Green Fiscal Policy Mechanisms for a Low–Carbon Ecosystem: A Developing Country Assessment

Abstract

Due to the obvious intensity of carbon footprint in developing nations' vicinity, the United Nations has developed a guidebook that focuses on carbon taxes as one of the solutions to industrial contamination in emerging regions. Green fiscal policy is a major topic of discussion in the public debate over climate change around the universe. This study investigates the influence of fiscal policy measures in reducing carbon emissions in the ecosystem. The analysis spans the years 2000 to 2020 and makes use of World Bank Development Indicators data on CO₂ emissions in million metric tons. The data on tax income are taken from the Federal Inland Revenue Service in billions of Naira, while the data on government investment and debt are derived from the Central Bank of Nigeria Statistical Bulletin. After establishing the adequacy and appropriateness of the datasets and model, the study employs econometric tool of multiple regression approach to examine the effect of fiscal tools on climate change improvement. The results suggest that government funding has a negative intangible impact on climate change mitigation. Further findings reveal that tax income collection is positively irrelevant, however debt has a positive influence on CO₂ emissions reduction. The study strongly suggests government drive for green fiscal policy which should incorporate efficient and cost-effective green-financing options, carbon taxation, environmentally friendly government budgets and investments.