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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.

Suggested Citation

  • 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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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. 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.
    3. 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.
    4. Seyyed Mahmoud Hashemi & Ali Bagheri & Nadine Marshall, 2017. "Toward sustainable adaptation to future climate change: insights from vulnerability and resilience approaches analyzing agrarian system of Iran," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 19(1), pages 1-25, February.
    5. Chalise, Sudarshan & Naranpanawa, Athula & Bandara, Jayatilleke S. & Sarker, Tapan, 2017. "A general equilibrium assessment of climate change–induced loss of agricultural productivity in Nepal," Economic Modelling, Elsevier, vol. 62(C), pages 43-50.

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