Have International Remittance Inflows Degraded Environmental Quality? A Carbon Emission Mitigation Analysis for Ghana

Abstract

Despite the considerable contributions of remittances to households and economic advancements, their environmental implications have received little attention in empirical research. This study was, therefore, conducted to help fill that gap, using Ghana as an evidence. In achieving the above goal, robust econometric methods that control for endogeneity, heteroscedasticity and serial correlation among others, were engaged for the analysis. From the results, the studied variables were first-differenced stationary and cointegrated in the long run. The elasticities of the predictors were explored via the FMOLS, DOLS and CCR estimators, and from the results, remittance inflows worsened the ecological quality in Ghana through high CO2 emissions. Also, population growth and energy utilization were not friendly to the country’s environment; however, technological innovations improved environmental quality in the nation via low CO2 effusions. The VECM was employed to examine the path of causalities amidst the series, and from the results, there were bidirectional causalities between remittance inflows and CO2 emissions and between population growth and CO2 emanations. Also, a causation from energy utilization to CO2 effluents was discovered; however, there was no causality between technological innovations and CO2 exudates in the country. Based on the findings, it was recommended among others that, authorities should enact regulations to control the activities of polluting industries that are being financed by remittances. Also, households and individuals should minimize their use of remittances to finance carbon-intensive items, like automobiles and air-conditioners among others, that add to environmental pollution in the country.