Impact of subsectors of agriculture and economic growth on CO2 emissions in Pakistan: evidence from Environmental Kuznets Curve.

Abstract

Modernization produces carbon dioxide (CO2) emissions but is also able to achieve sustainable agriculture growth by introducing the concept of renewable energy into the agriculture sector, and through this process reduce the CO2 emissions in the country. The main objective of this research is to check the environmental Kuznets curve hypothesis with CO2 emissions and economic development in renewable energy and agriculture subsectors such as fisheries and crop production in Pakistan. This study covers the time period 1984 to 2020. We have applied the autoregressive distribution lag (ARDL) bound test. The results indicate the existence of long-term association among all variables in the model. The result of co-integration in the short run shows a negative relationship between CO2 emissions and crop production in the current time period, and it shows a positive correlation with the first lag of CO2 emission, which means that current crop production reduces the CO2 emissions by 32% during a year, while in the lag period, it will increase in the short run. In the long run, a 1% increase in crop production will reduce the CO2 emission by 86%. Renewable energy shows a negative relation with CO2 emissions in the short run; a 1% increase in renewable energy will reduced the CO2 by 0.017%. Our results support the existence of the EKC hypothesis for Pakistan. In light of the findings, it is suggested that policy makers should focus more on renewable energy to decrease the level of CO2 as much as possible. Moreover, the government must provide subsidies for machines used for cropping and give special attention to subsectors such as livestock and fisheries.