Environmental Assessment of the Effect of CO2 Emissions on Economic Development in Iran
Subject Areas :
Keywords: Economic Growth, CO2 Emission, Iran,
Abstract :
Financial development can greatly contribute to alleviating environmental pollution by providing ready access to modern technologies. In contrast, it can aggravate environmental pollution by boosting production activities. Since CO2 emission is the main factor responsible for climate change, it is of crucial importance to study the factors affecting its emission. The present study mainly aims to explore the impact of financial development, gross domestic production (GDP), and energy use on CO2 emission in the agricultural sector of Iran from an environmental economics perspective. Accordingly, the impact of the financial index on CO2 emission is analyzed using time-series data of Iran for the period from 1991 to 2022 on the basis of an autoregressive distributed lag (ARDL) model. The results show an inverse relationship between financial development and CO2. This means that a 1% increase in the financial development of the agricultural sector results in a 0.27% reduction in CO2 emission in the long run. Also, the increase in the GDP of the agricultural sector and population growth will increase CO2 emission. There is also an inverse relationship between financial development and greenhouse gas emissions in the short run. Energy use and population growth are directly related to CO2 emission in the short run. So, the reduction of CO2 emission needs to make use of advanced technologies. Pollution emission planning should be on the agenda of planners and politicians.