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The economic impacts of drought on the economy of Iran: An integration of linear programming and macroeconometric modelling approaches

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  • Salami, Habibollah
  • Shahnooshi, Naser
  • Thomson, Kenneth J.

Abstract

In this paper, we provide economy-wide estimates of the costs of drought in the cropping sector of the Iranian economy, using a linear programming model to estimate the direct costs on agriculture, and a macroeconometric model to trace the indirect impacts on the rest of the economy. The results indicate that a severe drought such as the one that occurred in the crop year 1999-2000 imposes a direct cost of 1605Â million USD, equivalent to 30.3% of the total value added of the cropping sector in Iran. This, in turn, leads to a 12.7% reduction in the value added of other agricultural sub-sectors (livestock, fisheries and forestry). In the rest of the economy, the manufacturing and service sectors experience value added declines of 7.8 and 3.7%, respectively. In addition, there is a substantial decrease in investment in the agricultural, manufacturing and service sectors. Thus, such a drought reduces overall GDP by about 4.4%, and it would also result in decreased non-oil exports, increased food imports, and a rise in inflation. The results of some drought mitigation simulations are reported in brief. Such estimates strengthen the case for increased attention to drought strategies and management in agriculture in Iran and elsewhere.

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  • Salami, Habibollah & Shahnooshi, Naser & Thomson, Kenneth J., 2009. "The economic impacts of drought on the economy of Iran: An integration of linear programming and macroeconometric modelling approaches," Ecological Economics, Elsevier, vol. 68(4), pages 1032-1039, February.
    • Handle: RePEc:eee:ecolec:v:68:y:2009:i:4:p:1032-1039
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    2. Chen, Zhangliang & Dall'Erba, Sandy, 2018. "Drought, Domestic Trade And Agricultural Profit: Theory And Evidence," 2018 Annual Meeting, August 5-7, Washington, D.C. 274397, Agricultural and Applied Economics Association.
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    5. Mohammad Reza Farzanegan & Mehdi Feizi & Hassan F. Gholipour, 2019. "Drought and Property Prices: Empirical Evidence from Iran," MAGKS Papers on Economics 201916, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    6. FaghihKhorasani, Hanieh & FaghihKhorasani, Abbas, 2022. "Predicting the Impact of Internet of Things on the Value Added for the Agriculture Sector in Iran Using Mathematical Methods," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 14(3), September.
    7. Kaveh Madani, 2014. "Water management in Iran: what is causing the looming crisis?," Journal of Environmental Studies and Sciences, Springer;Association of Environmental Studies and Sciences, vol. 4(4), pages 315-328, December.
    8. Yogi Vidyattama & Leonie J. Pearson & Robert Tanton & Itismita Mohanty, 2017. "Assessing adaptive capacity during the drought period in the Murray–Darling Basin," Asia-Pacific Journal of Regional Science, Springer, vol. 1(1), pages 155-170, April.
    9. Sandy Dall'Erba & Zhangliang Chen & Noé J. Nava, 2021. "U.S. Interstate Trade Will Mitigate the Negative Impact of Climate Change on Crop Profit," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(5), pages 1720-1741, October.
    10. Ahmad Haseeb Payab & Umut Türker, 2018. "Analyzing temporal–spatial characteristics of drought events in the northern part of Cyprus," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 20(4), pages 1553-1574, August.
    11. Gil, Marina & Garrido, Alberto & Gómez-Ramos, Almudena, 2011. "Economic analysis of drought risk: An application for irrigated agriculture in Spain," Agricultural Water Management, Elsevier, vol. 98(5), pages 823-833, March.
    12. Behzad Fakari Sardehae & Naser Shahnoushi Foroushani & Saleh S. Tabrizy, 2023. "Exchange Rate and Agricultural Trade: Evidence from Iran," Economics Bulletin, AccessEcon, vol. 43(1), pages 302-308.
    13. Freire-González, Jaume & Decker, Christopher & Hall, Jim W., 2017. "The Economic Impacts of Droughts: A Framework for Analysis," Ecological Economics, Elsevier, vol. 132(C), pages 196-204.
    14. Mohammad Reza Farzanegan & Mehdi Feizi & Hassan F. Gholipour, 2021. "Drought and Property Prices: Empirical Evidence from Provinces of Iran," Economics of Disasters and Climate Change, Springer, vol. 5(2), pages 203-221, July.
    15. Thompson, Wyatt & Lu, Yaqiong & Gerlt, Scott & Yang, Xianyu & Campbell, J. Elliott & Kueppers, Lara M. & Snyder, Mark A., 2018. "Automatic Responses of Crop Stocks and Policies Buffer Climate Change Effects on Crop Markets and Price Volatility," Ecological Economics, Elsevier, vol. 152(C), pages 98-105.
    16. Abdol Rassoul Zarei & Marzieh Mokarram & Mohammad Reza Mahmoudi, 2023. "Comparison of the capability of the Meteorological and Remote Sensing Drought Indices," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 37(2), pages 769-796, January.

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