Azada Novruzova

This research investigates the long-term relationship between agricultural inputs, climate change, and agricultural output in Azerbaijan, with a particular focus on the effects of irrigation and agricultural supplies (IAS), investment in fixed capital, and climate conditions on agricultural output. Using annual data from 2002 to 2021, the study employs the Autoregressive Distributed Lag (ARDL) bounds testing approach to examine cointegration among the variables. The results confirm a statistically significant long-run equilibrium relationship between the Crop Production Index (CPI) and its key determinants, including irrigation and agricultural supplies, investment in agricultural fixed capital (INAG), and average annual rainfall (AAR). The ARDL F-statistic exceeds the upper critical bounds at both the 5% and 1% significance levels, providing strong evidence of cointegration. Robustness checks based on long-run coefficient estimates show that a 1% increase in IAS leads to a 1.319% increase in CPI, while a 1% increase in INAG results in a 0.038% rise in CPI. Conversely, AAR has a statistically significant negative impact, with a 1% increase in rainfall corresponding to a 0.115% decline in crop production, likely reflecting climatic irregularities. These findings underscore the critical importance of sustained capital investment and efficient input supply in enhancing crop productivity, while highlighting the risks posed by environmental variability for sustainable agricultural development in Azerbaijan.