The dynamic impacts of CO2 emissions from different sources on Pakistan’s economic progress: a roadmap to sustainable development

Carbon dioxide emissions have been the primary source of extreme environmental pollution and have detrimental consequences on human life, irrespective of an economy being developed or underdeveloped. For the developing economies, in particular, it is imperative to reduce such emissions in order to sustain the growth of the respective economies. However, for designing appropriate emission reduction policies, it is appropriate to identify the sectors which contribute the most to carbon dioxide emissions and dampen the growth of overall economy. Against this background, the key intention of this study was to examine the influence of carbon dioxide emissions generated from various sources on the economic progress in Pakistan between 1971 and 2017. This study is important for Pakistan to sustain its economic progress and enable the nation to comply with commitments of the Paris Agreement and Sustainable Development Goals. The econometric analysis conducted in this study considers a nonlinear autoregressive distributed lag model which is applied to ascertain the short- and long-run economic growth impacts associated with positive and negative shocks to CO2 emissions generated from various sources. The choice of this model is driven by its capacity to perform an asymmetric analysis which is relevant for suitable policy-making purposes. The overall results, in a nutshell, reveal that carbon dioxide emissions from Pakistan’s transportation sector influence the country’s economic progress. Positive shocks to such carbon dioxide emissions are originate to reduce economic progress in the long run while negative shocks are evidenced to boost economic growth both in the short and long run. In contrast, carbon dioxide emissions from other major sectors are found to be ineffective in influencing Pakistan's economic growth both in the short and long run. Hence, keeping into consideration the prospects of attaining sustainable economic growth, the Pakistan government must prioritize the implementation of CO2 emissions-inhibiting policies within the transportation sector. Simultaneously, the traditional fossil fuel dependency within this sector should also be phased out.