Abstract
In this study, the effects of financial inclusion (FI), agricultural innovation (AI), trade (TR), and forest rent (FR) on carbon dioxide emissions (CO2), economic growth (Y), and ecological footprint (EFP) for Pakistan from 1970 to 2017 are examined using symmetric and asymmetric cointegration approaches. These links are investigated using linear and non-linear autoregressive distributive lag (NARDL) techniques. In contrast to the asymmetry results, the symmetric results revealed no cointegration among the variables over the long run. Moreover, asymmetry results from the Y-model indicated that a positive shock in AI significantly affects Y over the long run while raising it over the short term. Furthermore, CO2 rises in the wake of positive shocks like AI, Y, and FR but falls in the wake of adverse shocks. A negative shock to FI raises CO2 temporarily, whereas a negative shock to FR causes CO2 emissions to fall over time. According to the EFP-model, long-term EFP is decreased by both positive shocks to AI and adverse shocks to FR with one-period lags. On the other hand, positive shocks to FI and FR cause the short-term EFP to rise. In addition to a bidirectional causal relationship between Y, EFP, and FI, we found a one-way causative relationship between Y, FR, AI, CO2, and EFP. The FMOLS estimator also supports NARDL estimations. The key recommendations to help Pakistan keep its environment and economy are to enhance green mechanization in agriculture, allocate adequate research and development funds, and initiate integrated environmental and economic growth policies by relevant institutions.
Graphical abstract
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Data availability
References
Abubakar SM (2021) Pakistan 5th most vulnerable country to climate change: Report. Business Recorder. https://www.dawn.com/news/1520402. Accessed 7 January 2023
Ahmad M, Khattak SI (2020) Is aggregate domestic consumption spending (ADCS) per capita determining CO2 emissions in South Africa? A new perspective. Environ Resour Econ 75:529–552. https://doi.org/10.1007/s10640-019-00398-9
Ahmed Z, Zafar MW, Ali S, Danish (2020) Linking urbanization, human capital, and the ecological footprint in G7 countries: an empirical analysis. Sustain Cities Soc 55:102064. https://doi.org/10.1016/J.SCS.2020.102064
Al-Mulali U, Ozturk I (2015) The effect of energy consumption, urbanization, trade openness, industrial output, and the political stability on the environmental degradation in the MENA (Middle East and North African) region. Energy 84:382–389. https://doi.org/10.1016/J.ENERGY.2015.03.004
Alcántara V, Padilla E (2009) Input–output subsystems and pollution: an application to the service sector and CO2 emissions in Spain. Ecol Econ 68:905–914. https://doi.org/10.1016/J.ECOLECON.2008.07.010
Alvarado R, Ortiz C, Jiménez N et al (2021) Ecological footprint, air quality and research and development: the role of agriculture and international trade. J Clean Prod 288:125589. https://doi.org/10.1016/J.JCLEPRO.2020.125589
Alvarado R, Ponce P, Alvarado R et al (2019) Sustainable and non-sustainable energy and output in Latin America: a cointegration and causality approach with panel data. Energy Strateg Rev 26:100369. https://doi.org/10.1016/J.ESR.2019.100369
Arnaboldi F, Rossignoli B (2015) Financial innovation in banking. In: Bank Risk, Governance and Regulation (pp. 127–162). https://doi.org/10.1057/9781137530943_5
Bara A, Mudzingiri C (2016) Financial innovation and economic growth: evidence from Zimbabwe. Invest Manag Financ Innov 13:65–75. https://doi.org/10.21511/imfi.13(2).2016.07
