The effects of climate change and climate variability on economic surplus of producers and consumers in the agricultural sector of Hamadan– Bahar plain

Document Type : Research Paper

Authors

1 Department of Agricultural Economics, Faculty of Agriculture, Tarbiat Modares University, Tehran, Iran.

2 Department of Agricultural Economics, Faculty of Agriculture, Tarbiat Modares University, Tehran, Iran

Abstract

The occurrence of climate change and variability, through changes in the supply and price of crops, overshadows the profitability of production in this sector and the share of food in consumer income. Therefore, social surpluses would fluctuate with physical and economic access to food. Accordingly, to make effective policies to adapt to new climatic conditions, accurate estimates of the welfare changes that will occur as a result of climatic events are needed. According to this approach, in the present study, the potential effects of different climatic scenarios on the cultivation pattern of the Hamadan-Bahar plain were investigated, and the impact of water resources, production, and food security in the agricultural sector of this plain was evaluated. The results showed that with the combined effect of climate change and variability, along with a 44% increase in agricultural consumption from the aquifer of this plain during the 20-year planning period, the present value of consumer and producer surplus and also, total economic welfare in the region's agricultural sector would decrease by 27%, increase by 16% and decrease by 4% compared to the baseline conditions, respectively. Therefore, it will be inevitable to adopt strategies to adapt to this phenomenon to mitigate its negative effects on food security in the region.

Keywords

Main Subjects

Extended Abstract

Objectives

The various pillars of food security are affected by climate change. Because food production depends on the availability of water resources, these resources are also affected by climatic conditions. Also, the optimal growth and yield of crops occurs in a certain range of climatic variables, so climate change can change this optimal range. In addition to changing the average value of climatic measures, the distribution of these measures around the average also affects the agricultural sector's production. These conditions overshadow the change in the supply and price of agricultural crops and, consequently, the change in the profitability of production in the agricultural sector, as well as the share of food in consumer surplus. Therefore, social surpluses would change with physical and economic access to food. According to this approach, in the present study, the potential effects of climate changes and climate variabilities on the cultivation pattern of the Hamadan-Bahar plain were investigated, and the change in crop yield, water resources, and subsequent changes in food welfare and food security in the agricultural sector of the plain was assessed quantitatively.

 

Methods

In this study, a cumulative biophysical-economic model was used. In the economic dimension of this model, the dynamic, positive mathematical programming approach in endogenous price conditions was used. The experimental model, consisting of 18 crops and two types of irrigation technologies, was developed based on the information of 2018 as the base year and in a 20-year planning horizon. This model's objective function is maximizing the present value of total economic welfare in the form of the sum of the current values of consumer surplus and farm income. Resource constraints used in the experimental model include water, land, capital, labor, and chemical fertilizers, with chemical fertilizer restrictions repeated for each nitrogen, phosphate, and potash fertilizers. Finally, the GAMS software package and CONOPT3 algorithm were used for data analysis. In the biophysical dimension of the model, the climatic measurement of rainfall was studied in the form of climatic scenarios. Accordingly, the rate of evapotranspiration of crops and, consequently, the production and yield of crops in the region due to climate change and fluctuations were estimated and integrated into the PMP model. Each of these relationships is responsible for providing some of the information needed in the experimental research model. Finally, the dynamic endogenous price optimization framework was estimated as a unit pattern, taking into account all the economic and biophysical relationships in question.

 

Results

The results showed that the change of current climatic conditions in the coming years would significantly affect the region's biophysical and economic indicators. Accordingly, in the most pessimistic forecast, the agricultural sector's harvest from the aquifer in the next 20 years would increase by 44%. Therefore, it is expected that the existing scarcity of water resources in the region, in the event of a pessimistic scenario of simultaneous climate change, would continue with greater intensity in the coming years. On the other hand, the amount of crop production in this plain in the annual average of the research planning period, according to the scenario of normal climate change, would be equal to 902 thousand tons, which, if other scenarios are realized, the amount would be reduced.

Meanwhile, the largest reduction in production will be in the scenario of simultaneous climate change and equal to 190 thousand tons. Decreased production of crops in the region reduces supply and consequently increases the price of crops. In addition, as rainfall decreases and groundwater abstraction increases for irrigation of crops, production costs would increase due to the increase in groundwater pumping depth, doubling the negative consequences of climate change on crop prices. On the one hand, this affects the producers' income and, on the other hand, it fluctuates the welfare of consumers. Comparing the scenarios showed that if climate change and variability occur simultaneously, the most positive effect will occur in the producer surplus, and the most negative effect would occur in the consumer surplus. Assessing the present value of total economic welfare also confirms that in the scenario of simultaneous climate change, the lowest value of this index, which is equal to 636899 billion rials, would be obtained compared to the baseline scenario.

