Abstract
Climate change is an obstacle in the path of sustainable economic development. One of the key findings in the economics literature is that the use of natural resources contributes to real income per capita. However, its environmental consequences should not be ignored. This paper examines the nexus among CO2 emission, real income, and natural resources, by incorporating urbanization, and trade in Pakistan from 1971 to 2017. The Auto-Regressive Distributive Lag (ARDL) and Vector Error Correction (VECM) models are used for analyzing time-series data. The empirical findings infer that the use of natural resources accelerates the rate of CO2 emission in Pakistan which worsens environmental quality. In addition, the Environmental Kuznets Curve (EKC) is confirmed in the presence of natural resource use. Besides, urbanization improves environmental quality through mitigating the level of CO2 emission. Moreover, the feedback hypothesis is found between the use of natural resources and CO2 emission. Additionally, bidirectional causality is found between urbanization and the use of natural resources. Overall, this study supports formulating new policies to overcome environmental degradation through energy-saving technologies.
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