Assessing the effects of economic uncertainties on environmental sustainability in Pakistan

Abstract Escalating environmental degradation has emerged as a critical global challenge, with developing economies disproportionately exposed to the adverse effects of climate change and global warming driven by environmental pollution. Pakistan, like many other developing countries, has experienced severe environmental stress in recent decades. This study provides an in-depth empirical assessment of alternative policy measures aimed at mitigating environmental pollution in Pakistan. Specifically, it investigates the effects of different sources of economic uncertainty oil price uncertainty (OPU), monetary policy uncertainty (MPU), and world economic uncertainty (WEU) on CO 2 emissions. Using annual time-series data from 1973 to 2023, the study employs an augmented Autoregressive Distributed Lag (ARDL) modeling framework. The empirical results indicate that a 1% increase in world economic uncertainty leads to a 0.8% rise in CO 2 emissions, while a 1% increase in monetary policy uncertainty raises emissions by 2.7%. In contrast, a 1% increase in oil price uncertainty reduces CO 2 emissions by 0.13%, and a 1% increase in renewable energy consumption lowers emissions by 1.2%. Based on these findings, the study recommends that Pakistan prioritize the expansion of renewable energy policies, adopt environmentally responsive monetary policy frameworks, and strengthen international cooperation to promote long-term environmental sustainability.