Environmental Sustainability in Pakistan: The Role of Natural Resource Rent, Foreign Direct Investment, and Renewable Energy

Abstract

For decades, environmental degradation has become a universal challenge, and for sustainable environmental quality requires an accurate and broader proxy for proper assessment. Pakistan faces serious environmental challenges due to rising emissions, rapid urbanization and heavy reliance on fossil fuels. Several studies used carbon and methane emissions to analyze the global warming issues, these measures provide only a partial view of environmental quality. Therefore, the current study examines the effect of foreign direct investment, renewable energy consumption and natural resources rent on ecological footprint by applying the ARDL-ECM model to Pakistan’s yearly data from 1985 to 2024. The empirical findings show that among all explanatory variables, renewable energy consumption has a significant negative impact on the ecological footprint, indicating that higher use of renewable energy helps reduce environmental pressure. Whereas natural resource rent and FDI have contributed positively to ecological footprint. Finally, the results suggest that increasing renewable energy consumption is the most effective way to reduce environmental pressure in Pakistan's economy. Keywords: Environmental degradation, Ecological footprint, overshoot.