Examining the agriculture-induced environment curve hypothesis and pollution haven hypothesis in Rwanda: the role of renewable energy

Abstract

AbstractAgriculture has a main impact on increasing the economy of most developing countries, and energy policies in fighting climate change have a vital role in strengthening economic growth. This paper studies the impact of agriculture, trade openness and green energy on CO2 emissions in Rwanda during 1990–2022. Phillips- Peron and Augmented Dickey fuller unit root test affirmed the stationary of data, and autoregressive distributed lag (ARDL)-bound testing confirmed a long-run relationship among variables. The study employed an ARDL approach.Findings from long-run elasticities showed that 1% increase in agriculture productivity increased carbon dioxide emissions by 1.94%; 1% increase in trade openness increased carbon dioxide emissions by 0.16%; whereas 1% increase in renewable energy consumption and GDP per capita decreased carbon dioxide emissions by 2.71% and 2%, respectively. The result confirmed the induced environment curve and the pollution haven hypothesis in Rwanda. Moreover, green energy consumption and GDP per capita decreases CO2 emissions eventually, which supports the validity of environment Kuznets curve in Rwanda.The findings recommend that an increase in renewable energy usage and trade reforms accompanied by strong environmental policies to reduce CO2 emissions will develop the agriculture sector and regional economy. Graphical Abstract