Abstract for:Government Subsidies and Common-Pool Resources: A System Dynamics Model of Pistachio Production in Rafsanjan, Iran

In the early 1980s, the Iranian government introduced energy subsidies to stimulate a stagnant economy. The subsidies made accessing water affordable, prompting a boost in agricultural activities, which, due to the attractive market and available land, caused a marked increase in pistachio production in the Rafsanjan region. After years of excessive groundwater extraction, the region is now facing a severe water scarcity problem. Besides, a dramatic increase in production cost also leads farmers to abandon their orchards and leave the region, which for many years has accounted for about half of Iranís pistachio production.† Meanwhile, the United States, previously the biggest importer of pistachios, has become a strong competitor to Iran in the pistachio market, particularly in China. In this way, Iran is losing its current market position due to the USAís cost-effective production. Unemployment, emigration, regional economy depression, and other aspects of this troublesome situation prompt the stakeholders to look for a solution. Investigating this complex dilemma needs a comprehensive and systematic study to consider all aspects of the situation. System Dynamics is used as a practical tool and to provide a theoretical perspective that captures the whole picture of this socioeconomic system.