Environmental degradation and economic growth: time-varying and nonlinear evidence from Nigeria

The current study investigates the causal relations between CO2 emissions and the growth of Nigeria's economy, a topic of significant interest for the relevant authorities that has yet to be comprehensively examined. We test both the nonlinear and time-varying nature of the variables' relationships to provide effective and applicable policies. Unlike the linear method's lack of causal evidence, both nonlinear and time-varying Granger causality tests indicate the presence of dual causation between the variables. This suggests that appropriate and cost-effective environmental policies need to be adopted in Nigeria to prevent sustainable economic growth from being jeopardized while addressing environmental concerns. In this regard, it is recommended that clean energy resources make a greater contribution to the country’s energy paradigm as a viable solution. This will lead to higher energy efficiency, which will help the country to maintain the economy's growth level in the ideal zone and mitigate environmental challenges.