CARBON EMISSION ACCOUNTING AND ECONOMIC GROWTH IN NIGERIA

Abstract

The study examined the effect of carbon emission accounting on economic growth in Nigeria. The specific objective was to determine the effect of carbon dioxide (CO2) emissions, energy usage and PM2.5 air pollution on gross domestic product in Nigeria. Ex-post facto research design was adopted in the study. This study covered thirty-two (32) year fiscal periods, spanning from 1990 to 2021. The study employed both descriptive and inferential statistical techniques to analyze the dataset. Unit root tests were conducted using Augmented Dickey Fuller. Johansen Co-integration Test was also applied to check for the long-run relationship between carbon emission accounting and economic growth in Nigeria. Additionally, Vector error correction model was deployed in estimating the regression coefficients for the purpose of inferential analysis. The study found no significant long-run causal relationship between carbon emissions and economic growth. However, regression suggests that increases in CO2 emissions are associated with declines in GDP. It is also observed that increase in energy usage (ENU) is likely to reduce the gross domestic product (GDP) by 22.855 in Nigeria; whereas an increase in the PM2.5 air pollution (AIRP) will increase the gross domestic product (GDP) of the country on the long run casual effect. The study recommends among others that while there is no long-term causal effect, the study indicates that a percentage increase in carbon dioxide emissions will significantly reduce GDP. As a result, the Nigerian government should implement policies to reduce carbon emissions, such as promoting renewable energy sources, improving energy efficiency, and encouraging sustainable land use practices. Secondly, according to the study, increasing energy consumption will likely reduce GDP. To mitigate this effect, the government should promote energy-efficient technologies, encourage the use of renewable energy sources, and put in place demand-side management strategies. Finally, re-evaluate Air Pollution Policies. The finding that increased air pollution leads to higher GDP in the long run is counterintuitive. This may indicate that current air pollution policies are ineffective or even counterproductive. The government should reconsider its air pollution policies and consider enacting more effective regulations to reduce pollution.