Turning the tide on environmental poverty in Ghana: Does financial inclusion matter?

Environmental deprivation is a significant setback to the achievement of Sustainable Development Goals (SDGs). Households' investment in and adoption of environmental innovation products and services is constrained by access to finance and financing instruments. Using a multidimensional framework, this study examines the impact of financial inclusion on environmental poverty from a developing country setting. With a two-wave socioeconomic panel survey on Ghana, we develop a multidimensional financial inclusion and environmental poverty index based on dwelling, water, sanitation facilities, and energy. This study employs a number of robust techniques, including the Lewbel two-stage least squares and propensity score matching techniques. The results show that being financially included decreases households' probability of being environmentally poor by about 4.2 to 5.1 %. This result is consistent with different cutoffs of financial inclusion, multidimensional environmental poverty, and other population subgroups. This study also observes that risk aversion and depression act as possible mediators for financial inclusion's negative impact on environmental poverty. These findings provide policy support for the improvement in financial inclusion strategies to solve environmental poverty issues for a safe, healthy, and sustainable environment toward the achievement of SDGs.