Investigating and Predicting the Impact of Water Pricing on Structural Changes in Iran : Dynamic Computable General Equilibrium Model Approach

Arabpour, Reyhaneh; Jalaee, Abdolmajid; Nejati, Mehdi

doi:10.22055/jqe.2022.38973.2434

Document Type : Article-Based Dissertations

Authors

¹ Ph.D. in economics, Department of Economics, Faculty of Management and Economics, Shahid Bahonar University , Kerman, Iran.

² Professor of Economics, Department of Economics, Faculty of Management and Economics, Shahid Bahonar University , Kerman, Iran

³ Associate Professor of economics, Department of Economics, Faculty of Management and Economics, Shahid Bahonar University , Kerman, Iran

https://doi.org/10.22055/jqe.2022.38973.2434

Abstract

Economic growth is one of the key components of economic development and structural changes refer to one of the factors followed by economic development stability. One of the fundamental drivers in the stable development process is the change in production inputs prices. In this study, the price of water in industrial and agricultural sectors is considered. Accordingly, the key question of the research is whether the realization of water prices in the agricultural and industrial sectors will cause structural changes in the Iranian economy? To answer the research question, due to the slow trend of structural changes, the forecast horizon of 2032 is considered and a dynamic computable general equilibrium model is used. The results show that with the increase in water prices in the industrial and agricultural sectors, the population of skilled and unskilled labor in the agricultural sector decreases. Consequently, in the coming years until 2032, skilled and unskilled labor in the industrial and service sectors will experience positive growth. It can be concluded that realizing the price of water may help the structural change process in Iran. Of course, capital flows will be affected along with the labor force, better reflected in key energy sectors. Therefore, the political suggestion is that the gradual realization of water prices can gradually cause structural changes in the Iranian economy over time, in turn leading to stable and sustainable growth and, most importantly, positive employment. Moreover, sustainable development in industry and service sectors would be improved.

Keywords

Main Subjects

Macroeconomics

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Investigating and Predicting the Impact of Water Pricing on Structural Changes in Iran : Dynamic Computable General Equilibrium Model Approach

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References

Volume 21, Issue 3 - Serial Number 82Vol. 21, No. 3, Autumn 2024December 2024Pages 30-54

Volume 21, Issue 3 - Serial Number 82
Vol. 21, No. 3, Autumn 2024
December 2024
Pages 30-54