An Empirical Analysis of Environmental Pressures of GDP in Iran

Reaction between economic growth and environmental quality is a controversial issue which has been considered since the 1990s. Pressure on the environment due to economic activities not only from environmental aspects but also from the economic point of view is important. The existence of abundant energy sources in Iran cause the use of them in economic activity exceeding. This will lead to increase environmental pollution in one hand and on another hand, using too much of energy is cause a burden on the environment. In this study, we investigate the relationship between energy consumption as a proxy of environmental pressure and GDP per capita by using the Johansen & Juselius Cointegration econometric method during to 1967-2009. The results show that the correlation between environmental pressures and GDP per capita is the inverse of U shape. Therefore, the increase of per capita GDP growth recommended so is that on the Kuznets curves downward part in stands long run. Also policy makers have to take short run polices that reduce negative externalities as far as economy is at positive part of EKC.