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Fuel Subsidy Reform and Environmental Quality in Nigeria

Author

Listed:
  • Opeyemi Akinyemi

    (Department of Economics and Development Studies, Covenant University, Ota, Ogun State, Nigeria,)

  • Philip O. Alege

    (Department of Economics and Development Studies, Covenant University, Ota, Ogun State, Nigeria,)

  • Oluseyi O. Ajayi

    (Department of Mechanical Engineering, Covenant University, Ota, Ogun State, Nigeria,)

  • Lloyd Amaghionyeodiwe

    (Department of Accounting and Finance, York College, City University of New York, New York, USA)

  • Adeyemi A. Ogundipe

    (Department of Economics and Development Studies, Covenant University, Ota, Ogun State, Nigeria,)

Abstract

The study examines the existence of a long run effect of fuel subsidy reform on environmental quality in Nigeria for the period of 1970-2012 using the Johansen and the Engle Granger two step co-integration procedure techniques. The study developed a three case scenarios including: (i) A case of subsidy payment, (ii) a case of effective subsidy and, (iii) a case of no subsidy payment. Findings from the study supported evidence of a long run sustainable equilibrium model. Also, our estimation results showed that the first and the last case scenario do not significantly influence environmental quality. This implies that subsidy payment in Nigeria does not enhance access and consumption of liquid fuel. On the other hand, the interaction of sound regulatory framework with subsidy payment (the case of effective subsidy) significantly exerts a responsive influence on environmental quality.

Suggested Citation

  • Opeyemi Akinyemi & Philip O. Alege & Oluseyi O. Ajayi & Lloyd Amaghionyeodiwe & Adeyemi A. Ogundipe, 2015. "Fuel Subsidy Reform and Environmental Quality in Nigeria," International Journal of Energy Economics and Policy, Econjournals, vol. 5(2), pages 540-549.
    • Handle: RePEc:eco:journ2:2015-02-19
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    Cited by:

    1. Opeyemi Akinyemi & Philip. O. Alege & Oluseyi. O. Ajayi & Henry Okodua, 2017. "Energy Pricing Policy and Environmental Quality in Nigeria: A Dynamic Computable General Equilibrium Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 7(1), pages 268-276.
    2. Opeyemi E. Akinyemi & Evans S. Osabuohien & Philip O. Alege & Adeyemi A. Ogundipe, 2017. "Energy Security, Trade and Transition to Green Economy in Africa," International Journal of Energy Economics and Policy, Econjournals, vol. 7(3), pages 127-136.
    3. Evans, Olaniyi & Nwaogwugwu, Isaac & Vincent, Olusegun & Wale-Awe, Olawale & Mesagan, Ekundayo & Ojapinwa, Taiwo, 2023. "The socio-economics of the 2023 fuel subsidy removal in Nigeria," MPRA Paper 118360, University Library of Munich, Germany.

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    More about this item

    Keywords

    Subsidy Reform; Environmental Quality; Climate Change; Johansen Cointegration;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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