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

Abstract

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.