Assessing the Energy-Economy-Environment Nexus in Somalia: The Impact of Agricultural Value Added on CO2 Emissions

Abstract

This study assesses the environmental impact of the agricultural sector’s contribution to Somalia’s economy within the energy-economy-environment nexus. While the agriculture sector is a central pillar of Somalia’s economy, its environmental costs remain underexplored. By addressing this gap, the research utilizes time series data spanning from 1990 to 2020, including variables such as CO2 emissions, real GDP, renewable energy use, agricultural value-added, and population growth. The data analysis employs the autoregressive distributed lag (ARDL) model, Canonical Cointegrating regression (CCR), dynamic ordinary least squares (DOLS), and fully modified ordinary least squares (FMOLS). The results reveal a strong positive relationship between economic growth and environmental degradation in Somalia, supporting the environmental Kuznets curve (EKC) viewpoint. While economic growth initially exacerbates environmental pollution, the effect diminishes as income levels rise. Renewable energy consumption significantly mitigates environmental degradation. However, agricultural value-added is found to increase environmental deterioration in the long-term. The findings suggest that Somalia’s path to sustainable development will require concerted efforts to reform agricultural practices and embrace renewable energy adoption. Despite Somalia’s considerable solar energy potential, owing to its abundant solar radiation, this resource remains underutilized. A strategic focus on expanding solar energy infrastructure could not only mitigate environmental harm but also enable the country to leapfrog traditional energy development, thereby driving economic growth and reducing pollution.