Purpose
Even though many studies have attempted to understand the drivers of carbon dioxide emission and energy consumption to help tackle environmental issues, not much has been done to estimate the effect of natural resources extraction on these two variables. This paper aims to analyze the long-run and short-run carbon dioxide emission and energy consumption effect of natural resources extraction in Ghana.
Design/methodology/approach
The theoretical foundation for this study is the Stochastic Impacts Regression on Population, Affluence and Technology (STIRPAT) model. Secondary Data sourced from World Development Indicators (2018) for the period of 1971-2013 were used. Estimation was done by using the autoregressive distributed lag.
Findings
It was found among other things that urbanization, and extraction of natural resources contribute to Ghana’s carbon dioxide emission, while official development assistance helps in reducing carbon dioxide emission in the long run. Again, while income and extraction of natural resources increase energy consumption, urbanization and official development assistance reduce environmental degradation in the long run. Regarding the short run, income and urbanization both increase energy consumption and carbon dioxide emission; trade openness and official development assistance decrease both carbon dioxide emission and energy consumption.
Research limitations/implications
The implications from the results include the need to strictly enforce laws regulating extractive activities in the country to ensure a safe environment; and also to raise tariff and non-tariff barriers on products that do not promote a friendly environment and vice versa.
Originality/value
The effect of natural resources extraction on carbon emission and energy consumption is examined.
Concerned with the declining trend of renewable energy consumption as well as a change in the energy mix for electricity production amidst growing urban population and carbon dioxide (CO2) emissions in Ghana, this study examines the effect of urbanisation and energy on carbon dioxide emissions in Ghana within the framework of the Environmental Kuznets Curve (EKC) Hypothesis over the period 1971–2013. Estimation results from Fully Modified OLS confirm the presence of the EKC hypothesis over the period for Ghana. In addition, combustible renewables and waste consumption, electricity production from hydro and trade openness are found to reduce carbon dioxide emission while fossil fuel consumption, electricity production from fossil fuels, urbanisation and industrialisation increase carbon dioxide emission for Ghana. The study again finds that an interaction between urbanisation and combustible renewables and waste consumption, however, has a positive effect on CO2 while the interaction between urbanisation and fossil fuel consumption has a negative effect. Further analysis using the Engel–Granger causality test, the variance decomposition and impulse response functions are embarked. The outcome of the study implies the need to pursue the implementation of the low‐carbon development strategy.
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