Natural Resource Rents-Environmental Degradation Nexus: Empirical Insights from Pakistan

Abstract

The study aim was to inspect the nexus between natural resource rents (NRR) on environmental degradation (CO₂) and used the data from 1976 to 2024 of Pakistan and ARDL procedures for estimation. The GDPpc, and FD have optimistic effects on CO₂. Yet, the NRR, URBP and HK have negative and substantial effects on CO₂ in the long run (LR). Moreover, in the short run (SR), the FD has optimistic and noteworthy effects on environmental degradation only. Furthermore, ECM value is negative and noteworthy, which shows that the speed of alteration from SR to LR by 52% and the LR cointegration. Moreover, there exists one way causality running from CO₂ to GDPpc, CO₂ to FD, NRR to URBP, FD to URBP, HK to FD, and HK to URBP, However, there is a Feedback causality between CO₂ and URBP. Consequently, this study determined that the total natural resource rent meaningfully reduces the CO₂ in LR while having no effect on CO₂ in the short run. Based on the findings, this study indorsed that the government of Pakistan and all resource rich developing countries use natural resources rents efficiently for sustainable development and focus on renewable energy consumption to enhance production and increase economic growth. Furthermore, use the efficient way of natural resources for economic growth as well as reduce the CO₂ emissions.