Driscoll & Kraay, 1998) is utilized. The estimation strategy involves five separate models: a baseline model without interaction terms, and four interaction models between WUI and each of the four main variables (structural changes, renewable energy, urbanization, and trade liberalization) to identify the moderating channels through which uncertainty operates. Diagnostic tests including cross-sectional dependence (Pesaran, 2004), unit root tests (Levin-Lin-Chu and Fisher), and variance inflation factor (VIF) tests were conducted.



3. Results

The empirical findings confirm the Environmental Kuznets Curve hypothesis in MENA countries, as GDP per capita exhibits a negative and significant effect on LCF, while its squared term shows a positive and significant effect. Economic structural changes in favor of the services sector demonstrate a positive and significant effect on LCF, suggesting that transition from industrial to service-based economies reduces pressure on natural resources. Renewable energy consumption also exhibits a positive and significant effect, confirming that increasing the share of clean energy enhances ecological sustainability. Conversely, trade liberalization shows a negative and significant effect, supporting the Pollution Haven Hypothesis, which suggests that weak environmental regulations in MENA countries attract polluting industries. Urbanization demonstrates a negative and significant effect, indicating that rapid and uncontrolled urban growth increases pressure on natural resources and ecosystems. The World Uncertainty Index exhibits a direct negative and significant effect on LCF, highlighting the detrimental impact of global uncertainty on environmental sustainability. The results of the interaction models reveal that global uncertainty significantly moderates these relationships. The interaction term between WUI and economic structural changes is negative and significant, indicating that uncertainty weakens the positive effect of structural changes towards the services sector. The interaction between WUI and urbanization is also negative and significant, showing that urbanization's negative effects are intensified under conditions of global uncertainty. Similarly, the interaction between WUI and trade liberalization is negative and significant, revealing that the detrimental environmental effects of trade openness are amplified during periods of global instability. Most notably, the interaction term between WUI and renewable energy consumption is positive but not statistically significant, suggesting that the positive effect of renewable energy on ecological sustainability is not weakened under uncertainty conditions. This finding indicates that renewable energy serves as a resilient channel against global shocks, maintaining its environmental benefits even during periods of heightened uncertainty.



4. Conclusions and Policy Recommendations

This study provides robust empirical evidence on the direct and moderating effects of uncertainty on ecological sustainability in the MENA region. The key findings confirm the Environmental Kuznets Curve, demonstrate the positive contributions of structural changes and renewable energy, and reveal the negative impacts of trade liberalization, urbanization, and global uncertainty. Critically, global uncertainty weakens the beneficial effects of structural changes and intensifies the harmful effects of trade liberalization and urbanization, while the positive impact of renewable energy remains resilient. From a policy perspective, MENA countries should prioritize investments in renewable energy as an anti-fragile strategy that maintains environmental benefits regardless of global conditions. The development of regional green energy banks and cross-border electricity grids could facilitate this transition. Additionally, environmental regulatory institutions should be strengthened through the establishment of independent environmental trust funds financed through green taxes and pollution levies, ensuring their financial autonomy during budget-constrained periods. Trade policies need to be greened through the implementation of environmental standards and common external environmental tariffs. Urban planning should adopt climate-resilient approaches, emphasizing green public transportation, sustainable waste management, and green space development. Economic diversification strategies should incorporate protective mechanisms against global shocks. Future research should extend this analytical framework to other developing regions, employ alternative uncertainty indicators specific to the MENA context, and investigate additional transmission channels such as institutional quality and governance.