Environmental degradation, energy consumption, population growth and economic growth: Does Environmental Kuznets curve matter for Nigeria?

Abstract

This paper investigates the relationship between CO2 emissions, energy consumption, population growth and economic growth in Nigeria during the period 1980-2012. The paper adopts autoregressive distributed lag (ARDL) bounds testing approach for cointegration with structural breaks and Toda-Yamamoto non-granger causality approach. Based on the result, there is no evidence of unidirectional causality running from CO2 emissions and energy consumption to economic growth and strong unidirectional causality running from CO2 emissions, energy consumption and economic growth to population growth was found. The long run and short run estimates show that energy consumption and population growth have strong and positive impact on CO2 emissions in the long-run and short run whereas economic growth impact weakly and negatively on CO2 emissions in the short-run. The inverted U-shaped environmental Kuznets curve (EKC) hypothesis is supported graphically and analytically in the long run with a turning point of 4.87. This means Nigeria has reached the required level of per capita real GDP to get an inverted U-shaped EKC. The main policy prescriptions among others is that Nigeria government should increase environmental taxation in order to reduce the rate of fossil fuel used by individuals which may lead to a reduction in per capital CO2 emissions.