Effect of natural resources extraction on energy consumption and carbon dioxide emission in Ghana

Abstract

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.