Approaches to Low-Carbon Agriculture in Iran

مجله اقتصاد و توسعه کشاورزی

Article 3, Volume 33, Issue 2 - Serial Number 44, July 2019, Pages 151-163   

Document Type: Research Article

DOI: 10.22067/jead2.v0i0.70778

Authors

A. Nikoukar^* ; I. Tajnia

Payame Noor University, Tehran

Abstract

Introduction: The concept of low-carbon economy postulates the consumption of less natural resources and causing less environmental pollution, while gaining more economic efficiency. According to the concept of low-carbon economy, low carbon agriculture is a specific model of agricultural production operations with both the lowest greenhouse gas emissions and maximum economic benefits having which has three characteristics including lower energy consumption, lower greenhouse gas emissions and lower pollution. Therefore, this research studies the approaches to low-carbon agriculture in Iran
Materials and Methods: In this research, energy consumption and consequently economic growth, which is expected to play a role in carbon emissions, other macroeconomic variables such as trade openness and financial development have been used. The estimated model of the research is linear-logarithmic based on Shahzad et al (2017). For this purpose, the ARDL and ECM patterns and the time series data of 1989-2014 have been used in current study. The data related to carbon dioxide emissions and energy consumption have been collected from the energy balance sheet of the Ministry of Energy, The data related to financial development have been collected from World Bank, Value Added of agriculture section Growth Ratio and Trade Openness data have been gathered from Central Bank of the Islamic Republic of Iran. Eviews9 software has been used to analyze the results.
Results and Discussion: Statistically significant impact of energy consumption logarithm and energy consumption logarithm square on carbon dioxide emissions at the level of 1% in the long run has been revealed by the results. The positive amount of energy consumption and negative amount of the square of energy consumption indicates a U-shaped inverted relationship between energy consumption and carbon dioxide emissions. The energy consumption threshold in the agricultural sector is 46.98 million barrels of crude oil, while the actual maximum energy consumption is 50.26 million barrels of crude oil. So the agricultural sector's performance is now above the mentioned level, then it is expected to reduce carbon emissions by technological improvements while increasing energy consumption. The coefficient of financial development variable in the long run is -0.014169. The financial development efficiency index is considered as national development variable which means each one percent of increase in bank credits allocated to the private sector will reduce about 1.02 ton of carbon dioxide. The coefficient of trade openness variable is 0.010443 in long run. Whereas the trade openness index is considered as the ratio of the total value of exports and imports to gross domestic product, so  every one percent increase in the volume of exchanges to gross domestic product leads to a 1.01 ton increase in carbon dioxide and pollution which confirms the  hypothesis. The growth rate of value added of agriculture section in the long run does not have any effect on carbon dioxide emissions. In the short run, the coefficient of trade openness is 0.00581. In other words, one percent increase in the ratio of international trade to GDP will increase about one ton of carbon dioxide emissions. The growth rate of value added of agriculture section, financial development, and the first lag of financial development in short run have no effect on carbon dioxide emissions.
Conclusion: The results indicated a long-term U-shaped inverted relationship between carbon emissions and energy consumption in this sector. The maximum energy consumption threshold was also equivalent to 46.98 billion barrels of crude oil. At present, performance of the sector is on downward, and carbon emissions are expected to gradually decrease by the technological improvement as energy consumption increases. Higher level of the energy consumption than the threshold level indicates that technology effect dominates the scale and composition effects. The results shows that the growth rate of value added of agriculture section in long and short run did not affect carbon emissions. Moreover, in the long run, financial development has negative effect on carbon emissions while in the short run financial development has no effect on carbon emissions. But the effect of trade openness index on carbon emissions in the long and short run is positive. According to the results of the study, increasing the volume of credits to the private sector will help reduce carbon emissions. It is also proposed to change the pattern of trade considering the environmental advantages and the use of green energy programs to reduce carbon emissions.

Keywords

ARDL Model; Carbon Dioxide; Energy Consumption; Iran; Low carbon agriculture

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