Decomposition of the Share of Factors Affecting Environmental Pollution in Iran Using the Shapley-Owen Value Approach

Achieving economic growth and sustainable development with increasing the environmental quality are principal goals of the Iranian economy. Identifying and ranking factors affecting the pollution environment is the first step to reaching this goal. Due to the importance of the subject, the present study has decomposed the share of factors affecting environmental pollution in Iran during 1982-2018 using the Shapley-Owen value approach. The Shapley-Owen approach, in addition to calculating the explanatory variables share, also computes the constituent components contribution of each explanatory variable from the dependent variable. Findings of the Shapley technique show that energy consumption has the largest share of environmental pollution. The results of Owen's method also indicate that energy consumption in the transportation and the agricultural sector contains the highest and the lowest contribution of total environmental pollution, respectively. Expansion of urbanization, an uncontrolled increase of non-standard vehicles, low quality of consumed fuels along with abundant and cheap natural resources, trade sanctions against the country, imposition of tariffs on the import of machinery, and lack of awareness and proper education about the consequences of harmful pollution has led to an accelerating increase in energy consumption in various economic sectors and, consequently, an increase in the environmental pollution in the country. Keywords: Environmental Pollution, Energy Consumption, Shapley-Owen Approach, Iran. JEL Classification: Q5، Q4، C20.