The Investigation of Long- Run Relationship Between per Capita Income and Environmental Quality Indices with Emphasis on Water Pollution

The main objective of this paper is to investigate the long-term relationship between per capita income and environmental quality indices. For this purpose, we used the CO2 emissions and Biological Oxygen Demand (BOD) per worker as a proxy for measuring air and water quality. In this paper, we used the Johansen's co-integrating technique for estimating the long-term relationship between CO2 emission and organic water pollutant with explanatory variables such as population density and growth rate of the urban population. The results of this paper show that the EKC curve is confirmed for Iranian economy during the 1980:q1-2011:q4. Moreover, the population density and urban population growth rate contributes to environmental degradation. Hence, the main implication policy of this paper is that the policy makers should adopt good policies and new technologies to reach the turning point of EKC. JEL Classification: C22: Q53:Q56