Exploring the Link between Poverty-Pollution-Population (3Ps) in Pakistan: Time Series Evidence

Abstract

The relationship between poverty, population growth and environment has been widely debated inside the academic circles. There is a general consensus that poverty is a major cause of population growth and environmental degradation and reversely population growth is the major cause of poverty and environmental degradation. The present study examines the impact of poverty on environment (air pollution) and population and reversely the impact of population on environment (air pollution) and poverty in the specific context of Pakistan during a period of 1975-2009. Data is analyzed using Ordinary Least Square (OLS) regression method and Autoregressive Distributed Lag (ARDL)-bounds testing approach to examine the linkage.

The results of the OLS test show that rapid population and air pollution has a significant contributor to poverty in Pakistan. However, the results nullify the conventional view that poverty is a major cause of environmental degradation (or air pollution), while the result supports the hypothesis that population have a deleterious impact on increasing poverty. The results of bounds test show that there is a stable long-run relationship between population, poverty and pollution in Pakistan. On the other hand, results of the causality test show that there is a unidirectional causal flow from population to carbon dioxide emission.

The post reform period is observed with the estimated coefficient of the poverty dummy variable (POVDUM) which shows that poverty in Pakistan has increased due to deprived performance of federal policies on pro-poor reforms in Pakistan. The post reform period is observed with the population dummy variable (POPDUM) reflecting that population growth has increased significantly during the said reform period.

Keywords: Population, Air Pollution, Poverty, Headcount Ratio, Population Dynamics, Carbon Dioxide Emission, Time Series, Bounds Test, Pakistan.