Is the Environmental Kuznets curve hypothesis valid for Kenya? An Autoregressive Distributed Lag (ARDL) Approach

Abstract

he Environmental Kuznets Curve (EKC) hypothesis posits that ecological degradation as a result of different pollutants upsurges at the primary stages, but declines as the economy attains a particular level of economic growth, determined by considering the per capita income of that economy. This hypothesized association results in an inverted U-shaped curve. The hypothesis has become a critical area of concern amid scholars who study environmental guidelines hence drawing much enquiry attention for both established and developing economies. This study examines the environmental Kuznets curve (EKC) hypothesis in Kenya using the time period of 1970–2015 relying on data from Energy Information Administration database and World Bank’s World Development Indicators database. The study utilized the Autoregressive Distributed Lag (ARDL) model to achieve the objective of this study. The study sought to address this challenge of climate change by examining the macroeconomic factors that are responsible in increasing environmental pollution and recommend appropriate policies for stable and sustainable economic growth and development in line with Kenya’s vision 2030. With the application of bounds test, the findings of this study confirmed the presence of a long run equilibrium relationship between the variables under study. Applying the Narayan and Narayan 2010 approach, the study determined that the short run coefficient 0.035 (p< 0.05) is weaker than the long run coefficient 0.207 (p < 0.05) confirming the absence of EKC in Kenya. This implies that there is no evidence of positive effect of economic activities on emissions in Kenya. This therefore means that EKC hypothesis is not significant for formulating policy in Kenya given its stumpy level of economic development. In terms of policy implication of these findings, intensifying economic activities in the country may not extremely result into carbon emissions. However, it should be noted that there will be no environmental paybacks from ill-using the environment in the name of economic growth. The study therefore recommends that in order to ensure sustainable development, Kenyan policymakers should make significant investments on appropriate environmental policies alongside economic development policies in order to achieve positive results regarding environmental quality along with the economic growth