Green Productivity of Iran with Environmental Approach

In economic literature, policy planners and decision-makers and governments to evaluate the various indicators presented various indices. One of the most important indices is Total Factor Productivity where ratio of all products to all inputs is measured. If there is growth, it means that the manager policies have been effective in the use of inputs. Calculateion and measurement of TFP is importance so that both calculations of it should be possible and it closed to realty of economy. One of affective problem on TFP is environmental issues such as pollution emission. If this issue is not considered in the calculation of TFP, Calculated TFP will severely flawed and mislead the managers and policy makers. In this study by using extended Solow residual model, in addition of Iran’s green TFP calculation, TFP without pollution emission variable by using several scenarios are estimated and compared with other studies. Finally, pollution emission elasticity and shadow price of it are estimated. Results indicate green TFP growth for yeas of 1978-2012 is -1.28 percent that in without pollution emission variable scenario is -1.02. So, difference between with and without pollution emission variable scenarios is 0.26 unit percent. So, if environmental issues are not considered in TFP, it will be misleading for planner. Also pollution emission elasticity are specified 0.31142. Accordingly, pollution emission shadow price of Iran’s economic are estimated 1.03 Mil Rls/tonne