Economic-environmental analysis of Implementation of agricultural inputs subsidy reform policy in Iran: Application of computable general equilibrium model

the effects of reducing subsidies allocatedto the agricultural sector in the form of a general equilibrium model on economic and environmental variables were evaluated.In this regard, the reduction of subsidies in the agricultural sector was considered at5levels.The results showed that subsidy reform in the agricultural sector will reduce agricultural production and increase prices,reduce the final demand for agricultural products,especially basic products for households,and therefore endanger food security.moving towards the last scenario,ie an80%reduction in subsidies in the agricultural sector, the percentage reduction in real government expenditures is estimated at-5.87%The results show the highest decrease in production is relatedto wheat and the lowest is related to barley.by applying the desired scenarios,the fisheries sector experiences a decrease in production more than other livestock,forest and rangeland sectors.Thus,with a10%reduction in subsidies in the agricultural sector, the rate of reduction in the production of livestock,fisheries,forestry and rangeland products has been estimated at-2.4%,-10.4%and-8%respectively.Implementing the policy of reducing subsidies allocatedto the agricultural sector reduces the level of domestic production and,consequently,increases the price of agricultural products and ultimately reduces the final demand for agricultural products.the reduction of subsidies in the agricultural sector in the future will leadto a reduction in environmental pollution.the reduction in CO2production in the first scenario was equalto-0.92percent and in the fifth scenario was-22.90percent.Given the needto review the subsidy payment system,the implementation of the policy of reducing subsidies to agricultural inputs shouldbe done gradually and with optimal combination and simultaneous implementation of several policy tools appropriate to the production structure and market structure of each product.