Macroeconomic variables and carbon dioxide emissions in Kenya

Abstract

Ever since the times of economic revolutions, countries across the globe are racing to attain higher and better economic growth while sacrificing their natural resources. This economic race has led to an upsurge in the exploitation of non-renewable resources through various human activities leading to emissions of greenhouse gases especially carbon dioxide that causes global warming and eventually climate change with negative economic repercussions. The specific objectives that aptly guided the study were as follows; to establish the effects of energy consumption, employment in agriculture, industrialization, gross domestic product, rural population, urban population and international trade involvement on carbon dioxide emissions in Kenya. The study also sought to establish the environmental damage theory existing for Kenya. The study employed explanatory research design and was mainly anchored on the Environmental Kuznets Curve, Brundtland Curve Hypothesis and Environmental Daly’s Curve Hypothesis. Time series secondary data for the targeted variables were sourced from the website of the World Bank for the period spanning 1963 to 2017. This defined the period since Kenya gained independence. The nexus between dependent and the independent variable was analysed using the autoregressive distributed lag model. Long run results showed that energy consumption had a positive and significant effect on carbon dioxide emission with coefficient 𝛽9=2.50: 𝜌=0.04<0.05, employment in agriculture had a significant positive effect on carbon dioxide emissions with coefficient 𝛽10=2.98: 𝜌=0.00<0.05 and industrialisation had a appositive and significant effect on carbon dioxide emissions with coefficient 𝛽11=1.77: 𝜌=0.00<0.05. Per capita gross domestic product had a positive and effect on carbon dioxide emissions with coefficient 𝛽12=0.01: 𝜌=0.95>0.05, rural population and urban population had a negative and significant effect on carbon dioxide emissions with coefficients 𝛽13=−23.13: 𝜌=0.00<0.05 and 𝛽14=−3.03: 𝜌=0.00<0.05 respectively. International trade involvement had a appositive and significant effect on carbon dioxide emissions with coefficient 𝛽15=0.67: 𝜌=0.02<0.05. The drift component 𝛼0 was estimated to be 𝛼0=138.38. The adjusted R-squared was estimated to be 95 per cent suggesting that 95 per cent of the variations in carbon dioxide emission was collectively explained by the independent variables. The error correction model coefficient term was also estimated at −0.95 suggesting that it took approximately 1 year (1/-0.95) for a shock in carbon dioxide instigated emissions to disappear in the long run, implying that adjustment took place fairly quickly. The quadratic check revealed that the per capita gross domestic product and the per capita gross domestic product squared coefficients were positive, 𝛽13=0.07 and negative 𝛽17=−0.05 respectively suggesting an inverted U shape relation between carbon dioxide emissions and the gross domestic product. This provided evidence that in the long run, the Environmental Kuznets Curve hypothesis was applicable Kenya. The study results therefore provided evidence that it is important for Kenya to take decisive measures on fighting climate change by committing to reduce greenhouse gases emissions. This study recommends active policy framework for Kenya regarding sustainable economic growth paths which supports environmental health and air quality through the adoption of green and environmentally friendly raw materials in agriculture, industrial production, technology and trade.