 

Discussion

Climate change reduces production and increases food prices by negatively affecting access to groundwater resources and the yield of most crops. These conditions create adverse effects on consumer surpluses and, on the other hand, provide the opportunity for most producers to increase farm incomes. Although part of the consumer welfare loss is improved by promoting producer benefits, it would be impossible to offset this loss fully. Therefore, total economic welfare would change in a declining direction. Given that it is impossible to avoid various forms of climate scenarios, it is necessary to apply adaptation strategies to the phenomenon to mitigate its negative effects on food security in the region. Based on this, it is suggested that at the plant, field, and basin level, measures such as the use of high-yield and drought-resistant seeds, application of deficit irrigation methods, and upgrading irrigation technology to consume water in proportion to the water needs of crops, reduce evaporation and transpiration through the improving planting and plowing dates, increasing water infiltration into groundwater aquifers by improving soil quality, increasing water economic efficiency by optimally selecting crops, and finally, using sewage in agricultural production should be on the agend.

References

Afruzi, A., & Zare Abyaneh, H. (2020). Investigation of agricultural water demand under the combination scenarios of climate change, irrigation efficiency enhancement, cropping pattern changes, and the development of early-maturing cultivars: A case study of Hamedan-Bahar plain. Iranian Journal of Irrigation and Drainage, 14(1), 61-75. (in Persian)
Akhavan, S., Ghabaei Sough, M., & Mosaedi, A. (2015). Investigation of the effect of climate change on net irrigation-requirement of main crops of Hamadan-Bahar plain using LARS-WG5 downscaling model. Water and Soil Conservation, 22(4), 25-46. (inPersian)
Ardakani, Z., Bartolini, F., & Brunori, G. (2017). Food and nutrition security in Iran: application of TOPSIS technique. Mediterranean Journal of Economics, Agriculture and Environment, 16(1), 18-28.
Arfini, F., Donati, M., & Paris, Q. (2008). Innovation in estimation of revenue and cost functions in PMP using FADN information at regional level. In 12th Congress of the European Association of Agricultural Economists (EAAE). No. 725-2016-49576.
Barikani, E., Shajari, S., & Amjadi, A. (2008). Price and income elasticity of demand for food in Iran: a dynamic demand system. Agricultural Economics and Development, 15(4), 125-145. (in Persian)
Calzadilla, A., Zhu, T., Rehdanz, K., Tol, R. S. J., & Ringler, C. (2013). Economywide impacts of climate change on agriculture in Sub-Saharan Africa. Ecological Economics, 93, 150-165.
Caputo, M. R., & Paris, Q. (2008). Comparative statics of the generalized maximum entropy estimator of the general linear model. European Journal of Operational Research, 185(1), 195-203.
Ferreira, F. H. G., Fruttero, A., Leite, P. G., & Lucchetti, L. R. (2013). Rising food prices and household welfare: evidence from Brazil in 2008. Journal of Agricultural Economics, 64(1), 151-176.
Garbrecht, J., Van Liew, M., & Brown, G. O. (2004). Trends in precipitation, streamflow and evapotranspiration in the Great Plains of the United States. J. Hydrol. Eng, 9, 360–367.
Gohar, A. A., & Cashman, A. (2016). A methodology to assess the impact of climate variability and change on water resources, food security and economic welfare. Agricultural Systems, 147, 51-64.
Hashemi Tabar, M., Akbari, A., & Darini, M. (2018). Analysis of factors affecting food security in rural areas of southern Kerman province. Space Economics and Rural Development, 7 (24), 1-18. (in Persian)
Howitt, R. E. (1995). Positive mathematical programming. Am. J. Agric. Econ, 77 (2), 329–342.
Iran Ministry of Agriculture Jihad, (2022). https://www.maj.ir/
Irmak, S., Odhiambo, L. O., Specht, J. E., & Djaman, K. (2013). Hourly and daily single and basal evapotranspiration crop coefficients as a function of growing degree days, days after emergence, leaf area index, fractional green canopy cover, and plant phenology for soybean. Trans. ASABE, 56, 1785–1803.
