Analysis of Urbanization and Energy Consumption Using Time Series Data: Evidence from the SAARC Countries

Abstract

Urbanization has posed some tremendous challenges which are related to environmental stresses through increased energy consumption. These challenges have drawn attention to the need to implement urbanization with sustainable energy consumption globally. The present study aims to identify the urbanizing factors that cause energy consumption in the SAARC countries. The South Asian Association for Regional Cooperation is considered in the study during the period of 1975-2014. The data are analyzed by using simple statistics and econometric techniques, such as the ordinary least squares (OLS) method for the country level. The study has found that all urbanizing variables significantly affect energy consumption with different levels in different countries, as shown by the OLS method. The coefficient of GDP is statistically significant at 1% level of significance for Bangladesh, Pakistan and Sri Lanka, while at 5% and 10% levels for India and Nepal, respectively. The coefficient of the industrial sector share in GDP is statistically significant at 1% level of significance for Bangladesh, Nepal and Pakistan. The result shows that a 1% increase in the service sector’s share in GDP leads to a reduction in energy consumption of 0.15%, 0.34% and 1.61%, respectively, in Bangladesh, Nepal and Sri Lanka. The result for urban population indicates that a 1% increase in urban population leads to an increase in energy consumption by 1.94%, 2.32%, 0.85% and 3.87%, respectively, for Bangladesh. India, Nepal and Sri Lanka. Green technology and energy efficiency technologies to use in the industries, encourage using public transportation, sustainable energy and urbanization are potential policy recommendations.