Effects of trade liberalization on welfare of crop consumers and producers, virtual water trade, and resource sustainability: A case study in Fars Province

The free trade for agricultural products has improving effects on the economic welfare. Analyzing this policy was a key goal for many countries in the last decade. On the other hand, the virtual water trade is discussed as an option in the water policy issues for sustainable use of water resources, especially in arid and semi-arid countries such as Iran. This study examined the effects of two policies including with and without trade liberalization of agricultural productions on economic welfare, virtual water trade and water resources sustainability. This analysis was carried out using a positive mathematical programming model as a case study in Fars Province, Iran. Results showed that the trade liberalization affects virtual water traded by various crops differently. Overall, this policy reduces the net virtual water export and secures the water resources sustainability in the studied area. Moreover, trade liberalization policy improves the net welfare for crops consumers. However, the net welfare for crops producers is dependent on changes in the crop patterns before and after the policy implementation.