Assessing the Effect of Climate Change and Food Price Index on Food Security of Urban Households in Iran

مجله اقتصاد و توسعه کشاورزی

Article 3, Volume 36, Issue 3 - Serial Number 56, October 2022, Pages 249-263   

Document Type: Research Article

DOI: 10.22067/jead.2021.71352.1060

Authors

A. Fatahi Ardakani^{* 1}; F. Sakhi²; Y. Bostan³; M. Rezvani²

¹Associate Professor, Department of Agricultural Economics, Faculty of Agricultural and Natural Resources, Ardakan University, Ardakan, Iran

²Department of Agricultural Economics, Faculty of Agricultural and Natural Resources, University of Tehran, Iran

³Department of Agricultural Economics, Faculty of Agricultural Engineering, Sari Agricultural Sciences and Natural Resources University, Sari, Sari, Iran

Abstract

Introduction
 Various studies have shown that changes in rainfall due to climate change can affect the stability of food supply and in fact climate change by increasing the prevalence and severity of drought or flood, crop yields, food access and also effect food prices. According to the FAO, Iran's food security rank is 82 out of 125 countries in the world, and one of the reasons for this rank is the excessive waste of agricultural products in Iran. As a result, citing a wide range of previous studies, it has been documented that the impact of climate change on food security for countries that are more dependent on agriculture is largely negative and has significant effects. Therefore, in present study, citing theoretical foundations and foreign and domestic studies conducted in the field of food security especially in Iran, factors such as food prices, climate change, household income, exchange rate and targeted subsidy policy as factors affecting selected food security and their effect on food security of urban households in Iran were studied.
Materials and Methods
 In this study, it was our goal to find the effects of food price variables, climate change, household income, exchange rate and targeted subsidy policy on food availability by estimating single equations of the food security index.
In this study, based on the subject literature and available information, the self-explanatory model with wide intervals (ARDL) and the error correction model (ECM) introduced by boys and colleagues have been used to examine integration and estimate short-term and long-term relationships between variables. Data required for the present study, regarding the open market exchange rate and food prices (food and beverages) from official statistics based on the annual reports of the Central Bank of the Islamic Republic of Iran and the necessary information to calculate the food security index of households and average household income from detailed results Expenditure and income of urban households of the Statistics Center of Iran, for the period 1398-1399 has been extracted.
Results and Discussion
 The results showed that in the long run, a one percent increase in food prices reduces the food security index of Iranian urban households by 21 percent. As expected, the coefficient of variable climate change has a negative and significant effect on the food security index, and with its increase, the production of food and agricultural products decreases, and as a result, the food security index decreases. The growth rate of free market exchange rate with a negative sign at the level of one percent is significant. Since the agricultural industry in Iran is an industry highly dependent on imports. As a result, the increase in the exchange rate increases the price of agricultural products and affects food security. Annual household income has a positive and significant effect on household food security index. By increasing household income and assuming its appropriate distribution in society, it can be concluded that urban households are faced with increased purchasing power and ability to meet their food needs, and this variable has a positive effect on energy status and food security. The virtual variable of the years of implementation of the law on targeted subsidies is also significant at the level of 10% with a negative sign. The results show that in the long run, the implementation of this law has reduced the activity of farmers due to rising prices of agricultural inputs and energy carriers, this issue leads to a decrease in domestic food production and thus increases their prices and ultimately reduces food security of households. The estimated coefficient of ecm (-1) is equal to the negative value of 0.42 and is statistically significant at 1% probability level. The value of this coefficient indicates that each year 0.42% of the imbalance of one period of food security of urban households in Iran in the next period is adjusted.
Conclusion
 Given the negative effect of food price index and exchange rate on food security of urban households, the application of appropriate exchange rate policies can be very effective in reducing inflation, especially food price inflation, which threatens the country's food security. With increasing investment, domestic food production is approaching self-sufficiency in this sector, in which case food prices will be subject to domestic supply and demand, and to some extent will be protected from exchange rate fluctuations and food imports, and this will create food security and prosperity. The economy in the country will help a lot. Given the negative effect of targeted subsidies, a review of the implementation of targeted subsidies policy to establish food security for households is proposed. To reduce the negative effects of climate change on food security, selective strategies must focus on addressing the adverse effects of climate change and food insecurity. Educating and strengthening public belief in climate change and water crisis, formulating long-term and short-term plans and policies for water resources management under climate change conditions with the participation of all relevant organizations and moving towards modern methods can be effective in reducing the effects of climate change.

Keywords

ARDL; Climate change; Domarten index; Nutrition index; Subsidy targeting

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