Beck T, Chen T, Lin C, Song FM (2016) Financial innovation: the bright and the dark sides. J Bank Financ 72:28–51. https://doi.org/10.1016/j.jbankfin.2016.06.012
Bello MO, Solarin SA, Yen YY (2018) The impact of electricity consumption on CO2 emission, carbon footprint, water footprint and ecological footprint: the role of hydropower in an emerging economy. J Environ Manag 219:218–230. https://doi.org/10.1016/J.JENVMAN.2018.04.101
Ben Jebli M, Ben Youssef S (2017) Renewable energy, arable land, agriculture, CO2 emissions, and economic growth in Morocco. Munich Personal RePEc Archive. https://econpapers.repec.org/RePEc:pra:mprapa:76798. Accessed 15 Mar 2023
Bhattacharyya SC (2012) Energy access programmes and sustainable development: a critical review and analysis. Energy Sustain Dev 16:260–271
Bildirici M, Gokmenoglu SM (2020) The impact of terrorism and FDI on environmental pollution: evidence from Afghanistan, Iraq, Nigeria, Pakistan, Philippines, Syria, Somalia, Thailand and Yemen. Environ Impact Assess Rev 81:106340. https://doi.org/10.1016/j.eiar.2019.106340
Brown RL, Durbin J, Evans JM (1975) Techniques for Testing the Constancy of Regression Relationships Over Time. J R Stat Soc Ser B Methodol 37(2):149–163. https://doi.org/10.1111/j.2517-6161.1975.tb01532.x
Chaudhry QUZ (2017) Climate change profile of Pakistan. Asian Development Bank. https://doi.org/10.22617/TCS178761
Chowdhury MAF, Shanto PA, Ahmed A, Rumana RH (2021) Does foreign direct investments impair the ecological footprint? New evidence from the panel quantile regression. Environ Sci Pollut Res Int 28:14372–14385. https://doi.org/10.1007/S11356-020-11518-0
Cima E (2021) Can trade work for the environment? In: From exception to promotion. Brill | Nijhoff, pp 212–277
Cole CV, Duxbury J, Freney J et al (1997) Global estimates of potential mitigation of greenhouse gas emissions by agriculture. Nutr Cycl Agroecosystems 49:221–228. https://doi.org/10.1023/a:1009731711346
del Mar Martínez-Bravo M, Martínez-del-Río J, Antolín-López R (2019) Trade-offs among urban sustainability, pollution and livability in European cities. J Clean Prod 224:651–660. https://doi.org/10.1016/j.jclepro.2019.03.110
Demena BA, Afesorgbor SK (2020) The effect of FDI on environmental emissions: evidence from a meta-analysis. Energy Policy 138:111192. https://doi.org/10.1016/j.enpol.2019.111192
Eckstein D, Kreft S (2020) Global climate risk index 2021. Who suffers most from extreme weather events? Think Tank & Research. http://germanwatch.org/en/download/8551.pdf
Engle RF, Granger CWJ, Engle RF, Granger CWJ (1987) Co-integration and error correction: representation, estimation, and testing. Econometrica 55:251–276
Essandoh OK, Islam M, Kakinaka M (2020) Linking international trade and foreign direct investment to CO2 emissions: any differences between developed and developing countries? Sci Total Environ 712. https://doi.org/10.1016/j.scitotenv.2019.136437
Galli A, Giampietro M, Goldfinger S et al (2016) Questioning the ecological footprint. Ecol Indic 69:224–232. https://doi.org/10.1016/J.ECOLIND.2016.04.014
Global Footprint Network (2021) Open data platform. In: York Univ. https://data.footprintnetwork.org/index.html#/. Accessed 16 Jun 2022
Godil DI, Sharif A, Rafique S, Jermsittiparsert K (2020) The asymmetric effect of tourism, financial development, and globalization on ecological footprint in Turkey. Environ Sci Pollut Res 27:40109–40120. https://doi.org/10.1007/s11356-020-09937-0
Grabowski R, Self S (2007) Economic development and the role of agricultural technology economic. Agric Econ 36:395–404
Hafeez M, Yuan C, Shah WUH et al (2020) Evaluating the relationship among agriculture, energy demand, finance and environmental degradation in one belt and one road economies. Carbon Manag 11:139–154. https://doi.org/10.1080/17583004.2020.1721974
