Environmental Impact of Economic Growth and Fuel Subsidy in Nigeria

Abstract

The study investigates the impact of economic growth and fuel subsidy on the environment of Nigeria from the year 1985-2018. We used Auto-regressive Distributed Lag (ARDL) to analyse the data employed in this study. From our findings, it was revealed that output per head had a positive and significant impact on carbon emission both in the long-run and short-run, while subsidy which explains government policy also had a negative and significant impact on carbon emission both in the short-run and long-run. The Error Correction Model (ECM) showed that 96% of shocks in the response variable are corrected in the long-run by the independent variables. It was concluded that increasing output in the economy increases the amount of carbon emission in the economy while removal of fuel subsidy reduces the amount of carbon emission in the economy. Therefore, effective policies should be implemented towards reducing carbon emission without hampering the growth of the economy.