Evaluation of Spatial Effect of Industrialization on Environmental Quality in Iran’s Province

Economic growth along with increasing environmental quality is one of the desires of every economy. Although the development of the industrial sector has always been an effective solution to increase economic growth, it has a high coefficient of producing of pollution. The study examines the spatial effect of industrialization on CO2 emission in Iran’s province by using spatial econometric approach over 2006-2014. The evidence shows that there is a positive spatial effect of CO2 emission between provinces. Also, industrialization, urbanization and population density have a significant positive effect on CO2 emissions, And the spatial effects of industrialization and urbanization are 0.104 and 0.23 respectively. But economic growth has a non-significant effect on the emission of CO2, which reflects the importance of less energy-intensive sectors in development. Therefore, allocation of credits in accordance with the direct and indirect benefits of reducing pollution, paying attention to the potential of less energy-intensive sectors in creating economic development, improving the technology of the manufacturing sector and increasing the quality of public transport system can be considered as effective policies to reduce emissions.