The Impact Analysis of Environmental NGOs on Local Sustainable Development in Iran’s Provinces: A Spatial Panel Data Approach

Given the environmental challenges and developmental disparities across various regions of Iran, identifying the factors influencing local sustainable development and understanding its spatial dynamics has gained particular importance. This study examines the role of environmental non-governmental organizations (NGOs) and local fiscal policies in improving the sustainable development index across the country’s provinces. Seasonal data from 31 Iranian provinces over the period 2006–2024 were collected and analyzed using spatial econometric methods and a spatial weight matrix based on inverse geographic distances. Spatial lag (SAR) and spatial Durbin (SDM) regression models were estimated to assess the spatial effects of the variables. The results of the SDM model indicate that the number of environmental NGOs (coefficient 0.291) and current government expenditures on environmental affairs (coefficient 0.198) both have positive and significant effects on local sustainable development. Moreover, their interaction effect (coefficient 0.112) was also positive and significant. The spatial dependence coefficient in this model was estimated at 0.318. Similarly, in the SAR model, the coefficients for the number of NGOs (0.273), government spending (0.181), and their interaction term (0.105) were all positive and significant. The spatial lag coefficient in this model was 0.301. Control variables, including literacy rates and urbanization, showed positive and significant effects, while the unemployment rate had a negative and significant impact on sustainable development. These findings demonstrate that strengthening environmental NGOs and targeted financial support play a key role in enhancing sustainable development, and that coordinated regional policies can substantially increase the effectiveness of development planning.