The nexus of economic growth and environmental degradation in Ethiopia: time series analysis

Abstract

ABSTRACT Economic growth and environmental degradation are like two sides of a coin implying that these two variables are interdependent. Therefore, the main objective of this study is to investigate the relationship between economic growth and environmental quality. Moreover, this study attempted to identify the relationships between the environmental quality, population growth, and economic growth using a time series data from 1981 to 2012. The result showed that the Vector Error correction model was appropriate to show both short-run and long-run relationships between variables. The results also indicated that the long-run economic growth helps to improve the environmental quality and/or reduce environmental degradation, while population growth worsens the environmental degradation. This study concluded that a major cause of bio-diversity loss is the degradation of vegetation in order to expand agriculture production for a rapidly growing population. Therefore, the country should formulate an appropriate policy for monitoring population growth.