Hajilary N, Shahi A, Rezakazemi M (2018) Evaluation of socio-economic factors on CO2 emissions in Iran: factorial design and multivariable methods. J Clean Prod 189:108–115. https://doi.org/10.1016/J.JCLEPRO.2018.04.067
Hussain J, Zhou K (2022) Globalization, industrialization, and urbanization in Belt and Road Initiative countries: implications for environmental sustainability and energy demand. Environ Sci Pollut Res 1:1–19. https://doi.org/10.1007/S11356-022-21520-3
Jahanger A, Usman M, Balsalobre-Lorente D (2022) Linking institutional quality to environmental sustainability. Sustain Dev 30:1749–1765. https://doi.org/10.1002/sd.2345
Jiang L, He S, Zhong Z et al (2019) Revisiting environmental Kuznets curve for carbon dioxide emissions: the role of trade. Struct Chang Econ Dyn 50:245–257. https://doi.org/10.1016/j.strueco.2019.07.004
Johamen S, Juselius K (1990) Maximum likelihood estimation and inference on cointegration-with applications to the demand for money. Oxf Bull Econ Stat 52(2):169–210
Johansen S (1988) Statistical analysis of cointegration vectors. J Econ Dyn Control 12:231–254. https://doi.org/10.1016/0165-1889(88)90041-3
Khan MK, Khan MI, Rehan M (2020) The relationship between energy consumption, economic growth and carbon dioxide emissions in Pakistan. Financ Innov 6:1–13. https://doi.org/10.1186/s40854-019-0162-0
Khurshid N, Khurshid J, Shakoor U, Ali K (2022) Asymmetric effect of agriculture value added on CO2 emission: does globalization and energy consumption matter for pakistan. Front Energy Res 10:1796. https://doi.org/10.3389/FENRG.2022.1053234
Köhl M, Ehrhart HP, Knauf M, Neupane PR (2020) A viable indicator approach for assessing sustainable forest management in terms of carbon emissions and removals. Ecol Indic 111:106057. https://doi.org/10.1016/J.ECOLIND.2019.106057
Kolcava D, Nguyen Q, Bernauer T (2019) Does trade liberalization lead to environmental burden shifting in the global economy? Ecol Econ 163:98–112. https://doi.org/10.1016/j.ecolecon.2019.05.006
Kongbuamai N, Bui Q, Yousaf HMAU, Liu Y (2020) The impact of tourism and natural resources on the ecological footprint: a case study of ASEAN countries. Environ Sci Pollut Res 27:19251–19264. https://doi.org/10.1007/s11356-020-08582-x
Koseoglu A, Yucel AG, Ulucak R (2022) Green innovation and ecological footprint relationship for a sustainable development: evidence from top 20 green innovator countries. Sustain Dev. https://doi.org/10.1002/sd.2294
Lanre Ibrahim R, Bello Ajide K, Usman M, Kousar R (2022) Heterogeneous effects of renewable energy and structural change on environmental pollution in Africa: do natural resources and environmental technologies reduce pressure on the environment? Renew Energy 200:244–256. https://doi.org/10.1016/j.renene.2022.09.134
Laslett D, Urmee T (2020) The effect of aggregation on city sustainability rankings. Ecol Indic 112:106076. https://doi.org/10.1016/j.ecolind.2020.106076
Liu X, Zhang S, Bae J (2017) The impact of renewable energy and agriculture on carbon dioxide emissions: investigating the environmental Kuznets curve in four selected ASEAN countries. J Clean Prod 164:1239–1247. https://doi.org/10.1016/j.jclepro.2017.07.086
Mahmood H, Alkhateeb TTY, Al-Qahtani MMZ et al (2019) Agriculture development and CO2 emissions nexus in Saudi Arabia. PLoS One 14:e0225865. https://doi.org/10.1371/JOURNAL.PONE.0225865
Moghaddam SM, Nazari MR, Soufizadeh S (2018) Integrating ecological impact indicators into economic restructuring decisions. Ecol Indic 89:327–335. https://doi.org/10.1016/J.ECOLIND.2018.01.045
