Carbon Emission Threshold and its effects on Agricultural Output: Evidence from Impulse Response and Variance Decomposition Analyses


Humanity and environmental issues are inseparable. In the past, human activities influenced the environment without concerns for reversal effects, but in recent times, the reversal effects are the most significant threats to the environment, agricultural development, the economy and human health. The study investigates the relationship between environmental pollution proxied by carbon emission and agricultural development in Nigeria using quarterly data spanned 1981Q1-2019Q4. The dynamic Environmental Kuznets Curve theory supported the formulation of the dynamic autoregressive models analysed using a plethora of econometric methods. The result of the Vector Error Correction Model, impulse response and variance decomposition test revealed an N-shaped Environmental Kuznets curve relations between carbon emission and agricultural output in Nigeria, against the theoretical expectation of an inverted U-shape nexus. The implications of the N-shaped relationship are enormous for agricultural development, foreign direct investment attraction and carbon emission curbing strategies in Nigeria.