The impacts of conventional energies on environmental degradation: does Pakistan's economic and environmental model follow the Kuznets curve?

Abstract

This paper investigates the long-run dynamic association of carbon dioxide emissions and economic progress using the environmental Kuznets curve (EKC) hypothesis for Pakistan from 1972 to 2019. The other variables used along with the above indicators are urbanization, financial development, manufacturing, oil and gas energy consumption, and trade openness. The ARDL bounds testing methodology has been used and the results of the bound testing showed that a 1% increase in economic growth and financial development would increase CO₂ emissions in the country by 4.277 and 0.0787%, respectively. Urbanization and manufacturing would increase CO₂ emissions by 0.648 and 0.171%, respectively. Oil and gas energy consumption would also increase CO₂ emissions by 0.130 and 0.1935%, respectively. Trade openness is the only factor found in the study which decreases emissions in the country in the long run by -0.087%. Besides, findings confirm the EKC hypothesis with the reversed U-shaped relation for per capita CO₂ emissions and economic progress. However, the threshold point of the economy is approximately $2735.19 per capita, where economic progress can mitigate the impact of pollution lies beyond the study period, and GDP growth still increases emissions of the country and degrades the environment of Pakistan, as it is not yet reached at the turning level of the economy. As a result, GDP growth is still harming the economy of Pakistan as it has not yet reached the turning point of the economy.

Keywords: Conventional energies; Environmental Kuznets curve; Manufacturing; Pakistan; Trade openness; Urbanization.