The Effect of Oil Export Growth on Environmental Quality in Iran

Trade led to the development of economic activities in developing countries and increases the accumulation of environment polluting industries in these countries. Since environmental standards in these countries are low, trade expansion makes the environment more polluted. In the economic literature the effects of trade liberalization on the environment have been studied through various methods. Although, the mechanisms of effecting trade on the environment and its pollution have been studied theoretically and experimentally, but the impact of each element of the international trade (export and import) on the environment, has not been studied. In this study we examined the effects of oil export growth on environmental degradation in Iran. By using time series data for the period 1998 to 2011 and Cointegration and VAR approaches, the result show that increasing in the crude oil exports, increased emissions of methane and carbon dioxide in the environment and also increased water pollution. Therefore, policymakers in the country have to show more respect to the explicit and implicit costs of increase exports compared to exports of petroleum products that can cause environment pollution and degradation and sometimes reconsider their policies.