Dynamic impacts of energy use, agricultural land expansion, and deforestation on CO2 emissions in Malaysia

Abstract

This study empirically investigates the nexus among energy use, agricultural land expansion, deforestation, and carbon dioxide (CO2) emissions in Malaysia. Time series data from 1990 to 2019 were utilized using the bounds testing (ARDL) approach followed by the Dynamic Ordinary Least Squares (DOLS) method. The DOLS estimate findings show that the energy usage coefficient is positive and significant with CO2 emissions, indicating a 1% increase in energy consumption is related to a 0.91% rise in CO2 emissions. In addition, the coefficient of agricultural land is positive, which indicates that agricultural land expansion by 1% is associated with an increase in CO2 emissions by 0.84% in the long run. Furthermore, the forested area coefficient is negative, which means that decreasing 1% of the wooded area (i.e., deforestation) has a long-term effect of 5.41% increased CO2 emissions. Moreover, the pairwise Granger causality test results show bidirectional causality between deforestation and energy use; and unidirectional causality from energy use to CO2 emissions, agricultural land expansion to CO2 emissions, deforestation to CO2 emissions, agricultural land expansion to energy use, and deforestation to agricultural land expansion in Malaysia. The empirical findings reveal that increased energy use, agricultural land expansion, and deforestation have a negative impact on environmental quality in Malaysia. Thus, the effective implementation of policy measures to promote renewable energy, climate-smart agriculture, and sustainable management of forest ecosystems could be useful for reducing environmental degradation in Malaysia.