An empirical examination of the Environmental Kuznets Curve hypothesis for carbon dioxide emissions in Ghana: an ARDL approach

Abstract

The Environmental Kuznets Curve (EKC) hypothesis postulates an inverted U-shaped relationship between different pollutants and economic growth. In Ghana, as in many other developing countries, there exist scanty studies that confirm or otherwise the EKC hypothesis with regards to CO2 emissions as well as the factors that drive CO2 emissions. This work aims to bridge this knowledge gap by addressing these two major questions using data from 1970 to 2010 and the Auto Regressive Distributed Lag (ARDL) Bounds Testing approach. The results rather suggest a U-shaped relationship between per capita GDP and CO2 emissions per capita indicating the non-existence of the EKC hypothesis for CO2 in Ghana. This implies that further increase in per capita Gross Domestic Product (GDP) will only be associated with increase in CO2 emissions as the income per capita turning point of about $624 at constant 2000 prices occurred between 1996 and 1997. Furthermore, our results reveal energy consumption and trade openness are positive long run drivers of CO2 emissions. It is therefore recommended that the enhancement of trade liberalization policies should ensure the use of cleaner technologies and products while investment in cleaner energy alternatives could help reduce CO2 emissions. We also recommend the implementation of the Low Carbon Development Strategy which integrates development and climate change mitigation actions.

The effect of energy and urbanisation on carbon dioxide emissions: evidence from Ghana

“…The emission reduction impact of trade openness is consistent with the results of Arouri et al (2014), and Al-Mulali and . However, it contradicts the arguments made by Twerefou et al (2016) that in Ghana, the increased importation of e-waste and exportation of gold which uses petroleum product for power generation result in increased CO 2 emissions that are detrimental to the environment.…”

“…However, it contradicts the arguments made by Twerefou et al . () that in Ghana, the increased importation of e‐waste and exportation of gold which uses petroleum product for power generation result in increased CO 2 emissions that are detrimental to the environment.…”

“…The foregoing developments make it necessary to examine the effects of energy and urbanisation on Ghana's CO 2 emissions under the EKC hypothesis. Our study is somewhat related to studies that have among other things examined the effect of energy (see Kwakwa et al ., ; Twerefou et al ., ), urbanisation (Adams et al ., ; Aboagye, ) or both urbanisation and energy (Opoku, ) on carbon dioxide emission for Ghana and other countries or regions (Jebli et al ., ; Sadorsky, ; York and McGee, ). However, this paper differs from these existing studies in four ways.…”

“…But relying on energy to achieve economic growth and development may come at a cost since energy is a major source of greenhouse gas (GHG) emissions, particularly CO 2 that deteriorate the quality of the environment. Consequently, the relationship between CO 2 , income and energy has been investigated by researchers (see Kwakwa and Adu, 2016;Shahbaz et al, 2016;Twerefou et al, 2016). However, in recent times, researchers have also paid close attention to the emission effect of population indicators especially urbanisation.…”

“…However, this paper differs from these existing studies in four ways. First, the analysis of the energy variable by studies like Kwakwa et al (2014), Twerefou et al (2016) and Opoku (2013) among others was limited to the consumption effect while studies like York and McGee, 2017 focused on the production side. In this study, we appreciate the changing trend of energy mix for the production of electricity and thus examine the emission effect of electricity production sources (renewable and non-renewable) as well as that of consumption.…”