Causality Relationship between Energy Consumption، Urban Population، and Environmental Degradation in Iran، 1981-2006

This research studies the existence and direction of causality between energy consumption، carbon emission، urban population and economic growth by using the Yamado- Toda approach in Iran for the period 1981-2006. Results indicate that there is a unidirectional causality between urban population، energy consumption، and GDP and CO2 emissions. There is also a one way directional causality from energy consumption and urban population to GDP. Based on these causality results، relationships between causal variables and CO2 emissions was estimated by using the Seemingly Unrelated Regression (SUR) method. The results indicate that the EKC hypothesis is valid for CO2 emissions and GDP. Moreover، the elasticity of CO2 emissions with respect to urban population is positive and less than unity. The elasticity of CO2 emissions with respect to energy consumption is positive and higher than unity.