Environmental Energy and Economic Research

Environmental Energy and Economic Research

Development of Enhanced Composite Climate Change Indicators and Its Nexus with the Performance of the Agricultural Sector in Iran

Document Type : Research Article

Authors
1 Faculty of Economic, Management and Administrative Sciences, Semnan University, Semnan, Iran
2 Faculty of Desert Studies, Semnan University, Semnan, Iran
Abstract
Climate change significantly affects human life, especially in the Middle East, where harsh climate zones worsen challenges like desertification, water scarcity, and rising sea levels. In Iran, increasing temperatures, reduced precipitation, and persistent water crises make the country highly vulnerable to climate change impacts. Among economic sectors, the agricultural sector has been heavily affected by these changes and is expected to face even more significant impacts in the future. As a result, it is crucial to study the economic impacts of climate change especially on agricultural output. This study aims to introduce two new composite indicators that provide a comprehensive view of the climate change phenomenon for policymakers. Additionally, it seeks to demonstrate the relationship between this index and the agricultural per capita added value in 23 provinces of Iran from 2000 to 2020, using PVECM models. As a result, composite indices specially in arid regions of the country reveal concerning trends and deteriorate over the period and due to the PVECM results, the added-value and both composite indicators move together in the long run but in the short term, there is no significant causality for index 1; conversely, there is a positive and significant causality from index 2 to added-value. Therefore, climate change will affect agricultural sector adversely more than ever.
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