Impact of sectoral mix on environmental sustainability: How is heterogeneity addressed?

Abstract

As the net of environmental challenges becomes tight, policymakers and higher authorities are trying to find the best alternative to deal with these problems. Therefore, the globe has introduced several initiatives to become sustainable, but developing economies have other priorities for their nations, such as hunger, poverty, and economic progress. However, Pakistan is a leading example that faces several issues besides environmental pollution. By keeping everything constant, this study seeks to present sustainability’s leading factors in Pakistan for the chosen period 1974–2018. This empirical research incorporates a series of estimators that help examine the effects of income, urbanization, technology, monetary progress, and industrial and agriculture sectors on environmental sustainability. Similarly, the obtained findings show the inclusion of all environmental determinants in carbon emissions (CO2), except industrial & agriculture industries. Both sectors significantly show a decline in emissions by 0.163%, 0.162% & 0.165% and 0.090%, 0.095% & 0.093%, respectively. In addition, the moderate role of financial development does not show a significant change in agriculture & industrial behaviour towards sustainability. Thus, the financial sector does not perform well in reducing environmental pressure. Hence, higher authorities must reshape their economic policies and ensure the green allocation of financial resources that help attain sustainability. In concluding remarks, financial resources are not allocated to sustainable activities. Thus, other developing economies can use this research as an example to allocate their financial resources to domestic sectors.