THE CAUSAL RELATIONSHIP BETWEEN ENVIRONMENTAL DEGRADATION AND SUSTAINABLE ECONOMIC GROWTH IN NIGERIA.

Abstract

This study examines the causal relationship between environmental degradation and sustainable economic growth in Nigeria. The broad objective of this study is to empirically examine the causal relationship between environmental degradation and sustainable economic growth in Nigeria using annual secondary data from the World Bank Development Indicators (WDI), covering the period 1991–2022. The specific objectives are; (i) to determine the long-run relationship between environmental degradation and sustainable economic growth in Nigeria; (ii) to empirically evaluate the direction of the causal relationship between environmental degradation and sustainable economic growth in Nigeria. The variables utilized for this study are the real gross domestic product growth rate (RGDPGR) as the dependent variable, while renewable energy consumption (REC), industrial sector carbon emissions (ISC), electricity generation carbon emissions (EGC), residential building carbon emissions (RBC), foreign direct investment (FDI), deforestation (FOREST), and urban population size (UPS) are the independent variables. To explore the possibility of causality, the Granger causality test was utilized, which seeks to establish whether a causal connection exists between the examined variables. The findings of the study revealed no causal relationship exist between RGDPGR and REC. Furthermore, the result revealed that a unidirectional causal relationship exists between ISC and RGDPGR; additionally, the result revealed that EGC and RGDPGR have no causal relationship, whereas RBC and RGDPGR have a unidirectional causal relationship. Similarly, FDI and RGDPGR have no causal relationship, whereas FOREST and RGDPGR have a unidirectional causal relationship. Finally, the UPS and RGDPGR have a unidirectional causal relationship. The study recommended that in light of the unidirectional causal relationship between deforestation and the real gross domestic product growth rate in Nigeria, the government should prioritize the promotion of sustainable environmental practices such as afforestation (tree planting). Moreover, the establishment of stringent laws aimed at protecting the environment from illegal logging and bush burning is vital for preserving natural resources.