Economic impacts of climate change on water resources and agriculture in Zayandehroud river basin in Iran

Highlights

• A hybrid of physical and economic models were used to explore the impacts of socio-economic and climate change scenarios.

• Such integration modeling gives a more realistic evaluation of water resources and agriculture vulnerability.

• Water resources and agricultural sector of the basin will experience additional stress due to climate and socio-economic changes in the future.

• Choosing optimal cropping pattern and deficient-irrigation strategies, give good opportunities to adapt with to climate change.

Abstract

Climate change has drastic impacts on water resources and agricultural productivity, especially in arid and semi-arid environments. The present study simulated and explored the economic impacts of climate change on the water and agriculture sectors of the Zayandehroud river basin in Iran for the years 2040 and 2070in three major phases. In phase I, two general circulation models (GCM) (HadCM2 and CGCM3T63), an artificial neural network (ANN) rainfall-runoff model, and crop-water production functions were applied to evaluate the biophysical impacts of climate change on water resources and various crop yields. In Phase II, the aforementioned models were integrated into the hydro-economic spatial equilibrium model of Zayandehroud basin (HE-SEMZ), and the effects of the modeled runoff and socio-economics changes on the economic welfare of the water sector, its distributional consequences, and on temporal-spatial water prices and allocation were simulated. In Phase III, the simulated optimal allocated water to the agriculture sector was introduced into a positive mathematical programming (PMP) model of the agriculture sector to simulate follow-on changes in crop acreage, cropping patterns, and farmers’ gross benefit. In this modeling framework, the role of two no-cost adaptation strategies in agriculture, i.e. modifications in crop irrigation and cropping pattern, were also investigated. The results showed that by mid-century, precipitation will be reduced and temperature increased in the Zayandehroud river basin. The direct result of these changes will be a reduction in the basin discharge by 4.3 % in 2040 and 8.1 % in 2070 compared to the base period. The simulated economic value of water showed upward trends under climate change and socio-economic scenarios, reflecting an increase in water scarcity. In response to changes in the scarcity value of water, users respond by changing their patterns of water use and allocation. The withdrawal by each sector decreases in response to reduced runoff, although agriculture will be more responsive. The results of the PMP model showed that by choosing optimal cropping pattern and an optimum deficient-irrigation strategy for each crop, there will be good opportunities for farmers to adapt to increasing water scarcity and higher temperatures induced by climate change.

Introduction

Today, climate change is one of the most important problems facing communities because of its long-term effects on current and future generations (Yazdanpanah and Zobydi, 2017). Climate change is an inevitable phenomenon of natural and human origins to which reduction and adaptation are needed to reduce the severity of its impacts and damages (Koundinya et al., 2018).

Climate change is the biggest 21st century environmental challenge that has broad impacts on various economic sectors, human communities, natural resources, and biodiversity. Water resources and agriculture are the sectors most dependent on climate as it directly determines the temporal and spatial availability of resources and their productivity (Bantin et al., 2017). In addition, these sectors are strongly linked to other economic sectors and claim a large portion of the economy, especially in developing countries. Climate change will have a significant influence on the sustainability of water supply, both quantitatively and qualitatively, human health, and the food supply in future decades (Bhave et al., 2018). In addition, agriculture is a climate-sensitive sector that must adapt to climate change to maintain its economic vitality and meet the increasing caloric demands of a growing population (Mu et al., 2017).

The direct physical effects of climate change on water resources and agriculture have indirect implications on social, economic, and environmental systems, thereby changing the management and allocation of land and water resources. Numerous studies worldwide have examined the complex relations between climate change and water resources as well as agriculture. Various studies have explored how climate change might affect global water scarcity in the future using population projections and simulated changes in climate from global climate models (GCMs) with water resources models (Simon and Arnell, 2016). Understanding the effects of climate change on water resource systems has been extensively attempted in the last few decades (Fant et al., 2015; Brown and Wilby, 2012; Haasnoot and Middelkoop, 2012). A review of these studies gives evidence that this issue needs to be studied in more detail considering various climatic and socio-economic conditions. It has been argued that even with aggressive strategies to stabilize the concentration of atmosphere carbon dioxide between 400 and 500 ppm, the occurrence of climate change in the future is inevitable on the general scale (Quiggin et al., 2010). It has been predicted that the vulnerability of developing countries would be greater than that of developed countries. Also, the water and agricultural commodities’ supplies, in addition to changes in their relative prices in response to climate change, would lead to structural changes of resources allocation among different sectors, to changes in the comparative advantages in favor of one region at the expense of another, and to alteration of the economic and commercial structures of countries.

Iran is located in a dry and semi-dry region of the world, and such countries are especially vulnerable to the predicted impacts of climate change on water resources (Xia et al., 2016). Trends in historical meteorological data as well as future climate change projections indicate that temperatures will increase and spatial and temporal patterns of precipitation will change in the future, as they have in recent decades (Fant et al., 2015). Analysis of data from five meteorological stations with at least 100 years of records revealed a significant increase in the average annual temperature. IPCC projections on climate change (A1 scenario) also indicate that the average annual temperature will increase by 2 °C until 2040 and by 3.5−4 °C by the year 2100. They also predict a decrease of 10–20 % in the average level of precipitation. Moreover, it is anticipated that cereal production will decrease by 30 % in the next 30 years (IPCC, 2007). These issues present a serious challenge to dry and low-precipitation regions of Iran.

Many studies have evaluated climate change and its consequences in Iran. However, they have tried to detect either long-term trends in climatic and hydrological variables (Abdi-dehkordi et al., 2017; Modarres and Silva, 2007; Hejam et al., 2008) or the physical effects of climate change on runoff and crop yields (Abrishamchi et al., 2007; Ashofteh and Massah Bovani, 2007; Khorshiddust and Ghavidel Rahimi, 2008). The outcomes of such studies offer only a potential estimate of climate change impacts and have limited managerial implications.

Climate change not only affects the biophysical variables, but also influences the type and amount of water consumption in various activities, the shadow price of water, and agriculture cropping patterns (Rojas-Downing et al., 2017). Emphasis on the potential effects of climate change only and disregarding adaptive adjustments in market and farmer behaviors causes the overestimation of vulnerability. For instance, runoff reduction deepens competition between different uses and consumers and, in turn, increases the price of water, resulting in water reallocation among users by moving from less value to high value consumption. Therefore, a part of the predicted impact on water resources in biophysical modeling is modified by price changes at the market level. Farmers also react to water deficits by changing cultivation patterns and crop irrigation schemes (Williams and Carrico, 2017). Nevertheless, climate change is only one aspect of future challenges to water resources management; changing socio-economic conditions are more important in outlining the situation of water resources at both national and regional scales (Menzel et al., 2019). Socioeconomic scenarios are also key factors that determine the degree of vulnerability to climate change (Rodríguez et al., 2015).

The impact analysis of climate change using hybrid models which integrate the complex relationships between economic, hydrological, and agronomic elements as well as adaptation strategies with socioeconomic trends gives a more realistic evaluation of water resources and the vulnerability of the agricultural sector. The current survey showed that there is a huge research gap in this area in Iran. The aim of this research, therefore, was to investigate the economic impacts of climate change on the water resources and agricultural sector of the Zayandehroud river basin by developing a hydro-economic model of the spatial equilibrium of water basin and an agricultural positive mathematical programming model.