Balancing Progress and Preservation: The Complex Interplay of Economic Growth and Forest Conservation in Nepal’s Carbon Dioxide Emissions

Abstract

The intricate relationship between economic growth, environmental quality, and energy consumption has been extensively debated and studied on a global scale. The impacts of ecological quality on economic growth have been observed to be both positive and negative, particularly about human health as a result of pollutant emissions. It is essential to examine the compatibility between economic growth and environmental improvement, particularly through the reduction of emissions. This study aimed to investigate the connection between economic growth in forested areas and the corresponding impact on carbon dioxide (CO2) emissions in Nepal (Rose and Fisher, 1970). The analysis utilized time series data from 1990 to 2020, employing the dynamic ordinary least squares (DOLS) method. The DOLS results demonstrated a positive and statistically significant relationship between economic growth and CO2 emissions (Shafik and Bandyopadhyay, 1992). Specifically, an increase of Rs. 10 million in gross domestic product (GDP) corresponded to a 0.6112 kiloton increase in CO2 emissions. In contrast, the long-term coefficient for forested areas exhibited a substantial association, indicating that a reduction of one square kilometer of forested area (deforestation) resulted in an increase of 68.37 kilotons in CO2 emissions in Nepal. These findings accentuate the divergent effects of economic progress and deforestation on carbon emissions in Nepal, with GDP growth contributing to a greater increase in emissions. Therefore, the implementation of effective strategies and economic measures, such as afforestation and reforestation, forest protection, sustainable forest management, and mechanisms like REDD+ (reducing emissions from deforestation and forest degradation plus), can play a vital role in mitigating carbon emissions while simultaneously addressing deforestation and ensuring long-term economic progress in Nepal.