Abstract:
Although the movement of people from rural to urban areas has caused the increased use
of energy, the abundance of water resources can be made into a form of renewable energy known as
hydroelectricity. As European countries are ranked as the first users and exporters of hydropower, the
production of renewable energy in developed countries such as the Nordic region has caused great
impacts on economic growth and human development. The importance of this paper is to investigate
the relationship between hydroelectricity and the Human Development Index by depending on some
variables such as urbanization, rule of law, corruption, trade openness, and GDP per capita from 2002
to 2021 in Nordic countries. The results were estimated depending on impulse response function
after conducting the Vector autoregressive model (VAR) model and Granger causality test. Results
showed a negative impact from hydro plants in the short run but a significant positive impact in the
long run in Nordic countries. The long-term sustainment of Human Development Index (HDI) is due
to policies limiting the immigration of labor as well as protection of energy use. Water batteries are
gaining popularity across Europe and their implementation is near mandatory.