Agricultural Economics

Agricultural Economics

Economic Impacts of Climate Change on Rainfed Wheat in Iran: A Counterfactual Analysis

Document Type : Research Paper

Authors
1 Department of Agricultural Economics, Faculty of Agriculture, University of Tehran, Karaj, Iran
2 Department of Agricultural Economics, Faculty of Agriculture, University of Tehran, Karaj, Iran,
3 Department of Forestry, University of Toronto, Canada
10.22034/iaes.2025.2068743.2144
Abstract
Human-induced climate change poses a critical threat to the economic viability of Iran's agricultural sector, yet its historical financial impact remains unquantified. This study isolates the effect of anthropogenic warming on rainfed wheat, a strategic crop for the nation's rural economy. Using a two-way fixed effects model on panel data from 16 provinces (1984–2023), we compare observed yields under factual climate conditions with a counterfactual scenario simulating a climate without human-induced warming trends.
Our analysis reveals that while climate change caused a net national decline in average yield, the regional economic outcomes are starkly divided. Key agricultural provinces suffered major losses, reaching up to $197 million, whereas others experienced significant gains. The findings prove that a one-size-fits-all approach to climate adaptation is inadequate and demonstrate the power of counterfactual analysis to inform the targeted, region-specific policies essential for maintaining agricultural resilience.
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Articles in Press, Accepted Manuscript
Available Online from 08 October 2025