FACTORS AFFECTING CO2 EMISSION: AN EMPIRICAL INVESTIGATION OF PAKISTAN’S ECONOMY

Abstract

This empirical study investigates the factors that influence CO2 emissions in the context of Pakistan's economy. Pakistan, being one of the world’s most populous and developing countries, presents tremendous problems in terms of environmental sustainability and climate change mitigation. This study aims to identify the primary drivers of CO2 emissions in Pakistan, providing light on the complex interplay between foreign direct investment (FDI), industrialization, urbanization, infrastructure development, power projects, and deforestation. The study utilizes regression to account for unobserved heterogeneity at the entity level and time-specific effects using autoregressive distributed lag model (ARDL) approaches. The study uses a dataset spanning 22 years (2001-2022), with an emphasis on period-specific fluctuations and trends. The findings of this study give important insights into the elements that contribute to CO2 emissions in Pakistan. Policymakers and stakeholders acquire a better knowledge of the drivers of environmental concerns in the region by determining which factors have significant connections with CO2 emissions and which are made inconsequential owing to collinearity. These findings may be used to support targeted policy initiatives in Pakistan aimed at reducing emissions, encouraging sustainable economic growth, and minimizing the negative consequences of climate change. This study adds to the body of knowledge on environmental economics and provides a foundation for evidence-based decision-making in the pursuit of a more sustainable and environmentally responsible future for Pakistan's economy in a global context marked by the imperative to address climate change and reduce greenhouse gas emissions.