Impact of Trade on the Environment: Evidence from Nigeria’s Time Series

Abstract

This study considers the impact of trade on the environment for Nigeria's economy. It employs Vector Autoregressive (VAR) model on Nigerian economy data over the period 1990 to 2014. It finds that within the VAR model built, trade impacts the environment mildly while the environment is also an important factor in the line of trade for a developing and natural resources driven economy like Nigeria, both over the short and the long run. The relevant authority in the Nigerian economy is hence advised to fashion policies that will explore the dynamics between trade and the environment as this can have implications for sustainability of economic growth. Given the middle low income status of the Nigerian economy and its dependence on natural resources endowments to drive economic growth, caution need to be taken not to inflict irreparable damage on the environment. Trade policies should be forward looking in relation to the environment rather than for attracting all sorts of foreign investments for immediate benefits.

Keywords: Trade, Environment and Sustainability