Energy, Trade, Urbanization and Environmental Degradation Nexus in Sri Lanka: Bounds Testing Approach

Oruj Gasimli,Muhammad Shafiq,Ihtisham Ul Haq,Sisira Kumara Naradda Gamage,Prasanna Sisira Kumara Rajapakshe,Fadi Shihadeh

doi:10.3390/en12091655

Oruj Gasimli, Muhammad Shafiq + Show 4 more

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https://doi.org/10.3390/en12091655

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This study examines the nexus between energy, trade, urbanization and environmental degradation in Sri Lanka. The time series data has been checked for unit root problem along with unknown structural break. The bounds testing approach confirms the long-term relationship among carbon emissions, energy consumption, income, trade openness, and urbanization in the presence of structural break. The results of the study do not confirm the presence of the EKC (Environmental Kuznets Curve) hypothesis in Sri Lanka. This study finds that energy consumption leads to carbon emissions in both the long term and the short term. Trade openness is degrading environmental quality, as trade is responsible for the accumulation of carbon emissions in the atmosphere. The results of the study confirm that urbanization has been found to have significant and negative effect on carbon emissions. The study finds that the model is in equilibrium and the model will return to equilibrium from any external shock in less than two years. Policy measures are recommended for sustainable environment of the island.

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Climate change is one of the core issues in the modern world and has economic, cultural, and ecological impacts on the society
If we consider the structural break of carbon emissions, energy and urbanization, it seems that the Sri Lanka national environmental action plan 1992–1996 is responsible for these structural breaks
This study found a long-term relationship among carbon emissions, energy consumption, income level, trade openness and urbanization in the long term in Sri Lanka

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Introduction

Climate change is one of the core issues in the modern world and has economic, cultural, and ecological impacts on the society. Fossil fuels consumption has increased the carbon emission which is one of the main roots of global warming and climate change in the world. Carbon emissions are being used as a proxy for environmental degradation in empirical studies [1,2,3]. The reason for this is that carbon emissions have a historical link with economic growth. To find a correct answer to this critical question, many studies have been attempted to study the nexus between environmental degradation and economic growth along with other important variables which fit in the context [3,4,5,6,7,8].

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