The nexus between greenhouse gas emission, electricity production, renewable energy and agriculture in Pakistan

Abstract

Abstract The present study explores the nexus between agriculture value added, coal electricity, hydroelectricity, renewable energy, forest area, vegetable area and greenhouse gas (GHG) emission in Pakistan using annual data from 1981 to 2015. The Toda and Yamamoto approach explored that all the explanatory variables showed causality towards GHGs emission, agriculture value added, coal electricity, hydroelectricity, renewable energy and forest area. The unidirectional causality was observed from hydroelectricity to GHGs emission, renewable energy to GHG emission, forest area to GHG emission, forest area to coal electricity, hydroelectricity to forest area, and vegetable area to forest area. The bi-directional causality was observed between agriculture value added and forest area. The VECM results confirmed the long run causality of GHG emission, agriculture value added, and forest area. The annual convergence from short to long-run equilibrium was 36.8%. The Fully Modified Ordinary Least Square (FMOLS) and Canonical Cointegration Regression (CCR) showed the reduction in GHG emission due to increase in agriculture value added (0.124%), renewable energy (1.086%), vegetable area (0.153%) and forest area (0.240%). The government should increase the agriculture value added, renewable energy, vegetable and forest area because all these variables could off-set the GHG emission increase due to coal electricity and hydroelectricity.