Nizam R, Karim ZA, Rahman AA, Sarmidi T (2020) Financial inclusiveness and economic growth: new evidence using a threshold regression analysis. Econ Res Istraz 33:1465–1484. https://doi.org/10.1080/1331677X.2020.1748508
Odhiambo NMN (2009) Energy consumption and economic growth nexus in Tanzania: an ARDL bounds testing approach. Energy Policy 37:617–622. https://doi.org/10.1016/j.enpol.2008.09.077
Olanipekun IO, Olasehinde-Williams GO, Alao RO (2019) Agriculture and environmental degradation in Africa: the role of income. Sci Total Environ 692:60–67. https://doi.org/10.1016/J.SCITOTENV.2019.07.129
Ozturk I, Acaravci A (2013) The long-run and causal analysis of energy, growth, openness and financial development on carbon emissions in Turkey. Energy Econ 36:262–267. https://doi.org/10.1016/j.eneco.2012.08.025
Pesaran MH, Shin Y, Smith RJ (2001) Bounds testing approaches to the analysis of level relationships. J Appl Econom 16:289–326. https://doi.org/10.1002/jae.616
PEC (2015) Ministry of finance, government of Pakistan. Government of Pakistan Ministery of Finance. https://www.finance.gov.pk/survey_1718.html. Accessed 15 Mar 2023
Pesaran MH, Smith R (1995) Estimating long-run relationships from dynamic heterogeneous panels. J Econom 68:79–113. https://doi.org/10.1016/0304-4076(94)01644-F
Phillips PCB, Hansen BE (1990) Statistical inference in instrumental variables regression with i(1) processes. Rev Econ Stud 57:99–125. https://doi.org/10.2307/2297545
Ponce P, Alvarado R (2019) Air pollution, output, FDI, trade openness, and urbanization: evidence using DOLS and PDOLS cointegration techniques and causality. Environ Sci Pollut Res Int 26:19843–19858. https://doi.org/10.1007/S11356-019-05405-6
Ramzan M, Iqbal HA, Usman M, Ozturk I (2022) Environmental pollution and agricultural productivity in Pakistan: new insights from ARDL and wavelet coherence approaches. Environ Sci Pollut Res 29:28749–28768. https://doi.org/10.1007/s11356-021-17850-3
Rehman A, Jingdong L, Shahzad B et al (2015) Economic perspectives of major field crops of Pakistan: an empirical study. Pacific Sci Rev B Humanit Soc Sci 1:145–158. https://doi.org/10.1016/j.psrb.2016.09.002
Rehman A, Ma H, Ahmad M et al (2021a) An asymmetrical analysis to explore the dynamic impacts of CO2 emission to renewable energy, expenditures, foreign direct investment, and trade in Pakistan. Environ Sci Pollut Res 28:53520–53532. https://doi.org/10.1007/s11356-021-14537-7
Rehman A, Ma H, Ozturk I (2021b) Do industrialization, energy importations, and economic progress influence carbon emission in Pakistan. Environ Sci Pollut Res 28:45840–45852. https://doi.org/10.1007/S11356-021-13916-4/TABLES/8
Saini N, Singhania M (2016) Determinants of FDI in developed and developing countries: a quantitative analysis using GMM Abstract. J Econ Stud 45:348–382. https://doi.org/10.1108/JES-07-2016-0138
Scherer L, Behrens P, de Koning A et al (2018) Trade-offs between social and environmental Sustainable Development Goals. Environ Sci Policy 90:65–72. https://doi.org/10.1016/J.ENVSCI.2018.10.002
Schmidt-Traub G, Kroll C, Teksoz K et al (2017) National baselines for the Sustainable Development Goals assessed in the SDG index and dashboards. Nat Geosci 10:547–555. https://doi.org/10.1038/NGEO2985
Shahbaz M, Sinha A (2019) Environmental Kuznets curve for CO2 emissions: a literature survey. J Econ Stud 46:106–168. https://doi.org/10.1108/JES-09-2017-0249
Shin Y, Yu B, Greenwood-Nimmo M (2014) Modelling asymmetric cointegration and dynamic multipliers in a nonlinear ARDL framework. Festschrift in Honor of Peter Schmidt. Springer, New York, pp 281–314
