The Effects of Climate Change on Kenya’s Economic Growth

Abstract

Changes in the climate and natural disasters have hampered Kenya's growth in economy, as seen by periodic droughts, floods, and shifts in rainfall and temperature patterns. The research investigated the effects of climatic change on Kenya's GDP growth. Modeling was done using Autoregressive Distributed Lag (ARDL) model estimation technique while analyzing data from 1990 to 2023. Climate change was represented by annual rainfall fluctuations, carbon emissions, and forest depletion, with inflation, exchange rates, and government spending serving as the controlling factors. The regression results indicated that at 5% level of significance short run carbon emissions affect growth negatively but the long run results indicated a positive effect. Forest depletion positively impacts growth in the long run period. Government expenditure, changes in the exchange rate and economic growth had an inverse relationship. Inflation did not have potential long term impact on GDP. This study recommended that the government to balance economic growth with environmental sustainability by promoting cleaner technologies and renewable energy projects. Investments advanced irrigation and drought resistant crops are crucial. Sustainable forest management should involve controlled logging and reforestation to ensure long term health. Reducing exchange rate volatility through foreign reserves and diversified exports will stabilize the economy. Enhancing government expenditure efficiency by focusing on high return investments and minimizing waste will boost GDP stability.