Relationship between CO2 and Iran's economic growth with an emphasis on household welfare index (an economy with oil and economy without oil)

Document Type : Research Paper


1 Faculty of Management, Arak Branch, Islamic Azad University, Arak, Iran

2 Arak Branch, Islamic Azad University, Arak, Iran

3 Assistant Professor of Economics, Faculty of Management, Arak Branch, Islamic Azad University, Arak, Iran


Economic growth emphasizes the expansion of economic activity, while economic development focuses on improving the quality and sustainability of economic growth and social welfare. Environmental concerns have shifted the focus of countries from nominal growth to real growth. Sustainable development and climate change reduction are the policy principles in many welfare countries. Considering the emission of carbon dioxide in different production sectors of IRAN, the main purpose of this study was to determine the relationship between the volume of carbon dioxide emissions and economic growth by emphasizing the welfare index of households in two sectors of the economy based on oil income and without reliance. The oil revenue in Iran was obtained using time series data from 1981 to 2018. The results of the analysis showed a significant relationship between economic growth and carbon dioxide emissions in both cases (with oil and without). In other words, increasing the amount of carbon dioxide emissions led to increased economic growth in Iran. In the oil based economy, carbon dioxide emissions have led to a nominal increase in economic growth due to their negative effects on the household welfare index. The results of the estimate showed that the impact of pollution on household welfare ultimately reduced the rate of economic growth. In fact, when carbon dioxide emissions only increased the country's economic production without contributing to economic growth, there was no growth leading to sustainable development, even though it might lead to a short-term production boom. It may reduce the general level of prices, but the negative effects it has on the environment and people’s well-being can lead to reduced economic growth in the long run.


