Asymmetric effect of environmental cost of forest rents in the Guinean forest-savanna mosaic: The Nigerian experience

Abstract

Several studies have identified deforestation as a major cause of environmental degradation, but little is known about the asymmetric effect of the environmental cost of forest rents. To fill this gap, our study uses the nonlinear autoregressive distributed lag (NARDL) model and asymmetric causality test to examine the environmental implication of forest rents in the Guinean Forest-Savanna Mosaic of Nigeria over the period 1990:Q1 to 2016:Q4. The empirical results show that forest rents increase CO₂ emissions when the shock to forest rents is positive and decreases CO₂ emissions when the shock to forest rents is negative. The results further show evidence of asymmetric effects of crop production, fossil fuel energy consumption, and economic growth on CO₂ emissions. Moreover, the effects of both positive and negative shocks in economic growth are elastic, suggesting that CO₂ emissions respond in a larger magnitude to a 1% positive or negative shock in economic growth. While the positive shock to crop production and economic growth stimulates CO₂ emissions, their negative shocks dampen CO₂ emissions. In addition, the positive (negative) shocks to fossil energy consumption exert upward (downward) pressure on CO₂ emissions. Furthermore, the asymmetric causality test divulges that a positive change in forest rents causes a negative change in CO₂ emissions and a negative change in forest rents causes a positive change in CO₂ emissions. Based on these findings, the study recommends the need for policymakers to formulate sound policies to protect the forests and transit toward clean energy consumption to minimize energy-related CO₂ emissions in the country.

Keywords: Agricultural production; Deforestation; Forest rents; Fossil fuel energy; Guinean Forest-savanna Mosaic; Nigeria.