The Effects of Granting Subsidies to Agricultural Inputs on Iranian Households' Welfare and Environment by Emphasis on Computable General Equilibrium Model

Abstract

This study seeks to investigate all the direct and indirect effects of agricultural input subsidies on agricultural production using the computable general equilibrium method, the effect of agricultural input prices and subsidies on macroeconomic variables, food security, household welfare, and the environment. The results showed that the reform of subsidies in the agricultural sector by reducing agricultural production and rising prices, will reduce the final demand for agricultural products, especially basic products for households, and therefore will endanger food security. The findings also indicate that by applying the desired scenarios, the production of fisheries sectors decreases more than other production sectors. The reduction of subsidies paid to the agricultural sector also leads to a decrease in the welfare of urban and rural consumers Is. In addition, reducing subsidies in the agricultural sector in the future will lead to a reduction in environmental pollution. Due to the low income of farmers, if subsidies are reduced in this sector, producers will not be able to change technology, and therefore with increasing production costs, production in the agricultural sector has decreased more sharply than other sectors, and in this regard support the agricultural sector, is necessary. In addition, it is suggested that the subsidy be reduced gradually, along with the payment of cash subsidies to farmers, especially villagers.