Effects of government policies reform on environmental sustainability: An integrated approach of PMP and system dynamics simulation model

Abstract

The government's supportive policies in the agricultural sector may provide some goals intended by policymakers; however, they may have environmental, social, and sometimes economic inefficiencies. Therefore, policy analysis not only needs to examine the effectiveness of these policies from the point of view of economic components but also, in a more comprehensive view, should assess the impact of these policies on other aspects like sustainability. In this study, an integrated Positive Mathematical Programming (PMP) and System Dynamics (SD) model was developed to investigate the effects of the agricultural policy reform on the cultivation pattern and water resources sustainability in the Doroodzan Dam basin in Fars Province, southern Iran, where managing water resources is a seriously challenging due to population growth and periodic drought. The initial investigation involved analyzing how price policies (guaranteed price and world price of crops) and non-price policies (removal of subsidy payments to agricultural inputs and improvement of irrigation efficiency) impacted the cropping pattern. The results of the study showed that the most significant decrease in cropland area occurs due to the removal of agricultural input subsidies. Although this crop pattern can lead to environmental sustainability, it is not considered from the point of view of food self-sufficiency. Based on the results, applying world prices increase cropping area for crops like rice, which is a water-intensive crop. Another point was the high priority of onions, fodder corn, and beans while they are not subjected to governmental pricing intervention. This may indicate the extent of public policies' impact on agriculture. Although under some policy scenarios changes in the gross margin or cropping area do not sound significant, the water-saving nature of these policies is more compelling. Finally, the impact of altering cropping patterns along with climate change and population growth on water indices was assessed using SD modeling. Thus, reforming the government's policies in the agricultural sector may help reduce the water shortage index in the basin. The policy of removing subsidies for the agricultural inputs led to the attainment of the lowest water shortage index.