Exploring the nexus between environmental degradation and living standard in Bangladesh: Evidence from ARDL and ECM technique

A nation’s ability to maintain a lower level of environmental degradation is considered pivotal for achieving a robust living standard. This study evaluates the short- and long-term effects of Bangladesh’s GDP, energy consumption (ENC), food production index (FPI), and life expectancy at birth (LEB) on CO2 emission using time series data over the period 1990–2021. In doing so, the study uses an Autoregressive Distributed Lag (ARDL) bounds testing model. The short-run disequilibrium behavior of the variables is also captured using the Error Correction Model (ECM). Then, the Granger causality test was applied to identify the causal relationship between variables. The outcome reveals a long-term relationship between variables. While ENC has a significant positive impact on CO2 emissions per capita, GDP per capita exhibits a significant negative impact. Additionally, if there is any departure from equilibrium, the rate of return to equilibrium is about 67.30%. The study also found a unidirectional causal relationship between CO2 emission per capita to GDP per capita and the bidirectional causal relationship between CO2 emission per capita and FPI. Building upon the obtained results, future efforts to promote living standards can be better achieved by matching the most suitable factors for their effective response to the environment. Therefore, the study suggests that the government should promote alternative energy sources like renewable energy, carbon pricing, energy-efficient technology, eco-friendly agricultural practices, higher economic growth, and life expectancy to reduce environmental deterioration and promote living standards simultaneously.