Assessment of the impact of renewable energy supply, carbon dioxide emissions, trade, and economic growth nexus on maize production from 1979-2021

Abstract

The economy most susceptible to climate change is the agriculture sector. Agricultural production is negatively affected by weather patterns and temperature which ultimately impacts the sector’s economy. Food insecurity and a disturbance in the food supply chain are the aftereffects of climate change. A study by Wu et al. (2021). It is foretold that renewable energy utilization will reduce emissions responsible for climate change. The United Nations (UN) has also laid out a global mandate of “a clean and inexpensive energy for all” as part of the 17 Sustainable Development Goals (SDGs). This study specifically focuses on SDG 7 (affordable clean energy) and 13 (climate change). Many industrialized and emerging nations use maize as an energy crop; South Africa has rarely made use of this potential owing to valid food security concerns. Maize production trends in this study showed growth throughout the years despite a few declines which were mostly as a result of climate change. Trade trends also pointed out that there is minimal maize regional trade between South Africa and the rest of the African countries. At the aggregate level, maize production for human, and animal consumption and for biofuel feedstock depends on several macroeconomic factors, some of which were explored in this study. This study was backed by several macroeconomic theories namely: the Environmental Kuznets Curve (EKC), the Mercantilist Theory of Trade, the Export-Led Growth Theory, and the Endogenous Growth Theory. The main objective of this study was to assess the impact of Carbon Dioxide Emissions (CO2), Renewable Energy Supply, Trade, and Economic Growth on maize production in South Africa from 1979 to 2021. The nexus offered vital insights on initiatives that could be prioritised to advance renewable energy in the South African agriculture industry. An Auto Regressive-Distributed Lag (ARDL) model using Bounds test econometric approach was employed to estimate the short and long-run nexus between renewable energy supply, carbon dioxide emissions, trade, economic growth, and the production of maize. The existence of unit root in the time-series data was examined using the Augment Dickey-Fuller and Phillips-Perron tests; the robustness of the long-run estimate was assessed using the Fully Modified Least Squares (FMOLS) and Canonical Cointegration Regression (CCR) models. The Pair-wise Granger Causality test was used to test for causality between carbon dioxide emissions, renewable energy supply, trade, economic growth, and maize production. The short-run results indicated that Carbon Dioxide Emissions reduce maize production and renewable energy supply increases maize production both in the short-run and long-run. Granger causality results indicated a unidirectional causality between carbon dioxide emissions, economic growth, and maize production. A bidirectional causality was observed between renewable energy supply and maize production. This study contributes to economic policy regarding the energy-climate nexus in South Africa's agricultural industry. The agricultural industry is not only an energy consumer but also has the potential to contribute to renewable energy, specifically bioenergy through the supply of biomass. Considering that maize is a major global energy crop, its demand globally trickles down to maize-producing countries, and this has implications for supply and demand locally and globally. The study’s emerging insights may be used to guide the use of renewable energy biomass supply and the impact of climate change on the agricultural economy (maize production).