Disaggregating the Ecological Footprints of Trade in Pakistan

Abstract

This study employs an ARDL model to examine the long- and short-run relationships between economic growth, trade in services, energy, and Pakistan’s import ecological footprints, using time-series data from 1990 to 2022. The model demonstrates strong illustrative power, with an R-squared of 0.9865 and a low RMSE of 0.0071, emphasizing the accuracy of modeling Import Footprints. In the long run, the bio-capacity of imports emerges as a significant positive factor (coefficient = 1.2846, p < 0.001), revealing that imports with high bio-capacity demand, such as agricultural or forest products, are major contributors to the ecological footprint. Although GDP has a tad significant effect (p = 0.059), indicating potential efficiency gains in import production per GDP unit, energy consumption, inflation, and population effects remain statistically insignificant, suggesting that their environmental impacts may be channeled primarily through domestic production. In the short run, import bio-capacity continues to reveal a significant effect (coefficient = 1.0623, p = 0.005), highlighting that fluctuations in bio-capacity-intensive imports can immediately alter the ecological footprint. The results indicate that while trade in services and energy consumption show limited direct environmental impacts, managing imports with substantial bio-capacity needs is critical for sustainable trade policy. This analysis provides intuitions into the ecological implications of Pakistan’s import composition and highlights the importance of aligning trade and environmental policy to manage long-term ecological footprints effectively.