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

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.