( 2019) also inform that cost of environmental degradation is considerable in Pakistan as the country has lost 0.53 % per unit GDP, and economic losses of about 3792.53 million US dollars along with experiencing 152 extreme weather events from 1999 to 2018.
The government of Pakistan (GoP) ( 2020) states that Pakistan is among the top ten countries which are highly vulnerable to climate change in the past 20 years. In Pakistan, like all other developing countries, the environmental issues have become the major concern of the government. Predominantly, energy comes from non-renewable resources (coal, oil, natural gas, nuclear) and has incredibly strong negative effects on the environment by producing carbon dioxide (CO 2), methane (CH 4) emissions, and other greenhouse gases (GHGs) in the atmosphere (Majeed and Luni 2019). Second, it acts as an input and can affect the economy through energy-related shocks (WEF 2012) and then to growth sustainability through a deteriorating environmental quality (Zhao et al. First, it contributes to the economy through extraction, transformation, and distribution of energy goods and services by creating jobs and boosting economic growth. In particular, its major effects on the economies are twofold. In 2018, the rate of global energy demand is recorded at about 2.3 % which was the ever fastest rise in the energy demand in the present decade. According to IEA ( 2019), a tremendous rise in energy demand is observed across the globe. This ensures that energy being the lifeblood of the global economy acts as a main driving force behind all economic activities (Alam 2006). Energy is a fundamental need for humans’ survival because without heat, light, and power, firms and industries cannot be built, cities cannot survive, and resultantly goods cannot be produced. However, this growth has been compromising environmental quality as it heavily relies on energy-intensive inputs. In the recent decades, human living standards and well-being have been improved to a greater extent because of high economic growth and prosperity. The positive shocks to coal and electricity consumption are negatively related with environmental quality while negative shocks are positively related with environmental quality. The asymmetric relationships also hold between coal consumption, electricity consumption, and ecological footprint. Thus, an increase in oil consumption has a deteriorating impact on environmental quality while a decrease in gas consumption has a favorable impact on environmental quality. The positive (negative) shocks to oil and gas consumption increase (decrease) ecological footprint.
Similarly, different sources of energy consumption have diverse asymmetric effects on ecological footprint. The empirical findings for aggregate consumption reveal that only negative shocks have a significant impact on ecological footprint. We have employed unit root test with breaks for stationary checks, BDS test for nonlinearity check and nonlinear autoregressive distributed lag (NARDL) approach for assessing the asymmetric co-integrating relationships among the variables by decomposing them into positive and negative shocks. This study explores the asymmetric effects of both aggregate and disaggregate forms of energy consumption along with economic growth on environmental quality for Pakistan covering the period from 1971 to 2014.