Environmental degradation and economic growth in Kenya: an ARDL bounds testing approach
This study set out to determine the nature of the relationship between environmental degradation and economic growth in Kenya over the period 1970-2008. The objectives were to determine the impact of economic activities on the environment and to establish whether economic growth is detrimental or beneficial to the environment in Kenya. A structural model was formulated by employing carbon dioxide emissions as the environmental indicator, per capita GDP as a proxy for the scale effect, the share of manufacturing, agricultural and services sectors as proxies for the composition effect and polity as a proxy for the technique effect. The ARDL approach to cointegration was adopted to establish the long-run relationship amongst variables. The findings reveal that there is an inverted N- shaped relationship between economic growth and environmental degradation. The share of agricultural and manufacturing sectors and polity variables are insignificant in the model, implying that changing them does not significantly cause a change in environmental degradation. However, the services sector is a significant contributor to degradation probably due to the tremendous growth reported in the sector and the high potential for degradation in its sub-sector activities. One of the core policy implications that can be drawn from the findings is that in order 'for the government to realize its development objectives there is need for environmental policies to be pursued alongside developmental policies. In addition a change towards enhanced democratization is expected to have beneficial effects on the environment through effective policies and institutions.