How the energy depletion rate and financial structure can promote environmental sustainability: Empirical evidence from Pakistan using ecological footprints

Abstract

Financial structure is the primary director of economic activity in a capitalist society, it also has an important societal role in encouraging investments that are beneficial to the natural and human ecosystems. To accomplish this objective, this study addresses the unattended symmetric linkages between financial structure, energy depletion, and environmental degradation using multiple ecological footprints ‘’ (built-up land, carbon land, cropland, fishing grounds, forest products, and grazing land)’’ as an indicator over the period 1985 to 2018 for Pakistan. By using these six indicators as separate regressands, this research quantifies the impact of financial structure and energy depletion by applying the newly developed Augmented Autoregressive Distributed Lag (AARDL) approach. The outcome reveals that financial structure decreases ecological footprints, similarly, energy depletion also decreases ecological footprints. Opposite to it, trade openness increases ecological footprints, while urban population decreases ecological footprints. Given these results, comprehensive environmental and financial structure development policies are directed to achieve environmental sustainable goals.

Keywords

• Augmented ARDL
• Environmental degradation
• Energy depletion
• Financial structure
• Trade openness
• Pakistan