In this study, we investigated the role of the urban population and energy consumption on environmental degradation in Somalia. The study used the
ARDL model and Granger causality test with time-series data from 1989 to 2021. The study found that increasing the urban population and domestic
investment positively influenced environmental degradation in the short and long run. If the urban population increases, environmental damage
will increase as they use more carbon dioxide emissions. Similarly, increasing domestic investment also contributes to environmental degradation.
The study also found a causal effect between the urban population and domestic investment, while the urban population and energy consumption
caused domestic investment. Moreover, there was a bidirectional causal effect between urbanization and energy consumption. Based on these results,
policymakers are recommended to prioritize the development of urban planning and regulatory institutions that focus on environmental consciousness
to guide sustainable urban growth. This should include measures to control pollution, preserve green spaces, and promote energy-efficient practices.
Furthermore, targeted policies are needed to support domestic investment while ensuring it aligns with environmental preservation goals. Incentives
for adopting eco-friendly industries and technologies can be explored to balance economic growth with environmental protection.
Keywords: Energy Consumption, Urbanisation, Environmental Quality, Domestic Investment, Somalia
JEL Classifications: C22, Q41, Q53, R11