| Summary: | This study examines the environmental impact of Indonesia's construction and transportation sectors, with a specific focus on carbon dioxide (CO2) emissions as a primary indicator of environmental harm. The study uses advanced econometric techniques such as unit root tests, ARDL cointegration analysis, diagnostic tests, and an estimate of an ARDL model to investigate the relationships between different socioeconomic factors and CO2 emissions. The results show that the variables are stationary after differentiation, confirming their appropriateness for ARDL estimation. The ARDL cointegration tests validate the existence of a long-run relationship, whereas diagnostic tests verify the integrity of the model. Findings indicate strong relationships between independent variables and CO2 emissions, with transportation sector energy use having the greatest impact. Policy recommendations involve focusing on sustainable transport infrastructure, encouraging renewable energy technology in industry, supporting sustainable urban development, promoting technological innovation, and improving monitoring and enforcement of environmental regulations. Enforcing these policies can result in substantial decreases in carbon emissions and environmental pollutants, promoting sustainable development and improving environmental quality in Indonesia. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2024.
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