Impact of Environmental Degradation and Energy Consumption on Growth: An Empirical Analysis

Abstract

Pakistan’s status as a nation like many developing economies, environmental degradation, and accelerating growth, investigates the impact of environmental degradation along with energy consumption on growth for policy implications. To discover the short and long period associations in these factors, the ARDL approach is used the data from 1981 to 2016. Estimates of bounds test and the value of ECM term validate the presence of significant short and long-run associations amongst these variables i.e., environmental degradation exerts negative impact on growth, whereas, energy consumption, capital formation, and effective labour force have positive effects on growth in Pakistan. Results of the study propose that authorities should adopt such types of policies that aim at increasing energy consumption, raising capital formation, and lessening carbon dioxide emissions so that environmental deterioration could be controlled and accelerated economic growth could be achieved in Pakistan. Findings of this study may be imperative for researchers, authorities and decision makers in energy policy, environmental policy and growth.