Sinha A, Sengupta T, Alvarado R (2020) Interplay between technological innovation and environmental quality: formulating the SDG policies for next 11 economies. J Clean Prod 242:118549. https://doi.org/10.1016/j.jclepro.2019.118549
Sinha JK (2019) Influence of technologies on the growth rate of GDP from agriculture: a case study of sustaining economic growth of the agriculture sector in Bihar. Stat J IAOS 35:277–287. https://doi.org/10.3233/SJI-180436
Solarin SA, Bello MO (2018) Persistence of policy shocks to an environmental degradation index: the case of ecological footprint in 128 developed and developing countries. Ecol Indic 89:35–44. https://doi.org/10.1016/j.ecolind.2018.01.064
Tyner WE (2012) Climate change policy design: discussion. Am J Agric Econ 94:368–369. https://doi.org/10.1093/AJAE/AAR112
Ullah A, Bano A, Khan N (2021) Climate change and salinity effects on crops and chemical communication between plants and plant growth-promoting microorganisms under stress. Front Sustain Food Syst 5(161). https://doi.org/10.3389/FSUFS.2021.618092
Ullah S, Syed NM, Gang T et al (2022) Recent global warming as a proximate cause of deforestation and forest degradation in northern Pakistan. PLoS One 17:e0260607. https://doi.org/10.1371/journal.pone.0260607
Ulucak R, Bilgili F (2018) A reinvestigation of EKC model by ecological footprint measurement for high, middle and low income countries. J Clean Prod 188:144–157. https://doi.org/10.1016/j.jclepro.2018.03.191
UNDP (2019) Review of SDG implementation and interrelations among goals: discussion on SDG 13 – climate action including the link to the Climate Action Summit and six action portfolios. In: United Nations Dev. Program. https://sustainabledevelopment.un.org/index.php?page=view&type=20000&nr=5684&menu=2993. Accessed 3 Jan 2022
UNSD (2016) UNSD — Environment Statistics. Municipal Waste Treatment. https://unstats.un.org/unsd/envstats/qindicators.cshtml. Accessed 7 January 2023
Usman M, Balsalobre-Lorente D (2022) Environmental concern in the era of industrialization: can financial development, renewable energy and natural resources alleviate some load? Energy Policy 162:112780. https://doi.org/10.1016/j.enpol.2022.112780
Usman M, Jahanger A, Radulescu M, Balsalobre-Lorente D (2022a) Do nuclear energy, renewable energy, and environmental-related technologies asymmetrically reduce ecological footprint? Evidence from Pakistan. Energies 15(9). https://doi.org/10.3390/en15093448
Usman M, Kousar R, Makhdum MSA, Yaseen MR, Nadeem AM (2022b) Do financial development, economic growth, energy consumption, and trade openness contribute to increase carbon emission in Pakistan? An insight based on ARDL bound testing approach. Environ Dev Sustain 25:444–473. https://doi.org/10.1007/s10668-021-02062-z
Usman M, Makhdum MSA (2021) What abates ecological footprint in BRICS-T region? Exploring the influence of renewable energy, non-renewable energy, agriculture, forest area and financial development. Renew Energy 179:12–28. https://doi.org/10.1016/j.renene.2021.07.014
Usman M, Makhdum MSA, Kousar R (2021) Does financial inclusion, renewable and non-renewable energy utilization accelerate ecological footprints and economic growth? Fresh evidence from 15 highest emitting countries. Sustain Cities Soc 65:102590. https://doi.org/10.1016/j.scs.2020.102590
Usman M, Radulescu M (2022) Examining the role of nuclear and renewable energy in reducing carbon footprint: does the role of technological innovation really create some difference? Sci Total Environ 841:156662. https://doi.org/10.1016/j.scitotenv.2022.156662
Viglia S, Civitillo DF, Cacciapuoti G, Ulgiati S (2018) Indicators of environmental loading and sustainability of urban systems. An emergy-based environmental footprint. Ecol Indic 94:82–99. https://doi.org/10.1016/J.ECOLIND.2017.03.060
