Remittance and Carbon Dioxide Emissions: Does an Environmental Kuznets Curve exist in case of Pakistan?

Abstract

This research examines the relationship between remittances and environmental degradation in Pakistan by applying the Environmental Kuznets Curve (EKC) hypothesis as a conceptual framework. The study uses the Nonlinear Autoregressive Distribution Lag model in analyzing annual data between 1990 and 2023. The empirical findings show that there is a significant long-run asymmetric impact of remittances on CO₂ emission. The positive remittance inflow increases the emissions, whereas negative ones reduce them, validating the existence of nonlinear environmental effects. The results support the EKC hypothesis in Pakistan, suggesting that remittances initially contribute to environmental degradation however at high-income levels, remittances lead to the enhancement of the environmental quality due to environmental awareness and clean investments. Based on the outcomes, the research suggests policy recommendations, including the promotion of renewable energy investment, the strengthening of environmental regulations, the encouragement of sustainable trade and foreign direct investment (FDI), promote sustainable remittance utilization, the education and empowerment of communities, and the development of institutional capacity to implement green remittance programs. The findings can be applied practically in the realization of environmentally sustainable development in the remittance-dependent developing nations.