Nexus Between Environmental Quality And Economic Sustainability: Evidence From Pakistan Based On Time Series Data

Abstract

The global ecological and environmental situation is deteriorating due to fuel consumption to produce energy and exploitation of natural resources to adjust to the growing population and their increasing demand. Pakistan's ecological quality is steadily declining because more and more forest land is exploited for industrial and residential development. A time series dataset from 1991 to 2021, culled from the World Development Index, is used to evaluate the impact of economic growth, capital stock, population growth rate, and energy use on Pakistan's environmental quality. The study is focused on exploring the long- and short-term affiliation among the variables and, later, in finding out the shock wave influencing the underline variables. The Johansen reported that a one percent increase in the population, economic development, and capital reduces the environmental quality by 0.04%, 2.28 %, and 2.17 %, respectively. However, the Local Projection with Impulse Response reported that one standard deviation shock of concerned variables positively and significantly affects the future environmental quality. It is the utmost responsibility of the government on the legislative forum to design the policy to mitigate environmental damages. The government should promote green energy/ renewable resources to reduce fossil fuel utilization.