The Impacts of Climate Change on Value-Added Agriculture in the MENA Region

Document Type : Original Article

Authors

• somaieh meyghani ¹
• Mahdi Khodaparast Mashadi ²
• Narges Salehnia ³

¹ Ph.D Student of Economics, Ferdowsi University of Mashhad

² Associate Professor of Economics, Ferdowsi University of Mashhad

³ Assistant Professor of Economics, Ferdowsi University of Mashhad

https://doi.org/10.22067/erd.2021.67927.1003

Abstract

1- Introduction
Climate change on planet earth as a result of growing economies in recent decades has had many effects that could not be ignored agricultural wise. The agriculture sector is one of the main sectors influenced by climate change because of its role in providing nutrition, which in turn effects the economy of region. Some regions, including the Middle East and Northern Africa (MENA), are exposed to more severe climate change. Therefore, in this research, the effects of climate change on value-added agriculture in the MENA region countries are investigated.
2-Theoretical framework
In present theoretical and empirical evidence, several potential approaches have been proposed for the effects of climate change on economic growth. First, destruction of nature and ecosystems, storms, floods, drought, deaths, and extinction of endangered species resulting from extreme weather events cause serious damage to economic growth. On the other hand, resources required to counter the damaging effects of global warming reduce availability of resources needed to invest in physical infrastructures, R & D, and human capital. As a result, economic growth will shrink (Dell et al. 2012; Abidoye et.al 2015). Theoretically, the relationship between climate change and economic growth could be mentioned through both macroeconomic and microeconomic perspectives. From the macroeconomic perspective, this relationship affects the level of output, including agricultural yield and economic potential to increase growth by its impact on investments and institutional status. From the microeconomic perspective, this relationship includes an array of factors like cognitive and physical labor productivity, conflict, and health, all of which have wide economic implications (IPCC 2007; Abidoye et.al 2015). Specifically, the important classical ideas related to economic development are presented in studies of economists such as Marshall (1890) and Huntington (1915) who relate productivity to temperature (Dell et al. 2012).
3- Methodology
The purpose of this study is to analyze the impact of climate change on value-added agriculture in the MENA region countries. Thus, temperature and precipitation data and value-added agriculture of 11 MENA countries during 2001-2016 was used here. This study employed Panel Data cointegration Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) models. Also, The Pedroni, Kao, and Westerlund cointegration tests confirmed existence of a long-run equilibrium relationship.
4- Discussion
The results indicate existence of a cointegrated long-term relationship between climate change and value-added agriculture. The value-added agriculture elasticity to climate change, gross fixed capital formation, employment and CO2 emission intensity are consistent with theoretical and empirical research types. Moreover, comparing the elasticity in both applied approaches shows that temperature changes had a negative and significant effect, and precipitation changes positively and significantly impacted the value-added agriculture variable. It implies that with a one percent increase in temperature and precipitation over the long term, value-added agriculture is changed in the FMOLS model at a rate of -0.28, 0.03 percent, and in the DOLS model -0.09, 0.02 percent,  respectively.
5- Conclusion and Suggestions
One of the important and obvious consequences of climate change in agriculture is its impact on food security and the spread of poverty. Consideration of the vital role of agriculture in economic growth and development, and since climate change and global warming in the future can pose serious risks to reduce the Value-added Agriculture. Therefore, there is a need for an international policy to adopt strategies to mitigate or control climate change. This is not only for economic growth in the MENA countries but also for poverty reduction. Investment in sectors such as energy-efficient technologies, renewable energy, public transport, sustainable agriculture, Implementation of appropriate cultivation pattern, development of drought-tolerant crop varieties and sustainable management of natural resources are needed for the promotion of a green economy. While the green economy can reduce climate change, it can turn the pressures of climate change into an opportunity for sustainable agriculture, resulting in maximum production and the Value-added agriculture.

Keywords

• Climate Change
• Value-added agriculture
• Panel cointegration

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