Study of a Stable Optimal Combination for Selected Low-Water-Consuming Agricultural Crops in Iran

Document Type : Research Article

Authors

R. Allahverdi ¹

H. Rafiee ¹

E. Pishbahar ¹

S. Yazdani ¹

M. Pendar ¹

A. Liaghat ²

¹ Department of Agricultural Economics, Faculty of Agriculture, University of Tehran, Karaj, Iran

² Department of Irrigation and Reclamation Engineering, Faculty of Agriculture, University of Tehran, Karaj, Iran

https://doi.org/10.22067/jead.2026.96305.1401

Abstract

Introduction
Iran’s agricultural sector plays a strategic role in ensuring food security and generating non-oil export revenues. However, growing water scarcity, climatic constraints, and global market instability have posed serious challenges to the sustainability of agricultural exports. Policies restricting exports of water-intensive crops-often implemented without considering economic water productivity-have further distorted the export structure and reduced overall efficiency. This study aims to identify the optimal export pattern of low water-consuming agricultural products in Iran while examining the dynamics and stability of target export markets. The central research question is whether Iran can restructure its agricultural exports in a way that either (a) maximizes export revenue for a given level of virtual water consumption, or (b) minimizes virtual water consumption while maintaining the same export earnings. To address this, a hybrid analytical framework combining the Markov chain model and mathematical programming was developed.

Materials and Methods
The research consisted of two complementary stages:
Stage one: Market Stability Analysis (Markov Chain Model): The Markov model was applied to analyze the persistence and transition probabilities of Iran’s major agricultural exports across key destination markets during 2013–2022. This probabilistic approach enabled the identification of market stability, volatility, and dependence patterns for products such as saffron, pistachios, dates, apples, raisins, figs, almonds, and watermelons.
Stage two: Export Optimization (Mathematical Programming): Two models were formulated:
Model a: Maximize export revenue subject to a constraint on virtual water consumption.
Model b: Minimize virtual water consumption subject to a constraint on export earnings.
These models were solved under different water and income scenarios to explore the trade-offs between economic performance and water sustainability. Scenario analyses tested the impacts of stricter or more relaxed water constraints on the optimal export composition.

Results and Discussion
1. Market Stability and Dynamics
The Markov chain analysis revealed that Iran’s agricultural exports are highly unstable and geographically concentrated, relying heavily on a few volatile markets. Generally, smaller markets showed greater stability, whereas larger markets were more volatile.
Saffron: Afghanistan, with only a 5% share, showed the highest stability (57%), while Spain-despite a large share-was highly unstable.
Pistachios: China and “other destinations” had the highest stability (27%), whereas the UAE, which absorbed most exports, was volatile.
Dates: India was the most stable destination (73%) with a moderate share.
Apples: Iraq was both the dominant and most stable destination (44% share, 24% stability).
Similar trends were observed for raisins, figs, almonds, and watermelons, indicating the need for market diversification and strategic reorientation toward more stable destinations.
2. Optimal Export Composition
The optimization results demonstrated a clear trade-off between water use and income. When stricter water constraints were applied, low water-consuming crops (e.g., saffron, figs, and almonds) gained larger shares in the optimal export mix. Conversely, under relaxed constraints, water-intensive crops (e.g., watermelons, apples) expanded, yielding higher revenues but lower water productivity.
Among all crops, saffron emerged as the most efficient in both water and economic terms, consistently appearing as a core component in all optimal scenarios. Quantitatively, restructuring the export composition could reduce virtual water use by 5-40% without lowering export income, or increase export revenue by 5-55% while maintaining current water consumption.
These findings underscore the potential of aligning trade policies with water resource management to enhance both economic and environmental outcomes.
3. Policy Implications
The results indicate that export earnings could increase by approximately 5–55% while maintaining water consumption at its current level in the export pattern. Considering these findings, export incentives for products that the optimal pattern recommends reducing could provide an effective policy instrument.
The findings also call for a shift in the basis for classifying agricultural products from physical water intensity to economic water productivity. Even under a virtual-water minimization objective, the export of some physically water-intensive products may remain economically justified when they generate high economic returns per unit of water. Export policy should also account for demand conditions in individual destination markets. Accordingly, agricultural export policies should adopt a destination-oriented approach, with decisions to restrict or promote the export of each product informed by economic water indicators, the importance of the destination market, demand in the target market, and the strategic contribution of each market-product combination to national foreign-exchange earnings.

Conclusion
Integrating Markov chain analysis with optimization modeling provides a practical framework for sustainable export policy design. The results indicate that Iran’s current export strategy compromises both market stability and water efficiency. Strategic market diversification and prioritization of water-efficient crops can simultaneously enhance export performance and reduce water stress. This study suggests that Iran can save up to 40% of virtual water without reducing export income or increase export earnings by up to 55% while maintaining current water use. These findings align with Article 11, Clause 2 of Iran’s Seventh Development Plan, and emphasizing incentives for water-efficient agricultural exports. Future research should incorporate climatic variability, global price fluctuations, and partner-country trade policies to refine the model further, ultimately promoting alignment between agricultural trade strategy and sustainable water management.

Keywords

Exports

Foreign exchange earnings

Instability

Low water-consuming products

Virtual water JEL Classification: Q17

Q25

F14

Q56

C61

Subjects

• Marketing and Trade of Agriculture Production

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Authors retain the copyright. This is an open access article distributed under Creative Commons Attribution 4.0 International License (CC BY 4.0)

 

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