Dynamic Relationship between Urbanization, Energy Consumption and Environmental Degradation in Pakistan: Evidence from Structure Break Testing

Research Article

This study investigates the Carbon dioxide emission-urbanization-growth nexus in Pakistan by taking time series data from the period of 1972 to 2013. The study applied three approaches of co-integration (ARDL bounds test, Johansen and Juselius and Gregory and Hansen structural break test) to confirm the valid long-run positive interaction between carbon dioxide emission and urbanization. The robustness of cointegrating vectors are further checked using FMOLS and DOLS tests and the results validate the long-run coefficients. The results of VDM exhibit the uni-directional causality between carbon dioxide emission and urbanization running from urbanization to carbon dioxide emission. It was therefore noted that policies in which the government needs to allocate greater portion to environmental safeguard and energy saving components in the planning, such as encouraging energy saving framework and creating a chain of increasing indicators of environmental protection and energy saving.

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