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Environmental Degradation and Macroeconomic Stability in Nigeria

Kporkpor, L.R, Momodu, A. A , Amadi, S.N

Abstract

This study examines the relationship between environmental degradation and macroeconomic stability in Nigeria from 1990 to 2024. Environmental degradation is proxied by CO2 emissions, PM2.5 air pollution, urbanization, and health expenditure (% of GDP), while macroeconomic stability is measured by GDP per capita growth. Data were obtained from the World Bank World Development Indicators and the United Nations Development Programme . The study employs descriptive statistics, KPSS unit root tests, ARDL bounds testing, cointegration analysis, and robustness checks. The KPSS results reveal a mixed order of integration, with urbanization integrated at level I(0) and other variables at first difference I(1). The ARDL bounds test confirms the existence of a long-run equilibrium relationship between environmental degradation indicators and GDP per capita growth. Long-run estimates indicate that CO2 emissions, PM2.5 pollution, and health expenditure have no statistically significant effects on GDP per capita growth. However, urbanization has a significant positive effect on GDP per capita growth. The error correction terms confirm convergence to long-run equilibrium. Based on these findings, the researchers recommend, among the following, that the government should accelerate the transition to renewable energy sources and enforce strict energy-efficiency standards to neutralize the statistically significant positive long-run effect of energy consumption per capita on CO2 emissions while reducing associated pressure on PM2.5. Based on these findings, the researchers recommend, among the following, that the government should shift from carbon-intensive growth to renewable energy and energy-efficient production by using incentives and regulation to decouple GDP growth from CO2 emissions and reduce long-term macroeconomic instability.

Keywords

Environmental DegradationPM2.5. Air PollutionGDP Per Capita GrowthHealth ExpenditureCO2 Emissions

References

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