The Granger Casual Relationship Between Air Pollution, Energy Productivity and Water Resources in Iran, A Markov Switching Perspective

<b>Abstract</b> Countries vary significantly in the measures they have taken to address climate change issues in the effort to mitigate the challenges posed by them. Understanding the causal relationships among the variables involved and their effect on other sectors like energy, the economy, and water supply will aid in the planning and implementation of appropriate strategies to prevent a further deterioration in the situation. This study explores the causality relationships between water resources, energy productivity, and air pollution in Iran from 1971 to 2014 using the Markov switching vector autoregressive models based on two scenarios. In the first, a Granger-causality analysis has been carried out to examine the indirect unidirectional relationship between energy productivity and water resources at different time scale. In a second it then investigated the direct unidirectional Granger causality relationship between energy productivity, water resources and air pollution. Furthermore, presence of an indirect Granger causality is surveyed for air pollution and water resources. Results also revealed a few practical recommendations to mitigate the harmful effects of pollution.