Abstract
This research examines the nexus of climate change and economic development in Nigeria between 1986 and 2022. The primary objectives were to assess the impact of climate change indicators on economic development and to assess the direction of causality between climate variables and per capita income (PCI). Data on PCI were taken from the WDI, while climate variables such as carbon emissions, temperature, and annual rainfall were sourced from the Nigerian Meteorological Agency (NiMET). Stationarity of the variables was assessed using unit root tests; the results revealed that PCI was I1 while carbon emissions, temperature, and rainfall were I0. The lag period was determined through the lag selection criterion, and the ARDL bound testing approach confirmed the existence of a long-run relationship among the variables. Long-run dynamics were estimated using the Error Correction Model (ECM), and the Error Correction Term (ECT) exerted a negative and significant coefficient (-0.13344, p=0.0257), which confirmed cointegration in the model. The findings showed that carbon emissions and annual rainfall (0.1709, p=0.1638; 0.002, p=0.6562) exhibited a positive but insignificant impact on PCI, while temperature (-0.0134, p=0.5092) exerted a negative and insignificant effect. Granger causality analysis showed a bidirectional causal relationship between carbon emissions and PCI, and a unidirectional causality from PCI to temperature. The research concluded that climate change indicators had no significant impact on economic development in Nigeria during the period under study, though causal relationships were present. It recommends that the Nigerian government establish efficient water harvesting systems to allow for the collection and storage of rainfall, ensuring water availability for irrigation during dry seasons and optimizing its use for increased agricultural productivity, which will impact the economy significantly.
Keywords: Climate Change, Economic Development, Error Correction Model