Fiscal policy and environment: a long-run multivariate empirical analysis of ecological footprint in Pakistan.

Samia Zahra,Dilawar Khan,Muhammad Nouman

doi:10.1007/s11356-021-15665-w

Abstract

The ecological footprint attempts to quantify human impact on nature and its resources necessary to satisfy human needs. This research study explores the long-run implications of fiscal policy on the ecological footprint in Pakistan empirically, keeping different socio-economic factors into consideration. Per annum, time series data have been collected between 1976 and 2018, and the ARDL model is applied to investigate this long-run and short-run association. The conclusion of ARDL model shows that a 1% increase in public development expenditures, total population, GDP, and energy consumption increase 0.19, 2.17, 1.16, and 2.17% ecological footprint, respectively, in Pakistan between 1976 and 2018 vice versa. However, it is also derived that a 1% increase in public tax and non-tax revenue and current public expenditures (in health, education, and other social sectors) shrink 0.36 and 0.013% ecological footprint in the long run in Pakistan. For policy implications, these results focus on practical fiscal policy significance to achieve environmental targets in Pakistan, suggesting an increase in public current expenditures in public and social sectors and increasing public revenue by expanding the tax base, which will ultimately reduce ecological footprint in the long run in Pakistan.

Highlights

Each country has its impact on the environment but anthropogenic emissions are no longer remain domestic but are being transferred through international trade which leads to environmental convergence
Time-series data is utilized to determine the impact of fiscal policies, economic growth, and energy consumption for the period of 1976 to 2018 in Pakistan
According to Engle and Granger (1987) when all the series of data is integrated at the same order of integration, Johansen co-integration test (1988, 1991) is an appropriate tool to determine the variable movement of data in the long run

Summary

Introduction

Each country has its impact on the environment but anthropogenic emissions are no longer remain domestic but are being transferred through international trade which leads to environmental convergence This shows that environmental degradation is being transferred between different income groups of the world which validate the existence of environmental convergence. In the current era; ecological footprint is used as one of the important measures of sustainability; exhibits how much bio-capacity is required for human existence and how much is currently available. This measure is used to predict the human burden on the environment which is created every day. It is important to consider that many fiscal instruments can be used to achieve environmental cum economic objectives, among all of them, taxes and public spending as fiscal policy are the most important fiscal instruments (Postula and Moroz; 2020)

Methods

Results

Conclusion