AN EMPIRICAL ANALYSIS OF NEXUS BETWEEN TRADE AND WATER FOOTPRINTS: A CASE STUDY OF PAKISTAN

Abstract

In the past two decades, in the literature on environment and growth, various indicators have been used to represent environmental quality, however, a limited number of studies have been directed towards an important environmental indicator such as availability of water. Besides, being a crucial element of survival for human life and agriculture, it serves as an important input for the production and industrial process. Increasing production activities result in increasing consumption of water resources which tends to affect the availability of water and may have ramifications for the environment. This study, therefore, is an attempt to investigate the impact of trade flows along with other independent variables on product water footprint in selected South Asian economies such as Pakistan, India, Sri Lanka, and Bangladesh. We have used secondary data over the period 1980-2018, while for empirical analysis, the study has used the ARDL approach to get both short-run and long-run elasticities. Furthermore, to get country wise trade elasticities, we have run a separate regression for each country. The empirical results show that both imports and exports are important indicators that affect the product water footprints in the selected South Asian economies. Likewise, economic growth and energy per capita are important indicators which were found to be important factors which have affected the product water footprint in case of almost all the selected Asian economies. Key Words: Water Footprint, International Trade, and Population Growth