Among others, environmental degradation has emerged as a serious challenge to be tackled on an urgent basis, worldwide. South Asia, like many other countries, is facing a trade-off between environment and development, therefore environmental degradation has proved to be a threat to the entire South Asian region’s sustainable economic growth. Although various factors are responsible for environmental degradation in these countries, the study underwrites the evolving thought of the Environment Kuznets Curve (EKC) by incorporating green aid as a moderating factor and the contribution of economic growth, green aid, population density, and institutional quality are taken as explanatory variables in determining the path and levels of environmental degradation in South Asian region. Panel Quantile Regression Autoregressive Distributed Lag Model (PQARDL) has been employed for the quantitative analysis for the period of 2000-2021. The long run, short run, and convergence coefficients have been estimated. The long-run results bared that economic expansion, green aid, the interaction of economic expansion square with green aid, and quality of institutions have an affirmative and contrarily, the square of economic growth, interaction of economic growth and green aid and population density are found adversely related to degradation of the environment. At the same time, economic growth, the interaction of economic growth with green aid, and population density are negatively concomitant with environmental degradation in the short run. Whereas, an affirmative and significant association has been found between squared economic growth, green aid, the interaction of squared economic growth with green aid, and institutional quality with environmental deterioration in the short run. Likewise, the coefficient of convergence speed is found to be significant but negative. The upshots of the study suggest that attracting green aid by growing international collaboration with international agencies and organizations, strengthening institutional quality, and adopting sustainable urbanization strategies would play the role of environmental safeguard without hurting economic growth in South Asian countries.

Keywords: Green Aid, Environmental Degradation, Environment and Growth, South Asia, Panel Data Model.