Analyzing the Effects of Fiscal Decentralization and its Environmental Consequences in Iran Provinces

This study analyzes fiscal decentralization policies and its environmental consequences, during the period 2005-2015. The results of GMM estimation show that revenue decentralization has negative and significant relationship with pollution. Also other variables results indicate positive relationship between industrialization and energy productivity with pollution. By increasing the relative density of population, pollution is reduced. The results of Environmental Kuznets Curve hypothesis also indicate rejection of this hypothesis. In addition, presence of multiplication of the neighboring matrix in dependent variable causes an increase in pollution in the provincial level and this indicates the spatial environmental effects in the country's provinces. It is suggested that local governments determine their own financial resources, in this case it can be targeted and based on new revenue resources such as green economy, it can define businesses that which they reduce pollution.