The impact of National Environmental Policy on Pakistan’s green economic development: evidence from regression discontinuity design

Abstract

Pakistan is currently facing a number of environmental challenges, including an increasing ecological footprint, loss of biodiversity, and overexploitation of natural resources. In response to these issues, the government introduced the National Environmental Policy (NEP) in 2005. However, the policy’s impact of NEP on Pakistan’s sustainable development remains understudied. In this study, we use an advanced ecological footprint model that incorporates a macro-trade adjustment approach to determine the trade modification values for energy and biological products. The study then analyzed the economic and policy impacts of NEP on the sustainable development using fuzzy regression discontinuity analysis. Results revealed a linearly decreasing trade footprint for Pakistan signifying an overall trade deficit. Per capita ecological footprint and per capita sustaining capacity declined; while, the ecological deficit increased over 1990–2022. Among the six land types, Fossil energy and cultivated areas exhibited the largest ecological footprint effects. Pakistan’s footprint decreased markedly following NEP implementation. Setting cutoffs at 2010, 2015, 2018 uncovered negative EP jumps, confirming NEP’s efficiency. Findings can shape optimal policy mechanisms.