An empirical re-examination of the output- pollution linkage in Nigeria

Abstract

This study investigates the validity of the Environmental Kuznets Curve (EKC) hypothesis for carbon emissions (CO₂) in Nigeria for the period 1990 to 2016. The study revisited the Shen (2006) argument of increased explanatory variables in the income-pollution relation. Two additional variables were included: energy demand and the human development index. The study asked whether there is a feedback effect among the pollutant (CO₂), income and human welfare by setting up a simultaneous model of three equations for the pollutant, income and human welfare. It also sought to determine whether there is a significant difference between the result of the simultaneous model and the traditional polynomial EKC model. Despite increasing the variables, the result for the pollutant, CO₂, supports the EKC hypothesis in Nigeria and rejects the Shen (2006) argument. There was no significant difference between the single equation and the simultaneous model. Based on this result, the study recommends that provisions be made to factor in the simultaneity or endogeneity problem when conducting any study on EKC and policy makers should focus on policies that will enhance inclusive growth in order to have an improved environment.

Keywords: Environmental Kuznets curve, carbon dioxide (CO₂), simultaneous equation model, human development index