Reshaping energy horizon of Iran: investigating economic sanctions, export diversification, and environmental resilience

Employing robust methodologies, including principal component analysis, autoregressive moving average, Fourier bootstrap dynamic autoregressive distributed lag, error correction model, and the Breitung-Candelon spectral Granger causality test, this study scrutinizes the impact of export diversification (EXD) on Iran's ecological footprint (EF) from 1997 to 2020, considering economic sanctions (ESI), trade openness (TOP), energy consumption per capita (ECpc), globalization (KOF), and real GDP per capita (RGDPpc). Findings consistently affirm a positive environmental impact of EXD, revealing a nuanced temporal pattern. Notably, the short-term impact (- 0.645) is more pronounced than its long-term counterpart (- .020). Increased industrial activities due to globalization (10% rise) lead to 4.26% and 1.64% EF degradation in the long and short term. Conversely, due to Iran's heavy reliance on fossil fuels, a 10% rise in ECpc correlates with 1.63% and 3.81% long- and short-term environmental quality reduction. ESI demonstrates a dual impact, improving short-term environmental quality but contributing to long-term degradation. Frequency-domain causality analysis highlights EXD and KOF as short- and long-term causes of EF, ESI, and TOP as medium- to long-term causes and RGDPpc as a long-term cause. These findings emphasize the need for sustainable policies, stringent environmental standards, and a balanced approach to fostering economic growth while preserving the environment.