The increase of greenhouse gases (GHG) in which CO۲ emissions constitute the principal component, is of major environmental problems of all societies. Economic growth impels intensive use of resources and as a result, more residues and wastes thrown in the nature that could lead to environmental degradation. This article tries to trace the eventual relationship between trade openness and environmental degradation in Iran. For this purpose, a multivarate model is employed in which economic growth and trade openness are related to CO۲ emissions for the period of ۱۹۷۱-۲۰۰۶. By carring out the Granger causality test, there appeared a unidirectional relation from trade openness to CO۲ emissions. To analyze the variables’ relationships, the approach of GMM is applied. Results indicate that economic growth has a significant negative effect on carbon dioxcide emissions. But, the impact of trade openness on carbon dioxcide emissions is significantly positive.

Trade openness, CO۲ emissions, Granger causality, generalized method of moments (GMM)