Impacts of Urbanization on Energy Consumption in the South Asian Association for Regional Cooperation Zone

Abstract

Energy resources play a vital role in the process of urbanization, and the high level of energy consumption has significantly created an alarming situation for environmental degradation. Increased demand for energy consumption in the South Asian Association for Regional Cooperation (SAARC) zone is a core concern for decreasing the existing reserves of energy, especially nonrenewable energy, when the growth of urbanization is increasing also. This study investigates the impacts of urbanization on energy consumption in this region by identifying factors that influence energy use. We employed globally used econometric techniques to examine the relationship between energy use and urbanization. The results of the study indicate that all the independent variables used in the model (except urban population growth) were statistically significant with a 99% level of confidence. In addition, the findings of this study recognized three long-run causalities running from the GDP (gross domestic product) to energy consumption, energy consumption to GDP, and energy consumption to the industry’s share of the countries’ GDP. We recommend (i) taking the initiative to invest in renewable energy, (ii) implementing green energy-efficient technologies in the industrial sector, and (iii) raising public awareness of the negative effects of energy use on the environment through education.