A Nonlinear Analysis of the Relationship between Urbanization and Carbon Dioxide Emissions in Pakistan: A Fresh Evidence

Abstract

The nature of the linkage between urbanization and carbon dioxide emissions has been a point of concern among researchers, policy makers and environmentalists for the last three decades. Due to the rapid economic growth and social progress in urban areas, a considerable part of rural labor force have migrated to urban areas for jobs, education and health facilities. It results in significant increase in energy requirements in urban areas that have caused several challenges related to ecological pollution. Pakistan is one of the developing nations with a rapid rate of urbanization as well as varying economic growth rate. This study analyzes the relationship between urbanization and carbon dioxide emissions in the presence of institutional quality, foreign direct investment and access to electricity. For analysis purpose, the study uses nonlinear ARDL estimation technique on Pakistani data for the period 1984-2020. The results show that the partial sum of positive/negative changes in urbanization are positively/negatively connected with carbon dioxide emissions. Furthermore, foreign direct investment inflows cause environmental degradation, while access to electricity is positively connected with carbon dioxide emissions in the long run. But, institutional quality considerably declines carbon dioxide emissions in Pakistan. The study concludes that positive part of urbanization has more significant effect than the negative counterpart. The study recommends that there is a need to promote economic friendly energy consumption pattern for improving the quality of environment in Pakistan.