Keeping an eye on environmental quality in Tanzania as trade, industrialization, income, and urbanization continue to grow.

Abstract

By applying the ARDL (autoregressive distributed lag) bounds testing method, this study examines the short- and long-term dynamic relationship between carbon dioxide (CO2) emissions, economic growth (gross domestic product), industrialization, trade, and urban population in Tanzania from 1990 to 2020. The study found that economic growth, trade, industrialization, and the urban population all contributed to the increase in environmental degradation (i.e., carbon dioxide emissions). However, we found that financial credit (i.e., domestic credit to the private sector) reduces carbon dioxide emissions, and its effects are significant in EKC (environmental Kuznets curve) model. Our findings revealed that economic growth (i.e., income) was responsible for both short- and long-term increases in carbon dioxide emissions in Tanzania. Economic growth is harmful to the environmental quality above a threshold value of 6.23%. Furthermore, the environmental Kuznets curve hypothesis is confirmed for Tanzania. Our findings suggest that policymakers should monitor and use the threshold levels to manage carbon dioxide emissions and to protect the environmental quality. Further, a strong focus should be placed on formulating environmental policies (i.e., carbon tax policy) as industrialization, urban population, economic growth, and trade continue to grow in future, restricting carbon dioxide emissions and safeguarding the environment.