Crude Oil Price, Urbanization and Environmental Pollution in Nigeria: Evidence from ARDL Approach

Abstract

The impacts of crude oil price and urbanization on environmental pollution in Nigeria for the time frame of 1981 to 2016 is the main objective of this paper and the objective was achieved through the application of Augmented Dickey Fuller and Kwiatkowski Philip Schmidt Shin unit root tests together with Autoregressive Distributed Lag Model in the process of achieving stationarity and cointegration among the variables. The results obtained showed from ADF indicate that foreign direct investment and urbanization were stationary at level while environmental pollution and crude oil price at first difference. But KPSS result revealed that all the variables with the exception of urbanization were stationary at level and the bound test result revealed that all the variables are cointegrated. The long-run and the short-run findings indicate that foreign direct investment and crude oil price have significant negative sign with environmental pollution for the periods under study and this shows that these variables are helps in ensuring clean environment and maintain the quality of the environment. But urbanization results from the long-run and the short-run models shows that it has significant positive sign with environmental pollution and this signifies that urbanization is among the drivers of environmental pollution in the country. We recommend that for the country to maintain good environmental quality the country must limit the process of urbanization to best level in order to reduce the associated environmental impacts and to maintain balance were the quality of the environment is not harm by the increasing urbanization. Contribution/ Originality: This study contributes to the existing literatures by providing evidence that rise in crude oil price helps in reducing the level of environmental pollution and urbanization is accountable for the increase in the level of environmental pollution in Nigeria.

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