Green Taxes and Environmental Standards of Import, Appropriate Tools of Sustainable Development in Iran's Transition Economy

Free trade policies make it possible for markets to allocate resources with maximum efficiency, while management and protection of land resources for continuous productivity are the purpose of environmental policies. Contrast occurs when resources are led to increased trade from one side and destruction of the environment from the other side. For optimal allocation, paying attention to these two dimensions is important that trade and environmental policies are in line with sustainable development. Pollution haven hypothesis challenges the opposition between environmental and free trade policies. The current study was conducted to introduce green taxes and environmental standards of imports to protect the environment in order to achieve sustainable development in transition economies of OPEC developing countries and Iran. The environmental Kuznets hypothesis and pollution haven hypothesis were tested using time series data for time period 1980-2007 in Iran by means of OLS method and panel data for time period 1990-2007 in OPEC countries with a quite similar structure to GMM and GLS methods and then the results were compared. The results indicateed that environmental Kuznets theory can not be rejected in Iran and OPEC countries, and increased trade along with degree of trade openness increases pollution. Necessity of using green taxes and environmental standards of import are shown through these results.