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Energy, Trade, Urbanization and Environmental Degradation Nexus in Sri Lanka: Bounds Testing Approach

Author

Listed:
  • Oruj Gasimli

    (College of Economics and Trade, Hunan University, Changsha 410082, China)

  • Ihtisham ul Haq

    (Department of Economics, Kohat University of Science and Technology, Kohat 26000, KP, Pakistan)

  • Sisira Kumara Naradda Gamage

    (Department of Social Sciences, Faculty of Social Sciences and Humanities, Rajarata University of Sri Lanka, Mihintale 50300, Sri Lanka)

  • Fadi Shihadeh

    (Department of Computerized Financial and Banking Science, Business and Economics Faculty, Palestine Technical University, Tulkarm 973000, Palestine)

  • Prasanna Sisira Kumara Rajapakshe

    (Department of Environmental Management, Faculty of Social Sciences and Humanities, Rajarata University of Sri Lanka, Mihintale 50300, Sri Lanka)

  • Muhammad Shafiq

    (Institute of Numerical Sciences, Kohat University of Science & Technology, Kohat 26000, Pakistan)

Abstract

This study examines the nexus between energy, trade, urbanization and environmental degradation in Sri Lanka. The time series data has been checked for unit root problem along with unknown structural break. The bounds testing approach confirms the long-term relationship among carbon emissions, energy consumption, income, trade openness, and urbanization in the presence of structural break. The results of the study do not confirm the presence of the EKC (Environmental Kuznets Curve) hypothesis in Sri Lanka. This study finds that energy consumption leads to carbon emissions in both the long term and the short term. Trade openness is degrading environmental quality, as trade is responsible for the accumulation of carbon emissions in the atmosphere. The results of the study confirm that urbanization has been found to have significant and negative effect on carbon emissions. The study finds that the model is in equilibrium and the model will return to equilibrium from any external shock in less than two years. Policy measures are recommended for sustainable environment of the island.

Suggested Citation

  • Oruj Gasimli & Ihtisham ul Haq & Sisira Kumara Naradda Gamage & Fadi Shihadeh & Prasanna Sisira Kumara Rajapakshe & Muhammad Shafiq, 2019. "Energy, Trade, Urbanization and Environmental Degradation Nexus in Sri Lanka: Bounds Testing Approach," Energies, MDPI, vol. 12(9), pages 1-16, April.
    • Handle: RePEc:gam:jeners:v:12:y:2019:i:9:p:1655-:d:227343
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