Environmental Kuznets Curve for carbon emissions in Pakistan: An empirical investigation

Abstract

This study investigates the relationship between carbon emissions, income, energy consumption, and foreign trade in Pakistan for the period 1972–2008. By employing the Johansen method of cointegration, the study finds that there is a quadratic long-run relationship between carbon emissions and income, confirming the existence of Environmental Kuznets Curve for Pakistan. Moreover, both energy consumption and foreign trade are found to have positive effects on emissions. The short-run results have, however, denied the existence of the Environmental Kuznets Curve. The short-run results are unique to the existing literature in the sense that none of the long-run determinants of emissions is significant. The contradictory results of short- and long-run give policy makers the opportunity to formulate different types of growth policies for the two terms taking environmental issues into consideration. In addition, the uni-directional causality from growth to energy consumption suggests that the policy makers should not only focus on forecasting future demand for energy with different growth scenarios but also on obtaining the least cost energy. Furthermore, the absence of causality from emissions to growth suggests that Pakistan can curb its carbon emissions without disturbing its economic growth.