Global Journal of Applied, Management and Social Sciences (GOJAMSS); Vol.13 December 2016; P.31 – 38 (ISSN: 2276 – 9013) 31 OIL FDI, ENVIRONMENT AND WELFARE ISSUES: EVIDENCE FROM NIGER DELTA REGION SALAMI DADA KAREEM, Department of Economics, Faculty of Social Sciences, Lagos State University, Ojo Email: daskareem@gmail.com & LAWAL AROGUNDADE SAMOD Department of Economics, Faculty of Social Sciences, Lagos State University, Ojo & ATOYEBI KEHINDE Department of Economics, Faculty of Social Sciences, Lagos State University, Ojo Abstract The study investigates oil foreign direct investment impacts on the environment and people of Niger Delta oil producing communities, using structural equation models. Structural equation model is adopted because it accommodates multiple dependent variables simultaneously. Evidence shows that oil foreign direct investment has greater adverse impact on the environment than improving the well-being of the people in host communities. By implication, the environment appears to be devastating at a faster rate than well-being. This suggests that the marginal environmental cost of addition exploitation will rise over time. Therefore, there are needs for efficient allocation of resources in production and consumption so as to reduce the degree of environmental degradation. Keywords: Oil foreign direct investment, environment, well-being, structural equation modeling Introduction The quest for self sufficiency, in the production of human wants has tamed the natural environment to his advantage hence the exploitation of solid and liquid mineral resources like oil in the Niger Delta for the benefit of man. This human activity had negative and disastrous implications on the environment and has raise concern about sustaining the health of rural inhabitants in Niger Delta Region Akpamovie (2014); Aghalino (2013), Atoyebi and Olatunbosun (2012), Das Kareem (2014). Niger Delta as a region is plagued with inadequate infrastructure, social services, non oil industries and even petroleum products. Rather than attract development, oil has actually devastated and under-developed the region (Ikelegbe and Ikelegbe, 2012). Oil exploration, exploitation and distribution have created the huge land and water scarcities and the oil company has disinherited and displaced the local people who dependent on the primary economies of farming and fishing. Owing to this appaling situation in the Niger Delta Region then the need to attract foreign direct investment in the oil industry. Foreign direct investment is significant to the prospect of enhancing Nigeria economy profiles as it is one of the way of increasing the existing capital for savings and growth of the economy that require less deficiency and enhancing the wellbeing of the locals of this community. Furthermore, foreign direct investment in oil industry improves method of production and skills, improved utilization of existing resources, waste and pollution reduction Peter (2014). The capacity of developing countries particularly Nigeria to have access to FDI in taking full advantage of the related benefits will be