Assessing the Nexus: Climate, Energy, and Geo-Political Risks in Pakistan

Abstract

In today’s world, environmental degradation is one of the major problems experienced by all the nations. The primary and key objective of this study was to assess the nexus between EFP, GPR, MTEMP, REC and NREC using autoregressive distributive lag (ARDL) approach. The time series dataset comprises a period of 1990 to 2022, collected from the Global Footprint Network and World Bank (Open Dataset). The Augmented Dickey- Fuller (ADF) tests confirmed that the dataset was a combination of stationary and non-stationary variables. The results of a bound test of the ARDL models indicate that a long-term cointegration exists between the variables in the model. The study used EFP as a dependent variable while GPR, MEANT, REC and NREC are used as explanatory variables. A percent increase in GPR insignificantly improves EFP by 25.5% while a unit increase in REC improves EFP significantly by 0.063 units. A percent increase in MEANT and NREC significantly reduces EFP by 248% and 46.5% respectively. The ARDL model reveals the significant positive impact of REC on Pakistan's ecological footprint, emphasizing the need of sustainable production and consumption using renewable energy sources. Higher GPR discourage FDI, and domestic investment reducing the production and consumption of commodities leading to the improvement in environmental quality. Rising mean temperatures (MEANT) and non-renewable energy consumption (NREC) negatively affect the ecological footprint, highlighting climate change challenges and its severity due to the excessive use of fossil fuels. Recommendations include incentivizing eco-friendly practices, addressing temperature-related issues, and promoting renewable energy to steer Pakistan towards a sustainable future. Strengthening environmental regulations and fostering international collaborations are essential components of this comprehensive approach.