Waheed R, Chang D, Sarwar S, Chen W (2018) Forest, agriculture, renewable energy, and CO2 emission. J Clean Prod 172:4231–4238. https://doi.org/10.1016/J.JCLEPRO.2017.10.287
Wang C, Ghadimi P, Lim MK, Tseng ML (2019) A literature review of sustainable consumption and production: a comparative analysis in developed and developing economies. J Clean Prod 206:741–754. https://doi.org/10.1016/j.jclepro.2018.09.172
Waring B, Neumann M, Prentice IC et al (2020) Forests and decarbonization – roles of natural and planted forests. Front for Glob Chang 3:58. https://doi.org/10.3389/ffgc.2020.00058
WDI (2020) World Development Indicators. In: DataBank - World Dev. Indic. https://datatopics.worldbank.org/world-development-indicators/. Accessed 4 Jan 2022
World Bank (2017) World Bank Annual Report
Yameogo CEW, Omojolaibi JA, Dauda ROS (2021) Economic globalisation, institutions and environmental quality in sub-Saharan Africa. Res Glob 3:100035
Yao X, Yasmeen R, Hussain J, Hassan Shah WU (2021) The repercussions of financial development and corruption on energy efficiency and ecological footprint: evidence from BRICS and next 11 countries. Energy 223:120063. https://doi.org/10.1016/j.energy.2021.120063
Zafar MW, Zaidi SAH, Khan NR et al (2019) The impact of natural resources, human capital, and foreign direct investment on the ecological footprint: the case of the United States. Resour Policy 63:101428. https://doi.org/10.1016/j.resourpol.2019.101428
Zaidi SAH, Hussain M, Uz Zaman Q (2021) Dynamic linkages between financial inclusion and carbon emissions: evidence from selected OECD countries. Resour Environ Sustain 4:100022. https://doi.org/10.1016/j.resenv.2021.100022
Zaman K (2022) Environmental cost of deforestation in Brazil’s Amazon Rainforest: controlling biocapacity deficit and renewable wastes for conserving forest resources. For Ecol Manag 504:119854. https://doi.org/10.1016/j.foreco.2021.119854
Author information
Authors and Affiliations
Contributions
Zulfiqar Ali: conceptualization, formal analysis, software, methodology, writing—original draft preparation, and investigation. Yang Jianzhou: data curation, investigation, visualization, writing—reviewing and editing. Amjad Ali: visualization, writing—reviewing and editing. Jamal Hussain: proofreading, writing—reviewing and editing.
Corresponding author
Ethics declarations
Ethical approval
Not applicable.
Consent to participate
Not applicable.
Consent for publication
Not applicable.
Competing interests
The authors declare no competing interests.
Additional information
Responsible Editor: Ilhan Ozturk
Publisher's note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Highlights
• The determinants of air quality, economic growth, and ecological footprint are investigated.
• This study examines the asymmetric and symmetric effect of agricultural innovation and financial inclusion on CO2 emissions, economic growth, and ecological footprint.
• A positive shock to agricultural innovation reduces economic growth and ecological footprint in the long run.
• A negative shock to financial inclusion raises CO2 emissions in the short run.
Rights and permissions
Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.
About this article
Cite this article
Ali, Z., Jianzhou, Y., Ali, A. et al. Determinants of the CO2 emissions, economic growth, and ecological footprint in Pakistan: asymmetric and symmetric role of agricultural and financial inclusion. Environ Sci Pollut Res 30, 61945–61964 (2023). https://doi.org/10.1007/s11356-023-26138-7
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11356-023-26138-7