Revisiting the economic growth and electricity consumption nexus in Pakistan

• Published in: Environmental science and pollution research international Vol. 26; no. 12; pp. 12158 - 12170
• Main Authors: Balcilar, Mehmet, Bekun, Festus Victor, Uzuner, Gizem
• Format: Journal Article
• Language: English
• Published: Berlin/Heidelberg Springer Berlin Heidelberg 01-04-2019; Springer Nature B.V
• Subjects: Aquatic Pollution; Atmospheric Protection/Air Quality Control/Air Pollution; Carbon dioxide; Carbon dioxide emissions; Causality; Earth and Environmental Science; Econometrics; Economic development; Economic growth; Economic models; Economics; Ecotoxicology; Electricity; Electricity consumption; Empirical analysis; Environment; Environmental Chemistry; Environmental degradation; Environmental Health; Environmental science; GDP; Gross Domestic Product; Industrial areas; Research Article; Time series; Waste Water Technology; Water Management; Water Pollution Control; Pakistan; Q43; Pakistan; C32; Economic growth; Electricity consumption; Maki cointegration; O41
• ISSN: 0944-1344; 1614-7499
• DOI: 10.1007/s11356-019-04598-0

This paper revisits the interaction between electricity consumption, real gross domestic product, and carbon dioxide emissions in Pakistan. To this end, our study relies on annual data from 1971 to 2014 for the econometric analysis while accounting for structural break(s). According to the Maki cointegration test, a cointegration equilibrium relationship exists among electricity consumption, economic growth, and carbon dioxide emissions. The empirical findings from Toda-Yamamoto causality test provided the following insights: (i) unidirectional causality was found running from economic growth to electricity consumption. Thus, this study validates the conservative hypothesis, meaning that in Pakistan, conservative energy strategies cannot harm economic progress. (ii) Causality was also found running from electricity consumption to carbon dioxide emissions. This implies that industrial activities trigger an increase in carbon emissions flaring which in return translates into environmental degradation. This outcome has inherent policy implications which are further discussed in the conclusion section.