Investigating the Effects of Climate Change on the Agricultural Market

Introduction: Climate change is an irreversible change in average climate. This phenomenon has a wide temporal and spatial range and consequently has a wide impact on various economic sectors including water and agriculture. The economic implications of climate change affect water resources, taking into account the opportunity costs and benefits of allocating and storing water resources in climate change. In order to achieve this goal, considering the sensitive climate conditions in arid regions and the multiple consequences of climate change in these areas, this study aims to investigate the economic effects of climate change and water deficiency in arid regions on production, price and income the agricultural sector in Iran. Materials and Methods: For this purpose, the present study uses a multi-market agricultural model that is superior to other methods because of its endogenous price considerations. It is also designed for agriculture with high geographical distribution (Ponce et al., (2014)). The core of the AMM consists of two sets of equations, the first set depicts the behavior of agricultural producers (supply) and the second set depicts a picture of consumer behavior (demand) Results and discussion: The results showed that with climate change, the area under cultivation of maize crop under warm, cold and temperate dry climate, barley, rainfed wheat and wheat decreased under warm, cold and temperate dry climate for 2025. The results also showed that with climate change, maize crop production in hot dry, cold dry and temperate dry sub-climates and wheat and rainfed wheat in temperate dry sub-climates decreased for 2025 compared to year 2016. Wheat, barley and maize crops will also rise under the hot, cold and temperate climate for 2025 compared to year 2016. Climate change is projected to increase farmers' income in hot, cold, and temperate sub-climates. The results also showed that with the climate change net exports of wheat, barley and maize remained negative for 2025 and the country remained an importer of these agricultural products. Suggestion: The results of the study show that as climate change increases, the average price of agricultural products for the sub-climates will increase and since the products under consideration are inelastic commodities, it is emphasized that a price protection policy should be adopted to increase consumer purchase power. Since the results showed that the temperature response coefficient for wheat, rainfed wheat and barley in warm and dry sub-climates and rainfed wheat, barley and rainfed crops in cold dry climate and rainfed barley in dry temperate climates more than rainfall. Therefore, it is necessary to increase the cultivation level of these products in the above sub-climates. JEL Classification:C61, Q25, Q54