Test of Kuznets environmental curve hypothesis in Iranian economy with emphasis on the role of key variables: Augmented ARDL Approach with a Structural Break

As one of the most polluted countries in the world, Iran faces the challenges of increasing CO2 emissions and its environmental impact. In order for Iran to achieve sustainable growth, it is necessary to identify the factors that reduce environmental pollution. To this end, this study empirically examines the environmental consequences of income, human capital, globalization, renewable energy consumption and trade openness for Iran within the framework of the Kuznets Environmental Curve (EKC) hypothesis. In this paper, the Augmented ARDL Approach with a Structural Break is used to examine the annual time series data during the period 1979-2017. These findings indicate that the EKC hypothesis does not apply to Iran and that a U-shaped relationship between environmental pollution and income levels for CO2 emissions and ecological footprints has been established. The results also show that globalization, open trade and income pollute the environment, while increasing human capital reduces the ecological footprint in the long run. Renewable energy consumption reduces the ecological footprint but has no effect on CO2 emissions. This study shows that human capital has a key role in reducing environmental degradation in Iran and renewable energy is not enough to meet environmental needs.