Volume 25, Issue 1 (2025)
QJER 2025, 25(1): 1-30 |
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taei F, Khalilian S. Multiple Effects of Energy Substitution, Technology Development and Growth Rate in Agricultural Sector. QJER 2025; 25 (1) : 1
URL: http://ecor.modares.ac.ir/article-18-73431-en.html
URL: http://ecor.modares.ac.ir/article-18-73431-en.html
1- Ph. D. Student, Department of Agricultural Economics, Tarbiat Modares University, Tehran, Iran
2- Associate Professor of Agricultural Economics, Tarbiat Modares University, Tehran, Iran ,khalil_s@modares.ac.ir
2- Associate Professor of Agricultural Economics, Tarbiat Modares University, Tehran, Iran ,
Abstract: (487 Views)
Aim and Introduction
The purpose of this study is to investigate the multiple effects of energy substitution from technology development on the growth rate of economic-environmental indicators in Iran's agricultural sector using the translog cost function. While one of the main goals of improving energy efficiency with the implementation of the Energy Subsidy Targeting Law in Iran was to deal with the rapid growth of fossil fuels, but looking at the energy consumption situation in the agricultural sector, it is clear that not only with the implementation of this plan, the consumption of fossil fuels has not decreased, but also increased in coparison to the time span before the plan. The increase in the annual growth rate of energy consumption has created many environmental challenges. In this way, the amount of carbon dioxide emissions, which is the most important greenhouse gas in Iran's agricultural sector, has reached from 13,682 tons to 17,639 tons in 2019. In other words, the average increase in the annual growth of carbon dioxide emissions in agricultural sector during this period was equal to 28.92%. The implementation of some energy saving policies may have the opposite effect on energy consumption and the environment as well.
Methodology
Translog cost function has been used to investigate the multiple effects of energy substitution from technology development on the growth rate of economic-environmental indicators in Iran's agricultural sector. The data used for the period 1988 to 2020 were collected from Central Bank, Iran Statistics Center, Ministry of Energy and World Food Organization.
Results and Discussion
The results has revealed that if the level of technology development increases, the substitution between capital and energy decreases and on the contrary, the substitution between labor and energy increases. The results have also shown that by reducing the amount of substitution between capital and energy, its negative effects on the economy and the quality of the environment are significant, and in contrast to the increase in the amount of substitution between labor and energy, it has a positive effect on the economy and the quality of environment. The higher level of technology development has increased the level of energy substitution.
Conclusion
The results of this research have shown that with an increase in the level of technology development on changes in energy consumption, the substitution between production factors in agricultural sector changes, which means that a 25% increase in technology development leads to an increase in energy consumption by 0.567%. In comparison, the changes in energy consumption are aligned with the development level of technology, which means that a small increase in the level of technology development leads to the rebound effects of energy. These energy feedback effects lead to an increase in substitution between capital and energy by 0.068% and a decrease in substitution between labor and energy by 0.412% compared to the initial level of technology development, but with a further increase in the level of technology development, the effect of energy feedback effects on energy substitution decreases. The results have also shown that with an increase in the level of technology development in the targeting period of energy subsidy, the amount of energy return effects increases, but at a higher level of technology development, these energy return effects decrease in the agricultural sector. Therefore, it is concluded that in the early stages of technology development, which is at a lower level, its effects on energy return are significant, but with the development of technology at a higher level, its value has gradually decreased and does not remain stable. The results have also revealed that with an increase in the level of technology development, the degree of substitution between capital and energy decreases and on the other hand, the degree of substitution between labor and energy increases, and these effects are greater at a higher level of technology development. Therefore, increasing the level of technology leads to a decrease in investment and an increase in employment in the agricultural sector at the same time. In addition, it was found that by reducing the substitution between capital and energy, the negative effects on economic indicators and environmental quality are significant. The reason that the development of the level of technology in Iran's agricultural sector has had significant negative economic effects can be seen in the exhaustion of the technology used in the production of this sector. The application of these technologies, will lead to a higher cost of production which in turn result into a lower rates of profitability in the sector. Therefore, the incentive for production, investment and job creation in this sector decreases in the long term.
