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Article

From Budgets to Biodiversity: How Fiscal Decentralization Shapes Environmental Sustainability in Pakistan

by
Rafique Ur Rehman Memon
1,2,* and
Farhan Ahmed
3
1
Federal Board of Revenue, Government of Pakistan, Karachi 74000, Pakistan
2
Department of Economics and Finance, Greenwich University, Karachi 75500, Pakistan
3
Economics & Management Sciences Department, NED University of Engineering & Technology, Karachi 75270, Pakistan
*
Author to whom correspondence should be addressed.
Sustainability 2025, 17(21), 9561; https://doi.org/10.3390/su17219561
Submission received: 15 August 2025 / Revised: 8 October 2025 / Accepted: 11 October 2025 / Published: 27 October 2025

Abstract

This research contributes to the continuing discussion on the causes of environmental degradation by investigating the impact of fiscal decentralization on environmental sustainability utilizing four measures of environmental sustainability and three measures of fiscal decentralization. The annual data from WDI, OECD, and Global Footprint Network from 1990 to 2023 is analyzed, and the auto regression distributive lag (ARDL) model is employed to calculate long-run estimates. The findings show that fiscal decentralization, technological innovation, population, and other control variables, such as foreign direct investment and trade openness, play important roles in determining environmental sustainability. Composite fiscal decentralization, expenditure, and revenue decentralization lead to decreased environmental sustainability while technological innovation improves environmental sustainability. Furthermore, population, foreign direct investment, and trade openness also negatively affect environmental sustainability. The findings suggest that more resources should be allocated for research and development to save the environment.
Keywords: fiscal decentralization; population growth; technological innovation; foreign direct investment fiscal decentralization; population growth; technological innovation; foreign direct investment

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MDPI and ACS Style

Memon, R.U.R.; Ahmed, F. From Budgets to Biodiversity: How Fiscal Decentralization Shapes Environmental Sustainability in Pakistan. Sustainability 2025, 17, 9561. https://doi.org/10.3390/su17219561

AMA Style

Memon RUR, Ahmed F. From Budgets to Biodiversity: How Fiscal Decentralization Shapes Environmental Sustainability in Pakistan. Sustainability. 2025; 17(21):9561. https://doi.org/10.3390/su17219561

Chicago/Turabian Style

Memon, Rafique Ur Rehman, and Farhan Ahmed. 2025. "From Budgets to Biodiversity: How Fiscal Decentralization Shapes Environmental Sustainability in Pakistan" Sustainability 17, no. 21: 9561. https://doi.org/10.3390/su17219561

APA Style

Memon, R. U. R., & Ahmed, F. (2025). From Budgets to Biodiversity: How Fiscal Decentralization Shapes Environmental Sustainability in Pakistan. Sustainability, 17(21), 9561. https://doi.org/10.3390/su17219561

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