Resource Scarcity and Food Price Volatility: Assessing the Role of Water Constraints in Pakistan

This study examines how water scarcity drives fluctuations in food prices in Pakistan, utilising annual time series data from 1990 to 2020. The Autoregressive Distributed Lag model (ARDL) is used for empirical analysis. The ARDL model indicates a statistically significant relationship between water scarcity and food prices in the long run and the short run (SR). An increase in water scarcity leads to an increase in the Log Food Price Index (FPI). Similarly, Log Money Supply and Log Diesel Prices have a positive and statistically significant impact on Log Food Price Index in both the long run and short run. A change in MS and DP increases FPI. To control for potential structural breaks, this study uses a dummy variable for extreme food inflation. Based on these findings, this study suggests that the government should promote solar technology and drip farming in Pakistan's agriculture sector to produce food with less water sustainably. nbsp; JEL Classification: Q235, E31, C22