Investigating the Effect of Economic and Non-economic Factors on Energy Demand in Iran’s Agricultural Sector

Energy demand and the factors affecting it have been growing in importance due to population growth, increased greenhouse gas emissions, and limited energy resources. In this regard, the agricultural sector of Iran shows an increase in the consumption of various energy carriers in this sector in recent years to increase production, employment, and food security. Given the significance of energy resources and environmental protection, the present study aims to investigate the impact of economic and noneconomic factors on energy demand in Iran’s agricultural sector over the period 19702017 using Markov switchingerror correction model. The results indicate that the variable of agricultural production in both Markov regimes has a positive and significant effect on energy demand in this sector. The variable of the diversity of agricultural activities affects energy consumption in the agricultural sector positively. In addition, the impacts of human capital and trade liberalization in the agricultural sector on energy consumption in this sector are positive and significant. It is therefore suggested that to manage and optimize energy consumption, appropriate policies should be implemented in this sector to mitigate the environmental pollution and prevent the reduction of agricultural production.