THE LONG-RUN ENVIRONMENTAL EFFECT OF AQUACULTURE AND FOOD TRADE IN EGYPT

Abstract

This research analyses the effects of aquaculture and food trade on the environmental quality in Egypt within the Environmental Kuznets Curve (EKC) Hypothesis. Using an annual time series data from 1971-2014 and employing the fully modified ordinary least squares and the Autoregressive distributed lag techniques, the study finds that the EKC hypothesis holds for carbon dioxide emission and economic growth while there is a U-shape relationship between deforestation and economic growth. Also, livestock production increases carbon dioxide emission and deforestation; urbanization reduces carbon emission and cereal production reduces carbon emission but increases deforestation. Aquaculture has a positive effect on carbon emission but reduces deforestation and food import is seen to reduce carbon emission. These findings were confirmed by results from variance decomposition effect and impulse response analyses. The outcome implies that addressing environmental degradation through these variables cannot be a ‘one-size fit all’ approach. Instead, the approach must be considered based on the primary environmental cost a particular policy seeks to address. Among others, it is recommended that there is the need for Egyptian government to adopt comparative and/or competitive advantage food trade policies in order to solidify the carbon reducing effect of food import.