Iran’s sustainability gap under sanctions: An ARDL-ECM analysis of the load capacity factor

Ecological sustainability depends on the compatibility of demand arising from human activities with ecosystems’ biological regenerative capacity. The consumption-based load capacity factor (LCF) represents this balance as the ratio of domestic biocapacity per capita to the ecological footprint of consumption per capita. This study examines how income, capital formation, and energy use are associated with LCF in Iran and whether the energy–LCF association differs across levels of sanctions intensity. Annual data for 1965–2024 were analyzed within an autoregressive distributed lag framework and its error-correction representation, with lag selection based on the Bayesian information criterion and conditional bootstrap inference. LCF declined from 1.362 to 0.188, and Iran transitioned from an ecological reserve to an ecological deficit; the ecological sustainability gap also widened in relative terms. In the primary model’s conditional long-run estimates, higher real gross domestic product (GDP) per capita was associated with higher LCF, whereas greater primary energy use per capita and a higher gross fixed capital formation share of GDP were associated with lower LCF. In the primary model, the negative energy–LCF association was stronger at higher levels of sanctions intensity, but this finding was sensitive to model specifications and sanctions coding. The bootstrap supF test also rejected coefficient constancy in the primary model. The estimated relationships are conditional associations, and the study does not identify the causal contribution of sanctions to the decline in LCF. The findings support considering energy and resource requirements in investment appraisal and monitoring LCF alongside economic indicators.Author summary: Between 1965 and 2024, Iran moved from an ecological reserve to an ecological deficit: consumption-based ecological demand exceeded domestic biocapacity. The load capacity factor, an indicator of this balance, is the ratio of domestic biocapacity to consumption-based ecological demand. Higher income can increase material and energy consumption. However, changes in the types of economic activity and improvements in technology may reduce resource requirements per unit of output. Investment also requires resources to build machinery and infrastructure, while equipment modernization can improve energy efficiency. Sanctions can restrict access to equipment and technology, thereby affecting the conditions under which energy is used. Accordingly, we examined how income and investment relate to Iran’s ecological balance and whether the relationship between energy use and this balance differs across levels of sanctions intensity. In the primary analysis, the indicator was positively associated with income and negatively associated with energy use and the share of fixed investment in gross domestic product. The negative association between energy use and the load capacity factor was stronger at higher levels of sanctions intensity, but this pattern was not confirmed in all analyses. This study also does not show that sanctions caused the historical decline in the load capacity factor.