Assessment of the Relationship Between Environmental Pollution, Economic Growth and Agricultural Production in Iran

Introduction: Improving living standards in developing countries and rapid population growthhave significant effects on the economy and environment. Population growth leads to anincrease in demand for agricultural products, which increases environmental pollution, reducesthe productivity of natural resources, and has a negative effect on economic growth. Therefore,the aim of this research is to investigate the short-term and long-term relationship betweenagricultural production, economic growth, and environmental pollution in Iran.Material and Methods: In this research, time series data for the period of 1991-2020 werecollected from the database of the World Bank and Food and Agriculture Organization (FAO),and the Autoregressive Distributed Lag (ARDL) models were used. First, the augmentedDickey-Fuller (ADF) and Phillips-Perron tests were performed to test the stationarity. Then,according to the values of Akaike, Schwarz, and Bayesian information criterion, the optimalnumber of lags was selected. ARDL bounds test was used to test the presence of the long-runrelationship between the variables, and then short and long-run relationships and errorcorrection models (ECM) were estimated. Finally, the causality between pairwise variables wasinvestigated by using the Granger causality test.Results and Discussion: The results of short-term relationships show that a one percentincrease in economic growth, rural population, gross capital formation, and agriculturalproduction increases CO2 emissions by 0.307%, decreases by 2.937%, and increases by0.087%, and 0.065%, respectively. The effect of foreign direct investment on CO2 emissions inthe short term was not significant. However, a one percent increase in the lag of foreign directinvestment will increase CO2 emissions by 0.01%. The long-term results show that a onepercent increase in economic growth, rural population, agricultural products, foreign directinvestment, and gross capital formation will increase CO2 emissions by 0.662%, decrease by3.807%, and increase by 0.141%, by 0.024% and 0.188%, respectively. The results of theGranger causality test show the bidirectional causality relationship between economic growth,agricultural production, foreign direct investment, and CO2 emissions, as well as foreign directinvestment and agricultural production. Also, there is causality in only one direction betweengross capital formation and CO2 emissions, agricultural production and economic growth,foreign direct investment and economic growth, agricultural production and rural population,rural population and foreign direct investment, and rural population and CO2 emissions. Inaddition, there is a long-term positive and significant relationship between CO2 emissions andeconomic growth, gross capital formation, agricultural production, and foreign directinvestment. The long-run result demonstrated by the FMOLS and DOLS methods was the sameas the finding of the ARDL approach.Conclusion: In Iran, enhancing agricultural mechanization, promoting renewable energy,enforcing environmental regulations, adopting green technologies, investing in R&D, andattracting foreign investments are crucial to reduce CO2 emissions and pollution. Fossil fueldependentindustries, capital formation, and rural populations also impact environmentalpollution, emphasizing the need for employment opportunities in rural areas to mitigate theseeffects.