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

Kermani, Alireza; Yazdani, Saeed; Hosseini, Seyed Safdar; Dourandish, Arash; Yousefpour, Rasoul

doi:10.22034/iaes.2025.2068743.2144

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

Articles in Press

Document Type : Research Paper

Authors

Alireza Kermani ¹

Saeed Yazdani ¹

Seyed Safdar Hosseini ²

Arash Dourandish ¹

Rasoul Yousefpour ³

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.

Keywords

Climate Change

Rainfed Wheat

fixed effects

counterfactual Analysis

climate attribution

Subjects