Modelling Dynamic Linkage between Climate Change and Food Inflation in Nigeria

Abstract

The study delves into the critical issue of climate change and its detrimental impact on various regions worldwide, including Nigeria. It emphasizes the urgent need for global efforts to mitigate these effects and advocates for measures to address human activities contributing to climate dynamics. Specifically, the study empirically examines the affiliation between climate change shocks and food price inflation in Nigeria using a Nonlinear Autoregressive Distributed Lag (NARDL) approach. The dataset covers the period from January 2011 to December 2022.The empirical findings reveal a robust cointegrating relationship between climate change shocks and food price inflation in Nigeria. Notably, climate change shocks significantly contributed to rising food prices within the study period. Furthermore, the Error Correction Term (ECT), estimated at 52 percent, indicates that food price inflation adjusts by 52 percent in the current month to counteract the initial shock experienced in the previous month. The Dynamic Multiplier graph, along with a 95 percent confidence interval, demonstrates that the explanatory variables exert substantial influence on food price inflation in Nigeria during the study period. Considering these findings, the study recommends that Nigeria should transit from traditional agricultural practices to Climate-Smart Agriculture to address future needs and climate-related challenges. Additionally, the government and stakeholders should implement alternative practices such as irrigation and the replenishment of shrinking water bodies in the Sudan and Sahel savannah regions.