The Effect of Urbanization on Energy Consumption in Iranian Provinces: Spatial Panel Data Approach

Energy is one of the essential inputs in production that due to inefficient and inappropriate use of its resources, its consumption has increased significantly. In this regard, the identification of factors affecting energy consumption in the provinces is important. This study aims to investigate the effect of urbanization on energy consumption in Iranian provinces. To do so, we used the STIRPAT model to design the econometric model. The spatial error econometric model in panel data was used to estimate the effect of urbanization on energy consumption in 28 Iranian provinces from 2002 to 2015. The results show that the relationship between urbanization and energy consumption is inverted U-shaped. This finding indicates that an increase in urbanization first causes to increase and then decreases energy consumption.