Main Subjects

[1] Long, X. and Ji.X. (2019). Economic growth quality, environmental sustainability, and social welfare in China - Provincial assessment based on genuine progress indicator (GPI), Ecological economics, 159, 157-176.
[2] Padash, A., & Ghatari, A. R. (2020). Toward an Innovative Green Strategic Formulation Methodology: Empowerment of corporate social, health, safety and environment. Journal of cleaner production, 261, 121075.
[3] Padash, A., Ardestani, M., Najmeddin, S. (2019). Peace or War? Intelligent development of Iran environmental diplomacy. Environmental energy and economic research, 3(4), 349-368.
[4] Ottelin, J., Heinonen, J. And Junnila, S. (2018). Carbon and material footprints of a welfare state: Why and how governments should enhance green investments, Environmental science and policy, 86, 1-10.
[5] Liu, Y. (2015). Dynamic study on the influencing factors of industrial firm's carbon footprint. Journal of cleaner production, 103, 411-422.
[6] Kolokotsa, D., Santamouris, M. (2015). Review of the indoor environmental quality and energy consumption studies for low income households in Europe. Science of the total environment, 536, 316-330.
[7] Padash, A. (2017). Modeling of environmental impact assessment based on RIAM and TOPSIS for desalination and operating units. Environmental energy and economic research, 1(1), 75-88.
[8] Nikooqbal, A. A., Akhtari, A., Amini Esfidvajani, M. and Attar Kashani, M. (2012). Economic growth, energy consumption growth, and carbon dioxide emission growth investigating the causal relationship with dynamic integrated data approach (DPD), Energy studies quarterly, year 9, No. 33, pp. 197-16
[9] Kallis, G. (2011). In defence of degrowth. Ecological economics, 70(5), 873-880.
[10] Mohajeri, A., Najafizadeh, S. A., Sarlak, A. (2020). Explaining relationship between Carbon footprint and economic growth with emphasis on welfare index: Evidence from panel data for OPEC countries. Environmental energy and economic research, 4(4), 295-308.
World Bank Group Report (2016). Iran economic supervisor towards reconnection, group on global macroeconomics and financial management studies, Middle East and North Africa,The World Bank
[11] Ajam Aghloo, D. (2015). An introduction to modern economic growth, translated by Seyed Abdolmajid Jalaei Esfandabadi and Maliheh Vaezizadeh, First edition, Noor Alam publications, Tehran.
[12] Zhang, C., Zhao, W. (2014). Panel estimation for income inequality and CO2 emissions: A regional analysis in China. Applied energy, 136, 382-392.
[13] Forster, B. A. (1973). Optimal capital accumulation in a polluted environment. Southern economic journal, 544-547.
[14] Sarkodie, S. A., Ozturk, I. (2020). Investigating the environmental Kuznets curve hypothesis in Kenya: a multivariate analysis. Renewable and sustainable energy reviews, 117, 109481.
[15] Dogan, E., Inglesi-Lotz, R. (2020). The impact of economic structure to the environmental Kuznets curve (EKC) hypothesis: evidence from European countries. Environmental science and pollution research, 27(11), 12717-12724.
[16] Behboudi, D., Sojoodi, S. (2011). Environment and sustainable economic growth: a case study of Iran. Economic modeling, (4)2, 1-18.
[17] Grossman, G. and Krueger, A. (1995). Economic growth and the environment. Quarterly Journal of economics, 110, 353-77.
[18] Hosseinidoust, S. E., Khezri, M., Shiri, A. (2020). Investigation of non-linear impacts of factors affecting greenhouse gas emissions. Environmental energy and economic research, 4(4), 250-261.
[19] Fitras, Ahmad; Ghaffari, Hadi; Shahbazi, Azadeh; (2010). Study of the relationship between air pollution and economic growth of oil exporting countries; Economic growth and development research, 1(1), 59-77.
[20] Bellettini, G., Ceroni, C. B. (2000). Social security expenditure and economic growth: an empirical assessment. Research in economics, 54(3), 249-275.
[21] Yin, Z., Huang, X., He, L., Cao, S., Zhang, J. J. (2020). Trends in ambient air pollution levels and PM2. 5 chemical compositions in four Chinese cities from 1995 to 2017. Journal of thoracic disease, 12(10), 6396.
[22] Sinha, A., Bhattacharya, J. (2016). Environmental Kuznets curve estimation for NO2 emission: A case of Indian cities. Ecological indicators, 67, 1-11.
[23] Yahoo, M., Othman, J. (2017). Employing a CGE model in analysing the environmental and economy-wide impacts of CO2 emission abatement policies in Malaysia. Science of the total environment, 584, 234-243.
[24] Pablo-Romero, M. D. P., & Sánchez-Braza, A. (2017). The changing of the relationships between carbon footprints and final demand: Panel data evidence for 40 major countries. Energy economics, 61, 8-20.
[25] Ahmadian, M., Abdoli, G., Jebel Ameli, F., Shabankhah, M., Khorasani, S. A. (2017). Effect of Environment Degradation on Economic Growth (Evidence from 32 Developing Countries). Quarterly journal of economic growth and development research, 7(27), 17-28.
[26] Sadeghi, Seyed Kamal, Karimi Takanloo, Zahra, Motafker Azad, Mohammad Ali, Asgharpour Ghorchi, Hossein and Andayesh, Yaghoub (2015). Study of the carbon footprint of economic sectors in Iran with the approach of social accounting matrix (SAM), Quantitative economics quarterly, (former economics), 12)4(, 1-18.
[27] Gholamipour Foumani, L., Jalaee Esfandabadi, S. A., Zayandehroody, M., Nejati, M. (2018). Investigating the effect of carbon footprint on trade balance of OPEC countries with an emphasis on income inequalities. Agricultural economics research, 10(40), 17-38.
[28] Hajinejad, Ahmad; Yousefi, Hussein; Behmeh, Omid; (2015), Investigation of carbon footprint in drinking water supply of Sepidan city, Echo hydrology, 5(1), 249-241.
[29] Paparoditis, E., Politis, D. N. (2018). The asymptotic size and power of the augmented Dickey–Fuller test for a unit root. Econometric reviews, 37(9), 955-973.
[30] Mahdavi, Abolghasem (2000). Proposing a macro growth model for Iran's economy, Journal of economic research, 56, 38-3.
[31] Barro, R. J. (1990). Government spending in a simple model of endogeneous growth. Journal of political economy, 98(5, Part 2), S103-S125.