The purpose of this study is to investigate the multiple effects of energy substitution from technology development on the growth rate of economic-environmental indicators in Iran's agricultural sector using the translog cost function. While one of the main goals of improving energy efficiency with the implementation of the Energy Subsidy Targeting Law in Iran was to deal with the rapid growth of fossil fuels, but looking at the energy consumption situation in the agricultural sector, it is clear that not only with the implementation of this plan, the consumption of fossil fuels has not decreased, but also increased in coparison to the time span before the plan. The increase in the annual growth rate of energy consumption has created many environmental challenges. In this way, the amount of carbon dioxide emissions, which is the most important greenhouse gas in Iran's agricultural sector, has reached from 13,682 tons to 17,639 tons in 2019. In other words, the average increase in the annual growth of carbon dioxide emissions in agricultural sector during this period was equal to 28.92%. The implementation of some energy saving policies may have the opposite effect on energy consumption and the environment as well.
Methodology
Translog cost function has been used to investigate the multiple effects of energy substitution from technology development on the growth rate of economic-environmental indicators in Iran's agricultural sector. The data used for the period 1988 to 2020 were collected from Central Bank, Iran Statistics Center, Ministry of Energy and World Food Organization.
Results and Discussion
The results has revealed that if the level of technology development increases, the substitution between capital and energy decreases and on the contrary, the substitution between labor and energy increases. The results have also shown that by reducing the amount of substitution between capital and energy, its negative effects on the economy and the quality of the environment are significant, and in contrast to the increase in the amount of substitution between labor and energy, it has a positive effect on the economy and the quality of environment. The higher level of technology development has increased the level of energy substitution.
Conclusion
The results of this research have shown that with an increase in the level of technology development on changes in energy consumption, the substitution between production factors in agricultural sector changes, which means that a 25% increase in technology development leads to an increase in energy consumption by 0.567%. In comparison, the changes in energy consumption are aligned with the development level of technology, which means that a small increase in the level of technology development leads to the rebound effects of energy. These energy feedback effects lead to an increase in substitution between capital and energy by 0.068% and a decrease in substitution between labor and energy by 0.412% compared to the initial level of technology development, but with a further increase in the level of technology development, the effect of energy feedback effects on energy substitution decreases. The results have also shown that with an increase in the level of technology development in the targeting period of energy subsidy, the amount of energy return effects increases, but at a higher level of technology development, these energy return effects decrease in the agricultural sector. Therefore, it is concluded that in the early stages of technology development, which is at a lower level, its effects on energy return are significant, but with the development of technology at a higher level, its value has gradually decreased and does not remain stable. The results have also revealed that with an increase in the level of technology development, the degree of substitution between capital and energy decreases and on the other hand, the degree of substitution between labor and energy increases, and these effects are greater at a higher level of technology development. Therefore, increasing the level of technology leads to a decrease in investment and an increase in employment in the agricultural sector at the same time. In addition, it was found that by reducing the substitution between capital and energy, the negative effects on economic indicators and environmental quality are significant. The reason that the development of the level of technology in Iran's agricultural sector has had significant negative economic effects can be seen in the exhaustion of the technology used in the production of this sector. The application of these technologies, will lead to a higher cost of production which in turn result into a lower rates of profitability in the sector. Therefore, the incentive for production, investment and job creation in this sector decreases in the long term.
Article number: 1
Article Type: Original Research |
Subject:
Agricultural and Natural Resource Economics; Environmental and Ecological Economics
Received: 2024/01/16 | Revised: 2025/02/18 | Accepted: 2024/02/6 | Published: 2025/02/18
Received: 2024/01/16 | Revised: 2025/02/18 | Accepted: 2024/02/6 | Published: 2025/02/18
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