Water consumption, agriculture value added and carbon dioxide emission in Iran, environmental Kuznets curve hypothesis

Agriculture and natural resources have a mutual relationship with each other. The purpose of this study was to evaluate forward and backward relationship between natural resources and agricultural development. The relationship between the consumption of water and agricultural value added per capita income has been studied in order to obtain the forward relationship, and the relationship between carbon dioxide emissions and per capita income of the Iran’s agricultural sector has been assessed in order to obtain backward relationship. To test these relationships, the Kuznets theory is used. Therefore, Iran’s provinces information from 2001 to 2013 was used and models were estimated by using the panel data and spatial econometric. Results showed that there was an inverted U relationship between per capita income and water consumption and carbon dioxide emissions. Also, spatial estimation showed that both water consumption and carbon dioxide (CO 2 ) emissions in agricultural sector had a direct relationship with the value of these two variables in the neighboring areas.