Johansson, R., Luebehusen, E., Morris, B., Shannon, H., & Meyer, S. (2015). Monitoring the impacts of weather and climate extremes on global agricultural production. Weather and Climate Extremes, 10, 65-71.
Jozi, A., Safa, L., & Salali Moghadam, N. (2020). A study on the effects of nutritional awareness and attitude on rural households’ food security level (The case of Zanjan county). Iranian Journal of Agricultural Economics and Development Research, 51(4), 715-730. (In Persian)
Karimi, S., Rasekhi, S., & Ehsani, M. (2010). An investigation of the demand for subsidized food in urban areas of Iran, using AIDS model for subsidy allocation priority. Iranian Journal of Economic Research, 13(39), 147-166. (inPersian)
Kiani Ghalehsard, S., Shahraki, J., Akbari, A., & Sardar Shahraki, A. (2020). Investigating the effects of climate change on food security of Iran. Journal of Natural Environmental Hazards, 8(22), 19-40. (in Persian)
Liu, W. Z., Hunsaker, D. J., Li, Y. S., Xie, X. Q., & Wall, G. W. (2002). Interrelations of yield, evapotranspiration and water use efficiency from marginal analysis of water production function. Agric. Water Manag, 56, 143–151.
Manceur, A. M., & Dutilleul, P. (2013). Maximum likelihood estimation for the tensor normal distribution: Algorithm, minimum sample size, and empirical bias and dispersion. Journal of Computational and Applied Mathematics, 239, 37-49.
Moazzezi, F., Yavari, G. R., Mosavi, S. H., & Bagheri, M. (2020). Assessing the impact of climate change on agriculture in Hamedan-Bahar plain with emphasis on water productivity and food security. Journal of Agricultural Economics and Development, 34(3), 305-323. (in Persian)
Momeni, S., & Zibaei, M. (2013). The potential impacts of climate change on the agricultural sector of Fars province. Journal of Agricultural Economics and Development, 27(3), 169-179. (in Persian)
Mosavi, S. H., Soltani, S., & Khalilian, S. (2020). Coping with climate change in agriculture: Evidence from Hamadan-Bahar plain in Iran. Agricultural Water Management, 241, 106332.
Munesue, Y., Masui, T., & Fushima, T. (2015). The effects of reducing food losses and food waste on global food insecurity, natural resources, and greenhouse gas emissions. Environmental Economics and Policy Studies, 17(1), 43-77.
Pakravan, M., Hosseini, S., Salami, H., & Yazdani, S. (2015). Identifying effective factors on food security of Iranian's rural and urban household. Iranian Journal of Agricultural Economics and Development Research, 46(3), 395-408. (in Persian)
Parhizkari, A., & Yazdani, S. (2017). Assessment of the economic and hydrological effects of the climate change on Kharrood watershed. Iranian journal of Ecohydrology, 4(3), 711-724. (in Persian)
Qureshi, M. E., Ahmad, M. U. D., Whitten, S. M., & Kirby, M. (2012). A multi-period positive mathematical programming approach for assessing economic impact of drought in the Murray-Darling basin, Australia. Economic Modeling, 39, 293-304.
Ravand, L., Dourandish, A., & Sabuhi, M. (2018). Effect of trade liberalization on production, consumption and trade of rice.  Journal of Agricultural Economics and Development, 32(3), 199-212. (inPersian)
Regional Water Company of Hamadan, (2022). https://www.hmrw.ir/st/72
Sabouhi, M., & Ahmadpour, M. (2012). Estimation of Iran agricultural products demand functions using mathematical programming (Application of maximum entropy method). Agricultural Economics, 6(1), 71-91. (in Persian)
Seyedan, S., Kohansal, M., & Ghorbani, M. (2016). Welfare effect of excessive extraction of groundwater resources in the plain of Hamadan-Bahar. Agricultural Economics, 10(3), 129-153. (in Persian)
Shahvari, N., Khalilian, S., Mosavi, S. H., & Mortazavi, S. A. (2019). Assessing climate change impacts on water resources and crop yield: a case study of Varamin plain basin, Iran. Environmental monitoring and assessment, 191(3), 1-12.
Van Passel, S., Massetti, E., & Mendelsohn, R. (2017). A Ricardian analysis of the impact of climate change on European agriculture. Environmental and Resource Economics, 67(4), 725-760.
Zhang, H., Wang, X., You, M., & Liu, C. (1999). Water-yield relations and water-use efficiency of winter wheat in the North China plain. Irrig. Sci, 19, 37–45.
Iranian Journal of Agricultural Economics and Development Research
Volume 54, Issue 1
March 2023
Pages 53-72

Files

Share

How to cite

Statistics