Analysis of the Effect of Selected Macroeconomic Variables on Carbon Emissions in Kenya

As nations strive to balance economic growth with environmental sustainability, it is important to understand the dynamic relationship between carbon emissions and key macroeconomic variables so as to design appropriate environmental policies. Despite the existence of an enormous literature examining the linkages between economic growth and carbon emissions in Kenya, only a few studies have included structural breaks in their analyses. This study, therefore, explores the relationship between carbon emissions and key macroeconomic variables in Kenya from 1990 to 2021 using the Autoregressive Distributed Lag (ARDL) model within the standard Environmental Kuznets Curve theoretical framework. The data were obtained from the World Banks’ World Development Indicators and include variables such as per capita Gross Domestic Product (GDP), foreign direct investment, natural resource rent, urbanization, energy consumption, and trade openness. Stationarity was tested using the Augmented Dickey-Fuller and Philips-Perron tests, which indicate that the variables were first-difference stationary. The ARDL bounds test results indicate the existence of a long-run relationship among the variables. Per capita GDP, energy consumption, urbanization, trade openness, and the 2014 structural break had a long-run positive effect on carbon emissions. This study recommends the promotion of investment in renewable energy, enforcement of environmentally-friendly trade policies, and enhancing urban planning given their long-run positive effects on carbon emissions.