Abstract
An increase in economic activities which leads to economic growth has been adduced as a possible factor for environmental degradation. While some other studies have argued that as economies keep growing, there are possibilities for resource redistribution which could engender environmental balance, thus engendering the argument on the conflicting-complementary position of the environment-growth nexus. In the light of this, this study uses previous activities between economic activities and the environment to determine the conflicting or complementary relationship that exists between economic growth and the environment. Also, using Nigeria as a case study, the design of environmental growth nexus to achieving sustainable development is assessed. Annual time series data between 1970 and 2014 were sourced from the World Development Indicators. Following the neoclassical perspective on ecological growth and the Kuznets inverted U-hypothesis on the environment-growth relations, stationarity test was performed, and the autoregressive distributed lag estimates were employed. From the study, it is seen that factors like rainfall that promotes environmental quality in the long run promote economic growth (per capita and GDP growth) in Nigeria. Similarly, factors like natural resource utilization, which depletes environmental quality, increases economic growth but reduces economic growth per capita; thus, with questions for development, the possibility of a complementary relationship for environmental quality and economic growth is spotted if the right policies are ensured. Also, the study found evidence of a growing conflicting relation between environmental quality (CO2) and economic growth (per capita and GDP growth). Meanwhile, these conflicts to a great extent find expression in the Kuznets hypothesis; such that, if policies that promote income per capita reduces pollution and pursues eco-efficiency via economic growth are properly harnessed, there are the prospects of meeting up with the goals of environmental sustainability in developing economies.
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Notes
In\( \left(\frac{Y_t^{\ast }}{L_t}\right)=\ln {A}_0+ gt-\frac{\alpha }{1-\alpha}\ln \left({\hat{n}}_t+\delta \right)+\frac{\alpha }{1-\alpha}\ln \left({s}_k\right)+{\theta}_1\ln \left({Q}_t\right)+{\theta}_2\ln \left({E}_t\right) \)
Specifically, \( \left(\frac{Y_t^{\ast }}{L_t}\right) \)is expressed as GDPCt. In the model, environmental quality represented by Qt is explained as a determinant of per capita income among other variables such as productivity (E0) and human capital (Et).
Kuznet hypothesis states that “as an economy’s per capita income increases, the total amount of environmental impact of economic activities initially grows, reaches maximum and then falls
This approach is found to be applicable irrespective of the order of integration of variables, evades the need for pre-testing the integration order of variables, allows the variables to have different optimal lag length of deriving a dynamic unrestricted error correction model from the approach via a simple linear transformation and it integrates both the short run dynamics and long run dynamics together without loss of any long run information (see Pesaran et al. 1999 and 2001; Narayan and Smyth, 2005; Akinlo, 2008 and among others)
`
The same ARDL estimation technique is applied for robustness checks.
The variable NRES was removed from the presentation after several iterations revealed explosive and insignificant estimates.
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Appendices
Appendix 1
Model I (where GDP per capita (GDPC) is the response variable)
Appendix 2
Model II (where CO2 (metric tons per capita) is the response variable)
Appendix 3
Model III (where GDP (growth rate of GDP) is the response variable)
Appendix 4
Model III (where CO2 (growth rate of emissions) is the response variable)
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Adejumo, O.O. Environmental quality vs economic growth in a developing economy: complements or conflicts. Environ Sci Pollut Res 27, 6163–6179 (2020). https://doi.org/10.1007/s11356-019-07101-x
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DOI: https://doi.org/10.1007/s11356-019-07101-x