The Effects of Economic Development and Urbanization on Pollution Emissions in Iran

In this study, the effects of economic development and urbanization on environmental degradation in Iran were analyzed over the period of 1971- 2012. For this propose, the long and short run relationships between CO2 emission per capita as an environment degradation index and per capita national income, urbanization, energy consumption per capita and trade openness were investigated applying Autoregressive Distributed Lag (ARDL) approach. The empirical results revealed that the relationship between urbanization and CO2 emission per capita is inverted U-shaped and statistically significant. Also, the impact of national income per capita is positive and statistically significant and a 10 percent increase in national income would increase CO2 emission by 8.5 and 7 percent respectively in long and short run. Moreover, a 10 percent increase in energy consumption is linked with 4.5 and 4 percent growth in CO2 emission in long and short run, respectively. Although the impact of trade openness is positive on CO2 emission and statistically significant in short run, there is not significant impact in long run.