The role of green energy consumption and human capital in Iran's environmental Carrying Capacity

Purpose: Most studies conducted in Iran have used indicators such as air pollution emissions (CO2 emissions) and ecological footprint (EF) to assess environmental sustainability. However, these two indicators have limitations and do not show the different dimensions of the environment. They only focus on the consumption and demand for resources and neglect the supply of resources. Recently, a new indicator called ‘carrying capacity’ has been used in environmental economics studies to assess environmental sustainability. This indicator shows how much load the environment can bear to meet human needs and economic activities. Therefore, in this study, the impact of human capital and green energy on carrying capacity for sustainable development was investigated during the period 1990-2021.
Methodology: In previous studies conducted in Iran to investigate the impact of human capital and green energy, indicators such as CO₂ and EF were used. Due to the shortcomings of these indicators, this research makes use of the load capacity index. Unlike the CO₂ index which only examines the emissions caused by fossil fuels, as well as the ecological footprint index which only shows the demand side of resources and ignores the supply side, this index represents the supply side in addition to the demand side. In other words, the load capacity factor, compared to the biological capacity and the ecological footprint, shows an ecological threshold, so it makes a comprehensive research on environmental sustainability assessment possible. So far, the impact of human capital and green energy on the load capacity index has not been checked in Iran.
In this study, the documentary method was used to collect the data. The research was conducted based on the annual data from the period of 1990 to 2021 in the Iranian economy. The EViews software was used to estimate the model. It should be noted that the data on the variables related to the research were extracted from the World Bank and the global footprint Network. The model was estimated by the GMM time series econometric method. This is because the model in this study is dynamic and meets the conditions of the generalized moment. In fact, GMM serves for time series models that are linear and satisfy the conditions of generalized moments and secondary properties. Using this method to estimate models can have many advantages.
Findings and discussion: The results show that the estimated model is in good conditions in terms of statistical indicators. The null hypothesis of the Sargan test cannot be rejected; therefore, it can be said that the instrumental variables used in the estimated model are valid. Indeed, the null hypothesis of the Sargan test implies the validity of the instruments. In view of the linearity of the model, all the estimated coefficients indicate elasticity. The coefficient of the carrying capacity of the previous period had a positive and significant impact on the coefficient of carrying capacity of the present period. In other words, with a 1% increase in carrying capacity in period t-1, the carrying capacity in period t increases by 0.64%. This result is in line with research theories and is in good agreement with the results of previous studies. With an increase of 1% in human capital, the carrying capacity increases by 0.28%. Considering the p-value corresponding to the T statistic of the human capital coefficient, human capital has a positive and significant impact on the environmental carrying capacity in Iran. The consumption of green energy has a positive and significant impact on the carrying capacity. It is such that an increase of 1% in the consumption of green energy increases the carrying capacity by 0.13%. Renewable energies have the least impact on the environment and the ecosystem. Therefore, the use of these energies reduces the ecological footprint. The economic growth variable has a negative and significant impact on the carrying capacity. In other words, with an increase of 1% in economic growth, the carrying capacity decreases by 0.72%. As the economic growth increases, pressure on the environment increases too, leading to a decrease in ecological sustainability. The trade variable has a negative impact on the carrying capacity. So, with an increase of 1% in trade, the carrying capacity decreases by 0.24%. Theoretically, the impact of trade openness on the environment can have positive or negative effects.
Conclusions and policy implications: The results of the study showed that the effect of green energy on the carrying capacity coefficient is positive. In general, environmental changes and the reduction of its sustainability due to the increase in greenhouse gas emissions are important factors in the occurrence of climate change, environmental hazards, natural disasters, and serious damage to the environment. The expanded use of renewable energy as a clean energy source can play an important role in reducing environmental pollution and the emission of pollutants. Using green energy can reduce dependence on fossil fuels and lower the greenhouse gas emissions from consumption and production sectors. Green energy is reliable and, if developed correctly, can lead to environmental sustainability and reduce environmental destruction. Based on the results, human capital has a positive and significant impact on the carrying capacity coefficient. Training of human capital is one of the ways to achieve sustainable development and improve the environment. On the other hand, the use of human capital increases awareness, research, development, and green technologies. Incentives for people, the market, and businesses so as to protect the natural environment and promote green consumption and production affect environmental quality and lead to a sustainable environment. Therefore, by improving human capital through the three components of health, skill and education, it is possible to help improve and sustain the environment. Based on the results of the study, economic growth has a negative impact on carrying capacity, which is consistent with other previous studies.