Does emission of carbon dioxide is impacted by urbanization? An empirical study of urbanization, energy consumption, economic growth and carbon emissions - Using ARDL bound testing approach

Abstract

In modern era, where urbanization is at its peak, has resulted a significant economic-gap among rural and urban residents across developing nations, and had a considerable impact on CO2 emission. The current study investigated that how urbanization affects emission of CO2 in Pakistan. To achieve the expected long- and short run goals, we utilized the better suited approach of Auto-regressive Distributed Lag (ARDL) approach. Similarly, causality investigation was accomplished through vector error correction model (VECM). The current outcomes from unit root tests verified the stationarity of the selected variables. Whereas, ARDL outcomes endorsed the relationship among the selected variables of the model. We observed that emission of CO2 goes-up with increase in urbanization. Similarly, VECM endorsed the existence of SR unidirectional causal connection towards the emission of CO2 from urbanization. In short-run, however, economic growth is one-way, Granger produces CO2 emissions. As a result, the effect of short-run results on CO2 emissions coming from economic growth and urbanization is supported and validated by these causalities. In a nutshell, government action is critical in developing energy-efficient and environmentally sustainable ways to reduce CO2 emissions and improve the environment.