Natural Resource Rents and CO2 Emissions in West Africa: The Institutional Quality Dilemma?

Natural resource exploitation can fuel economic growth by generating resource rents, but this growth comes at a cost: significant environmental degradation. As resource rents rise, so do carbon emissions and environmental degradation, highlighting the need for sustainable management of natural resources to balance economic benefits with environmental protection. consequently, this study examines how natural resource rents impact environmental quality, and whether regulatory quality can mitigate any adverse effects. Specifically, it investigates the relationship between resource rents, environmental quality, and regulatory quality from 1990 to 2022. The study utilized unbalanced panel dataset of fifteen (15) West African countries. For techniques, the study used the Pooled Mean Group (PMG) estimator in addition to panel unit root and cointegration. The study used Kao and Westerlund cointegration procedures found co-movement among the variables. The PMG empirical result asserted that the environment further degrades as resource rents increases. The PMG also divulged that institutional quality exacerbate the environmental damaging effect of resource rents. Thus, reducing the level of CO2 emissions and improving the environment will require policy makers and government of the African countries to lower their dependence on the extractive sector, the extraction and utilization of mineral resources and exploring other energy source through scaling up research and investment in hydropower, solar, wind and geothermal energy sources.