How do economic growth and burnt area affect CO2 emissions in Portugal?

Abstract

A contemporary and pertinent discussion concerns the trade-off between economic growth and carbon dioxide (CO₂) emissions. Despite the dire consequences of wildfires on human health, habitats and overall environment, the economic literature has failed to consider the impact of increasingly frequent fires on emissions. We will look closely at the Portuguese case, considering the economic growth and emissions nexus considering the role of wildfires which can further explain the proposed relationship. This variable is of particular importance when studying the Portuguese case since wildfires are unfortunately a recurrent phenomenon and global warming as predictably increased their intensity and frequency leading to further emissions (Miranda et al., 1994). Leitão (2014) found a positive and statistically significant impact of economic growth on carbon emissions in Portugal, using energy use and globalisation as control variables. While Martinho (2019)’s causality analysis confirms a positive effect of burnt area on emissions in Portugal, with the relationship being non-linear. This research therefore seeks to address this gap and contribute further knowledge regarding the relationship between economic growth, burnt area, and CO₂ emissions. The objectives defined for this study are: (a) to assess the contribution of burnt area to the Portugal’s CO₂ emissions; and (b) to revisit the issue of the impact of economic growth on CO₂ emissions in the presence of fire-fighting variables. The database of our time-series concerns Portuguese data spanning 28 years (from 1995 to 2022) for which the variables for carbon emissions per capita, gross domestic product per capita as well as the firefighting variables for the number of firefighters and burnt area, and lastly average temperature to account for weather variations. All variables collected for the construction of the database are from both national and international databases which are free and publicly available to ensure replicability. The model’s results point to a positive and statistically significant effect of burnt area on carbon emissions in the short run as was to be expected, with a 0,042 coefficient, so a 1% increase in burnt area potentially leads to a 0,042% increase in carbon emissions. while all other variables are not statistically significant. While in the long run all variables present statistical significance, with a 1% increase in economic output per capita leading to an increase of 0,702% of carbon emissions, while the coefficient for burnt area is now slightly higher at 0,049. Similarly, the number of firefighters also has a positive effect on carbon emissions while remarkably, average temperature has a negative impact on carbon emissions. Our results lead us to confirm our main hypothesis in the long run and partially in the short term since only burnt area is significant. Therefore, policy makers must further their efforts to reduce ignitions and increase firefighting efficacy to reduce burnt area, not only to prevent material and even human losses but to prevent the deterioration of our environment through carbon emissions who in turn lead to increased temperatures, habitat destruction and health issues which leads to increased expenses and economic burden (Barbosa et al., 2024).