Dynamics of Economic Growth and Environmental Degradation in Nigeria using Vector Auto-Regressive Model
Keywords:Environmental pollution, population, sustainable development, vector error correction model, environmental kuznet curve hypothesis
The study examined the interrelationship among economic growth, environmental pollution and human health for Sustainable Development (SD) in Nigeria. This was to contribute to the dynamic debate of how human and economic activities relate and interrelate with environmental pollution in measuring sustainable development in Nigeria. This study further sought to verify the Environmental Kuznet Curve Hypothesis in Nigeria.
The study employed the Vector Error Correction Model (VECM) to investigate linear and interrelationship mainly among life expectancy at birth, economic growth and environmental pollution in Nigeria from 1970-2015. Since the variables have unit root and revealed that there is at least a cointegrating equation in the model, the VECM become a more appropriate model for the study.
The VECM Impulse Response Function (IRF) result indicated that economic growth increased environmental degradation in the long run and environmental degradation on the other way round reduced economic growth in most of the period of the study. The VECM system conditional forecast of 10%, 20% and 26% from 2000 to 2015 periods showed that a 10%, 20%, and 26% reduction forecasts of environmental pollution led to a consistent increased economic growth and life expectancy at birth of the country in the study. This indicated that a reduction in environmental pollution will improve the health of Nigerians and also enhance a sustainable development in the country.
The study concluded that environmental degradation reduces economic growth while economic activities in the country increases environmental degradation in the country. From the conditional forecast, the study further concluded that efforts in reducing environmental pollution through policies and better environmental friendly economic activities will improves economic growth for sustainable development in the country.
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