Pistachio Yield Risk and Farm Income Stability Under Climate Variability An Econometric Assessment of Production Risk in Iran

Abstract

Climate variability has become an increasingly important source of production and income risk in perennial agricultural systems, particularly in regions where crop profitability depends strongly on climatic conditions and water availability. Pistachio production represents a strategically important agricultural activity in Iran, yet substantial interannual fluctuations in yield can expose producers to considerable income instability. This study investigates the relationship between climate variability, pistachio yield risk, and farm income stability in Iran using an econometric framework that explicitly distinguishes production effects from production risk. The empirical analysis combines observed pistachio production and yield data with climatic indicators capturing temperature and precipitation variability over time. The study first characterizes temporal changes in pistachio productivity and income-related outcomes and subsequently estimates the effects of climatic variability on both expected yield and yield risk. The estimated production-risk relationships are then linked to farm income dynamics to assess how climate-induced fluctuations in pistachio output translate into economic instability. Particular attention is given to asymmetric climatic effects, temporal variability, and differences in the sensitivity of pistachio production to temperature and precipitation conditions. The empirical framework also enables the identification of climatic conditions associated with relatively high and low production-risk states, providing a more economically meaningful interpretation of climate exposure than conventional mean-yield analysis. The results are expected to demonstrate that climate variability affects pistachio-producing economies not only through changes in average productivity but also through increased uncertainty surrounding production and farm income. The findings provide an empirical basis for evaluating the economic consequences of climate-related production risk and for designing risk-management strategies aimed at improving income stability in pistachio-producing regions. By integrating yield risk with farm income dynamics, the study contributes to the agricultural economics literature on climate-related production uncertainty and offers policy-relevant evidence for strengthening the economic resilience of Iran's pistachio sector under increasing climatic variability.