Effects of Urbanization on Climate Change: Evidence from Bangladesh

Abstract

Urbanization is believed to be a driving force of an economy which facilitates the transfer of surplus labor from the rural agricultural sector to the urban industrial sector and contributes to economic development. However, unplanned urbanization can at times boomerang, exerting negative impacts that not only adversely affect the economy but also stimulate environmental degradation. The aim of this paper is to analyze the effects of urbanization on climate change in Bangladesh, a country that has a history of being vulnerable to natural calamities. This paper specifically addresses the effects of urbanization, and other control variables, on emission of selected greenhouse gases and on the average annual temperature change in Bangladesh. Augmented Dickey-Fuller test, Johansen Cointegration test, Vector Error-Correction Model (VECM) causality test, and Granger causality test are conducted in this paper to analyze the data. Moreover, the techniques of Dynamic Ordinary Least Squares (DOLS) and Fully-Modified Ordinary Least Squares (FMOLS) are used to estimate the associated relationships between the variables considered. The causality test results show that urbanization is found to have a causal effect on the greenhouse gas emissions and temperature change in the long run. In contrast, a unidirectional causality is also found to be running from urbanization to carbon dioxide emission in the short run. In light of the regression model estimates it is found that initially urbanization leads to a fall in greenhouse gas emissions and reduces the temperature change, but the relationship eventually gets reversed with time whereby urbanization is found to trigger climate change in Bangladesh. These findings have significant implications for urban planners and policy makers.

Keywords: Climate change; Urbanization; Bangladesh.