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Research article - Peer-reviewed, 2022

Environmental quality and the asymmetrical nonlinear consequences of energy consumption, trade openness and economic development: prospects for environmental management and carbon neutrality

Khan, Imran; Lei, Hongdou; Shah, Ashfaq Ahmad; Khan, Inayat; Baz, Khan; Koondhar, Mansoor Ahmad; Abu Hatab, Aseem

Abstract

Economic expansion gives rise to modern and energy-efficient technologies and, thus, contributes to a decline in energy usage. Developing countries, including Pakistan, require tremendous efforts to sustain economic growth. However, to attain economic growth, these countries have to cope with greenhouse gas (GHG) emissions and other environmental problems. This research focuses primarily on the asymmetric impacts of energy consumption and economic growth on Pakistan’s environmental quality. Accordingly, secondary data spanning from 1971 to 2018 was used, and carbon dioxide emission (CO2) was considered a target variable (a proxy for environmental quality), whereas energy consumption (E) and gross domestic product (GDP) as a proxy for economic growth, and trade accessibility (TR) and foreign direct investment (FDI) as control variables. The nonlinear autoregressive distributed lag (NARDL) approach is used to verify the asymmetric co-integration between the variables selected. Moreover, to examine data stationarity and nonlinearity, we used the Zivot–Andrews structural break unit root and BDS tests, respectively. The findings confirmed the asymmetric and symmetric co-integrations among the considered variables. In addition, the causality analysis reveals that only negative shocks to TR have an effect on CO2 emissions. Similarly, negative shocks to FDI asymmetrically cause CO2 emissions. Meanwhile, GDP symmetrically affects CO2 emissions. Finally, a neutral causal response was observed between E and CO2 emissions. These findings have policy implications in terms of environmental management and carbon neutrality, and they serve as a baseline for future research.

Keywords

Carbon neutrality; CO2 emissions; Economic expansion; Energy usage; NARDL approach; Trade openness

Published in

Environmental Science and Pollution Research
2022, volume: 29, number: 10, pages: 14654-14664

Authors' information

Khan, Imran
Nanjing University of Information Science and Technology
Lei, Hongdou
Columbia University
Shah, Ashfaq Ahmad
Nanjing University of Information Science and Technology
Khan, Inayat
Northwestern Polytechnical University
Baz, Khan
China University of Geosciences
Koondhar, Mansoor Ahmad
Northwest A&F University
Swedish University of Agricultural Sciences, Department of Economics

Sustainable Development Goals

SDG8 Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
SDG17 Strengthen the means of implementation and revitalize the global partnership for sustainable development
SDG12 Ensure sustainable consumption and production patterns

UKÄ Subject classification

Economics

Publication Identifiers

DOI: https://doi.org/10.1007/s11356-021-16612-5

URI (permanent link to this page)

https://res.slu.se/id/publ/113998