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

Devaluation of the national currency increases the economic justification of the supply of agricultural products to foreign markets more than ever. Pistachio is one of the most important agricultural product in Iran, the export amount and value of which increase with the devaluation of the national currency. At the same time, this will lead to a decrease in demand and consumption of this product and increase in virtual water export from 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 Iran’s pistachio market was conducted. For this purpose, the components of the Iranian pistachio market were simulated by designing 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 were reviewed and suggested 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.

Alipour, A., Ebrahimi, M. S., & Gohari, A. (2022). Welfare Consequences of the Devaluation of the National Currency in the Pistachio Market in Iran (Emphasis on the Concept of Virtual Water Export). Iran-Water Resources Research, 18(2), 72-81.

https://dorl.net/dor/20.1001.1.17352347.1401.18.2.5.5