Abstract:
Iran
is one of the most energy
-
rich countries subsidizing energy carriers, especially in
the agricultural sector, to the extent that the resulting growth is at the expense of the
environment. This study tries to investigate the potential impacts of energy pric
e reform
on the agro
-
environment, based on the Marginal Abatement Costs (MACs) of emissions.
Firstly, the energy demand function of the agricultural sector and the probable reaction
of inputs and outputs to the reform were estimated. Then, using an Input D
istance
Function (IDF), the country and provincial
-
wide MAC were simulated through
counterfactual reform scenarios. The results indicated that energy price reform would
increase the MAC of emissions and socio
-
environmental benefits. However, the reform
adv
ersely affected the income of farmers. Also, the results provided detailed information
both at a nationwide and provincial scale. Finally, it was recommended to implement
complementary policies alongside reforms to compensate for the reduction in farmers’
income.
Keywords:
Energy demand function, Input distance function, Marginal abatement cost,
Shadow price.
