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The present study shows the economic effects of climate alteration on grain (maize, wheat, and rice) production in Iran using a Ricardian method. The model was estimated using the longitudinal data on grain yields and climate variables from 1983-2014. The marginal effects of climate changes on productivity of crops were estimated by applying Panel Corrected Standard Error (PCSE) models. Empirical results showed a considerable hill-shaped correlation between wheat yield and spring and fall rainfalls and temperatures. The joint effect of the spring and fall rainfall and temperature for wheat was significantly negative. For maize, the outcomes showed a considerable hill-shaped correlation between crop productivity and spring precipitation. Moreover, there was a meaningful interaction term between winter rainfall and temperature at 1%. Our results for maize yield were not as robust as those for wheat. For rice, winter temperature had a considerable U-shaped relationship with rice yield, while summer precipitation and temperature had a considerable hill-shaped relationship with yield. The annual marginal impacts of rainfall and temperature for all the crops were positive. The outcomes showed that in Iran, the sensitivity of cereal production to enhance in precipitation levels would be less compared to the increase in temperature.

The effects of policies on farmers' profit have a key role in their adoption by the farmers and their operationalization at the basin level. The present research explored the effects of water resources conservation policies on optimal cropping pattern and farmers' profit in the Zayanderud basin located Iran using a combined hydrological-economic model composed of WEAP and multi-objective (MOP) models for the assessment of the effects of the A2 climate change scenario with or without the conservation policies. The results showed that climate change will reduce crop yields by 0.5–4%, will decrease water availability by 12–19%, and will increase crop water requirements by 0–4%. It was also found that the adoption of the policy of changing irrigation technology along with the policy of limiting groundwater use will alleviate the effects of climate change on the farmers' profit, will enhance their planned return per unit area by 5%, and will increase the economic efficiency of water use from 5,283 to 6,002 IRR/m3. But, the policy of increasing water price cannot improve the farmers' profit at the basin level and the economic efficiency of water use although it can reduce water use. So, proving the improvement of profit and livelihood of the farmers by applying combined water resources conservation policies can play a significant role in motivating farmers to accept these policies, operationalizing optimal water resources management, and resolving conflicts over water use in this basin.