Navigating Nepal’s Economic Growth and Carbon Emissions: Insights into the Environmental Kuznets Curve (EKC)

This research aims to employ the Autoregressive Distributed Lag (ARDL) method within the insight into the Environmental Kuznets Curve (EKC) to verify whether EKC exists in the Nepalese economy. In this research, variables were used, such as carbon emissions per capita, GDP per capita, energy use per capita, trade volume, and urbanization from 1980 to 2021, and the ARDL method was used. The data has been taken in this research except trade volume from the World Bank and the Ministry of Finance, Nepal. The data sets are converted into the natural logarithmic form to minimize the problem of heteroskedasticity. The findings provide compelling evidence for the existence of the EKC in Nepal, that economic growth has an inverted U-shaped impact on carbon emissions. In the early stages of development, economic growth leads to rising carbon emissions, but in the later stages, economic growth becomes associated with declining emissions. Besides economic growth, per capita energy consumption and urbanization emerge as significant drivers of carbon emissions. However, the trade volume is not found to be the driving factor of carbon emissions. The findings of this study have significant policy implications for global climate change issues and Nepal’s transition from an underdeveloped to a developing nation. To achieve harmonious economic growth and emissions reduction, donor countries and agencies to partner with Nepal in its ambitious endeavors. This partnership can take shape through multifaceted support as fueling socio-economic progress that aligns with Nepal’s commitment to reduce carbon emissions, ensuring that development and sustainability walk together. This research recommends the government of Nepal electrify the transportation landscape by incentivizing the adoption of electric vehicles, paving the way for cleaner air and a healthier planet, empowering Nepal’s natural guardians by strengthening public and private forest programs, safeguarding invaluable ecosystems and biodiversity and curbing the tide of waste mismanagement through strict regulations and robust enforcement, transforming a potential threat into a source of innovation and resourcefulness. These measures, aligned with sustainable employment generation, can pave the way for a brighter and greener future for Nepal.