Examining the role of climate finance in the Environmental Kuznets Curve for Sub-Sahara African countries

Abstract

The purpose of this study is to examine the impact of climate finance on pollutant emissions (CO₂, CH₄ and N2O) for a sample of 19 Sub-Sahara Africa (SSA) countries over the period 2006 to 2017. Our study augments the traditional Environmental Kuznets Curve (EKC) with climate finance and our findings affirm the existence of an inverted U-shaped relationship between per capita income and emissions (i.e. traditional EKC) as well as between climate finance and emissions (Climate finance-induced EKC). We particularly compute turning points of $3,690 (CO₂); $5,710 (CH4) and $6,420 (N2O) for per capita GDP levels and $910 million (CO₂), $1.2 billion (CH4) and $1. 6 billion (N2O) for climate finance funds. These turning points are above the current averages observed for the SSA countries hence implying that these African countries are not developed enough and neither receive sufficient climate funding to address the challenges arising from climate change.

Keywords:

• Environmental Kuznets Curve (EKC)
• Carbon emissions (CO₂)
• methane emissions (CH4)
• nitrous oxide emissions (N2O)
• climate finance
• pollution haven-halo hypotheses

PUBLIC INTEREST STATEMENT

Global warming is one of the greatest concerns of humans. Despite African countries not contributing much to climate change, these countries suffer the most from it as they do not have the proper means to mitigate and adapt to climate change. Therefore, industrialized economies who contribute the most to climate change have pledged climate funds to assist in less developed countries circumvent the adversities of climate change even though there is much debate on whether the current levels of climate assistance is enough for mitigation and adaptation purposes. Our study examines the effect of climate finance on greenhouse gas emissions for a sample of 43 African countries and we are particualry interested in computing the turning point at which climate fiannce begins to reduce carbon emissions. Our study shows that climate finance offered to most African countries have not yet reached that turning pointand and we therefore verify that climate finance received from African countries are not sufficient enough to address problems arising from climate change.

Additional information

Funding

The authors received no direct funding for this research.

Notes on contributors

Andrew Phiri

Isaac Doku is a post-doctorate student at the Department of Economics at the Nelson Mandela University, South Africa. He is the main author of this manuscript which is part of his PhD research. His academic interests are macroeconomics, financial economics, applied econometrics and environmental economics.

Ronney Ncwadi is a full professor at the Department of Economics at the Nelson Mandela University, South Africa, and second author of the manuscript. He is also the director of the School of Economics, Development and Tourism. His academic interests are macroeconomics, financial economics, public economics and applied econometrics. He has published both in local and international journals and has read papers at academic conferences both in South Africa and abroad. He also serves as a co-chair for Pan African Entrepreneurship Research Council Editorial Committee in USA. He is a member of BRICS Academic Forum and Athens Institute for Education and Research in Greece.

Andrew Phiri, who is the corresponding author of the manuscript, is an associate professor with the Department of Economics at the Nelson Mandela University, South Africa who enjoys a wide range of publications in international journals with a research interests mainly in macroeconomics, applied econometrics and financial economics.