The Impact of Economic and Environmental Factors on the Development of the Circular Economy in Iran: A Nonlinear Multilevel Regression Analysis (1993–2023)

Document Type : Research Paper

Authors

1 Faculty of economics, Allameh Tabataba'i University, Tehran, Iran, E-mail: m.khadem360@gmail.com

2 Associate Professor, Department of Economics, Faculty of Management and Economics, Shahid Bahonar University of Kerman, Iran, E-mail: mbahmani@uk.ac.ir

10.22111/ijbds.2025.53038.2277

Abstract

This study investigates the role of economic factors such as total annual water withdrawal, total renewable energy consumption, total greenhouse gas emissions, and waste generation in shaping the trajectory of the circular economy.
Utilizing a nonlinear multilevel regression model with combined fixed and random effects, the research examines the impact of these variables on the circular economy index in Iran over the period 1993 to 2023. The choice of this model is justified by its ability to incorporate both fixed effects (such as average variable levels) and random effects (to account for unobserved heterogeneity across observations or units).
The results indicate that among the factors influencing the circular economy, renewable energy consumption has a positive and statistically significant effect on circular economy index, with a coefficient of 0.004. In other words, higher renewable energy consumption is associated with improvements in the circular economy index, underscoring the positive role of clean and renewable energy in promoting sustainable economic development. Conversely, water withdrawal, greenhouse gas emissions, and waste generation negatively impact the circular economy, with coefficients of -0.091, -0.02, and -0.003, respectively. This implies that increased unsustainable resource use (such as water extraction), higher greenhouse gas emissions, and greater waste generation hinder the development of a circular economy.
Strategic and targeted investment in water-efficient technologies, renewable energy development, greenhouse gas mitigation, and comprehensive waste management can serve as fundamental pillars for advancing the circular economy.

Keywords

References

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International Journal of Business and Development Studies
Volume 17, Issue 2
October 2025
Pages 47-66

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