Evaluation of the Relationship between Underground Water Resources Extraction and Rural Poverty in Iran

Poverty has different dimensions and multiple variables have effect on types of poverty. But in recent decades holistic look has changed to detailed and targeted poverty. Also, due to the severity of degradation and evacuation of the environment, in the transitional stages of countries to development, evaluation of environmental variables impacts such as water on poverty have been considered. The main objective of this research is to evaluate the effect of groundwater resources extraction on absolute poverty in Iran's rural areas during 1985-2015, using the Markov switching specification and the determination of two absolute poverty schemes. The results showed that rural poverty in Iran's economy has two low and high poverty regimes. Low poverty regime tends to be more sustainable than high poverty regime. Also, the extraction of underground water resources in the high rural poverty regime has a nonlinear and threshold effect on the absolute rural poverty index. In other words, as long as the index is less than 74.46, its increase has been able to reduce rural poverty. But after increasing the extraction of groundwater resources and crossing the above threshold, increasing the extraction of underground water resources will increase the rural absolute poverty. These results indicate that groundwater resources should be exploited based on an optimal long-term extraction pathway in order to achieve sustainable development. In this way, it is suggested that the quality of water governance and access to water resources be implemented in the form of a comprehensive water resources management system in absolute poverty stress areas, in order to prevent environmental poverty in rural areas.
JEL Classification: L95, Q25, N57, P28, I32.