The Relationship among Income, Openness and Environmental Quality: An ARDL Approach for the case of Iran

The objective of this paper is to examine the relationship among environment, economic growth and openness in Iran for the period 1970-2011, based on the autoregressive distributed lag (ARDL) approach. The study finds a cointegrating relationship among these variables with co2 emission as dependent variables. The results imply GDP contribute most to long-as well as short-run CO2 emission growth. Estimating error correction model revealed that the speed of adjustment to restore equilibrium is -0.54 which confirms that there is a stable long-run relationship. Regarding weak impact of openness on long run CO2 growth, it seems that foreign trade in Iran stimulated by oil booms play trivial role in domestic energy consumption after controlling the income variable.