Climate Changes Impacts on Trade Balance of Agricultural Sector of Iran

The purpose of the present study was to investigate the effect of climate changes on the trade balance of Iran's agriculture sector. For this purpose, two main climatic components i.e. precipitation and temperature were used and Autoregressive Distributed Lag (ARDL) econometric model was used to estimate the model. The study results showed that the increase in temperature improves trade balance, and the reduction in precipitation leads to worsening trade balance of Iran's agriculture sector. Therefore, the effect of climate changes on Iran's agriculture trade balance was confirmed. Also, the negative and declining trend in Iran's trade balance indicates that Iran has increased food imports in order to adapt to climate change shocks and maintain its food security. Given the international sanctions imposed on the country and the shortage of foreign exchange reserves, reliance on trade to adapt to climate changes shocks is not appropriate. Hence, in order to maintain the country's food security, it is recommended that, in addition to trade policies, other policy measures should be taken to increase the agriculture sector's resilience to climate changes, the measures such as the use of water-saving technologies, eugenics research for the production of drought tolerant plant species, climate smart agriculture and determination of an optimal cultivation pattern appropriate to the climate. The current study is the first attempt to investigate the climate change impacts on trade balance of agricultural sector in Iran using an econometric model.

Keywords:

Climate Change , Reduced Precipitation , Exchange Rate , Trade Balance , ARDL Model.