Abstract

This paper investigates the relationship between environmental pollution, energy consumption, and the level of urbanization in South Asian countries over the period 1978–2011. The sample is a panel of three selected countries, namely, India, Pakistan, and Bangladesh. The relationship is investigated by employing nonparametric additive model with country and time specific fixed effects. The findings suggest that the relationship between carbon dioxide emissions and energy consumption is nonlinear in nature and energy consumption has a positive impact on carbon dioxide emissions in the panel of countries. The results also convey that the level of urbanization has inverted U-shaped relationship with carbon dioxide emissions. More specifically, there exists a threshold till which increase in urbanization increases carbon dioxide emissions but after that, more urbanization leads to fall in carbon dioxide emissions. Furthermore, results also suggest that there is an interaction effect of energy consumption and the level of urbanization on carbon dioxide emissions in the panel of countries.