Welfare Consequences of the Devaluation of the National Currency in the Pistachio Market in Iran (Emphasis on the Concept of Virtual Water Export)

With the devaluation of the national currency, the economic justification of the supply of agricultural products to foreign markets increases more than ever. Pistachio product is one of the most important agricultural goods in Iran, which the amount and value of its export increase with the devaluation of the national currency. At the same time, the devaluation of the national currency and the increase in pistachio exports from Iran will lead to a decrease in demand and consumption of this product and increase in virtual water export in the country. In this study, with emphasis on the concept of virtual water export, the welfare analysis of the effects of the devaluation of the national currency in the pistachio product market in Iran was conducted. For this purpose, the components of the Iranian pistachio market were simulated in the design of a partial equilibrium model. The results showed that on average, with every 1% increase in the exchange rate, gross social welfare increases by about 1.6%. However, considering the economic value of pistachio virtual water wasted, the total social welfare rate is reduced by about 12%. Finally, the planning and formulation of policies to support pistachio consumers in the country and the need to pay more attention to the internalization of the external effects of agricultural exports, especially in the context of the devaluation of the national currency was reviewed and proposed.