Climate Change, Natural Resource Depletion and Economic Growth of Kenya

Abstract

The adverse effects of climate change ravage more the growth trajectories of developing countries than developed countries. This is aggravated by random depletion of natural resources arising from rapid economic growth, consequences of civilization as well as existence of weak institutional infrastructure for environmental protection. The paper empirically investigates the nexus between climate change, natural resource depletion and economic growth of Kenya. The trend analysis demonstrates that depletion of forest cover as a percentage of gross national income moves in tandem with the cost of damage to the economy arising from carbon dioxide emissions. The depletion of forest cover also reduces the growth rate in gross domestic product. The empirical findings from regression analysis show that natural resource depletion increases the cost of damage arising from carbon dioxide emissions and this finding mimics the trend analysis. The increased cost of damage arising from carbon dioxide emissions in turn reduces savings, investments and ultimately reduces the growth rate in gross domestic product of Kenya. Agriculture sector in Kenya plays a pivotal role in GDP growth and is immensely affected by climate change. The paper also empirically examined the impact of the cost of carbon dioxide damage on agriculture crop production and livestock product. Results show that both livestock production and crop production reduce with increased carbon dioxide emissions. These findings point to the importance of implementation of policies or protocols for controlling carbon dioxide emissions and natural resource depletion because of their devastating effect on economic growth of Kenya.