The role of renewable energy and agriculture in reducing CO2 emissions: evidence for North Africa countries

Ben Jebli, Mehdi and Ben Youssef, Slim (2015): The role of renewable energy and agriculture in reducing CO2 emissions: evidence for North Africa countries.

Abstract

This paper uses panel cointegration techniques and Granger causality tests to investigate the dynamic causal links between per capita renewable energy consumption, agricultural value added (AVA), carbon dioxide (CO2) emissions, and real gross domestic product (GDP) for a panel of five North Africa countries spanning the period 1980-2011. In the short-run, the Granger causality tests show the existence of a bidirectional causality between CO2 emissions and agriculture, a unidirectional causality running from agriculture to GDP, a unidirectional causality running from GDP to renewable energy consumption, and a unidirectional causality running from renewable energy consumption to agriculture. In the long-run, there is bidirectional causality between agriculture and CO2 emissions, a unidirectional causality running from renewable energy to both agriculture and emissions, and a unidirectional causality running from output to both agriculture and emissions. Long-run parameter estimates show that an increase in GDP and in renewable energy consumption increase CO2 emissions, whereas an increase in agricultural value added reduces CO2 emissions. As policy recommendation, North African authorities should encourage renewable energy consumption, and especially clean renewable energy such as solar or wind, as this improves agricultural production and help to combat global warming.

• Item Type: MPRA Paper
• Language: English
• Keywords: Renewable energy; Agriculture; CO2 emissions; Panel cointegration; North Africa.
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C33 - Panel Data Models ; Spatio-temporal Models; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q15 - Land Ownership and Tenure ; Land Reform ; Land Use ; Irrigation ; Agriculture and Environment; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q42 - Alternative Energy Sources; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q54 - Climate ; Natural Disasters and Their Management ; Global Warming

References

Ang, J. B., 2007. CO2 emissions, energy consumption, and output in France. Energy Policy, 35, 4772-4778.

Apergis, N., Payne, J.E., Menyah, K., Wolde-Rufael, Y., 2010. On the causal dynamics between emissions, nuclear energy, renewable energy, and economic growth. Ecological Economics, 69, 2255-2260.

Apergis, N., Ozturk, I. 2015. Testing environmental Kuznets curve hypothesis in Asian countries. Ecological Indicators, 52, 16-22.

Ben Jebli, M., Ben Youssef, S, 2015a. The environmental Kuznets curve, economic growth, renewable and non-renewable energy, and trade in Tunisia. Renewable and Sustainable Energy Reviews, 47, 173-185.

Ben Jebli, M., Ben Youssef, S., 2015b. Renewable energy consumption and agriculture: evidence for cointegration and Granger causality for Tunisian economy. MPRA Paper 68018.

Ben Jebli, M., Ben Youssef, S., Apergis, N., 2015. The dynamic interaction between combustible renewables and waste consumption and international tourism: The case of Tunisia. Environmental Science and Pollution Research, 22, 12050-1201.

Chebbi, H.E., 2010a. Agriculture and economic growth in Tunisia. China Agricultural Economic Review, 2, 63-78.

Chebbi, H.E., 2010b. Long and short-run linkages between economic growth, energy consumption and CO2 emissions in Tunisia. Middle East Development Journal, 1, 139–158.

Chebbi, H.E., Olarreaga, M., Zitouna, H., 2011. Trade openness and CO2 emissions in Tunisia. Middle East Development Journal, 3, 29-53.

Dickey, D.A., Fuller, W.A., 1979. Distribution of the estimators for autoregressive time series with a unit root. Journal of the American Statistical Association, 74, 427-431.

Energy Information Administration, 2015. International Energy Outlook. Available online at: www.eia.gov/forecasts/aeo.

Engle, R.F., Granger C.W.J., 1987. Co-integration and error correction: Representation, estimation, and testing. Econometrica, 55, 251-276.

Fischer., J.R., Finnell, J.A., Lavoie, B.D., 2006. Renewable energy in agriculture: Back to the future? Choices: The magazine of food, farm, and resource, 21, 27-31.

Fodha, M., Zaghdoud, O., 2010. Economic growth and pollutant emissions in Tunisia: An empirical analysis of the environmental Kuznets curve. Energy Policy, 38, 1150-1156.

Halicioglu, F., 2009. An econometric study of CO2 emissions, energy consumption, income and foreign trade in Turkey. Energy Policy, 37, 1156–1164.

Im, K.S., Pesaran, M.H., Shin, Y., 2003. Testing for unit roots in heterogeneous panels. Journal of Econometrics, 115, 53-74.

Karkacier, O., Goktolga, Z.G., Cicek, A., 2006. A regression analysis of the effect of energy use in agriculture. Energy Policy, 34, 3796-3800.

Levin, A., Lin, C.F., Chu, C.S., 2002. Unit root tests in panel data: Asymptotic and finite-sample properties. Journal of Econometrics, 108, 1-24.

Mushtaq, K., Abbas, F., Ghafour, A., 2007. Energy use for economic growth: Cointegration and causality analysis from the agriculture sector of Pakistan. The Pakistan Development Review, 46, 1065–1073.

Pedroni, P., 2001. Purchasing power parity tests in cointegrated panels. Review of Economics and Statistics, 83, 727-731.

Pedroni, P., 2004. Panel cointegration: Asymptotic and finite sample properties of pooled time series tests with an application to the PPP hypothesis. Econometric Theory, 20, 597-625.

Phillips, P.C.B., Perron, P., 1988. Testing for a unit root in time series regressions. Biometrika, 75, 335-346.

Rafiq, S., Salim, R., Apergis, N., 2015. Agriculture, trade openness and emissions: an empirical analysis and policy options. Australian Journal of Agricultural and Resource Economics, DOI: 10.1111/1467-8489.12131.

Reynolds, L., Wenzlau, S., 2012. Climate-Friendly Agriculture and Renewable Energy: Working Hand-in-Hand toward Climate Mitigation. Worldwatch Institute. Accessed at: http://www.renewableenergyworld.com/rea/news/article/2012/12/climate-friendly-agriculture-and-renewable-energy-working-hand-in-hand-toward-climate-mitigation.

Sadorsky, P., 2009. Renewable energy consumption, CO2 emissions and oil prices in the G7 countries. Energy Economics, 31, 456-462.

Sebri, M., Abid, M., 2012. Energy use for economic growth: A trivariate analysis from Tunisian agriculture sector. Energy Policy, 48, 711-716.

Shahbaz, M., Khraief, N., Uddin, G.S., Ozturk, I., 2014. Environmental Kuznets curve in an open economy: A bounds testing and causality analysis for Tunisia. Renewable and Sustainable Energy Reviews, 34, 325-336.

Turkekul, B., Unakitan, G., 2011. A co-integration analysis of the price and income elasticities of energy demand in Turkish agriculture. Energy Policy, 39, 2416–2423.

United Nations Economic Commission for Africa, 2012. The Renewable Energy Sector in North Africa: Current Situation and Prospects. Rabat, Morocco.

World Bank, 2015. World Development Indicators. Accessed at: http://www.worldbank.org/data/onlinedatabases/onlinedatabases.html.