Economic Growth and Environmental Quality in Nigeria: Does Environmental Kuznets Curve Hypothesis Hold?

Abstract

This study investigates the relationship between Economic Growth (GDP) and environmental quality in Nigeria. The Environmental Kuznets Curve (EKC) hypothesis is investigated and tested with the annual data of carbon emissions capita and GDP per capita from 1970-2005. EKC hypothesis postulates a relationship between economic growth and environmental degradation such that in the early stage of economic growth, the rate of environmental depletion would be on the rise and as income rises above some threshold level the magnitude of environmental impacts due to economic activity would begin to fall. The study reveals that there is no causal or long run relationship between carbon emissions and income in Nigeria. Again, the regression line (curve) gotten from regressing carbon emission on GDP and its square completely refute the EKC hypothesis in the case of Nigeria. Interestingly, the curve depicts a ‘U-shaped’ rather than an ‘inverted U-shaped’ curve (as suggested by the EKC hypothesis), meaning that with increase in income, carbon emission first experiences a declining trend and then starts rising again.