The potential role of a carbon tax on CO2 emission reduction in the agriculture sector of Iran

A carbon tax is one of the fundamental cost-effective market tools to limit global temperature and reduce greenhouse gases emissions. In this study, using the provisions of the Paris Agreement and the shadow price of carbon, the potential role of the carbon tax on carbon emission reduction in the agricultural sector of Iran is investigated. To this end, the GMM (generalized method of moments) approach and data for 28 provinces of Iran during 2001–2017 is implemented. The own price and income elasticity of diesel are calculated at −0.26 and 0.32, respectively. Results indicated that each 300 Rial (0.0.0071) increase in diesel price led to a 44 kg/capita decrease in carbon emission. Each 10