Agricultural Insurance and Food Security in Saudi Arabia: Exploring Short and Long-Run Dynamics Using ARDL Approach and VECM Technique

Faten Derouez () and Yasmin Salah Alqattan
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Faten Derouez: Department of Quantitative Method, College of Business Administration, King Faisal University, Al Ahsa 31982, Saudi Arabia
Yasmin Salah Alqattan: Professional Licensing Department, Field Supervision, Al-Ahsa Municipality, Al-Mubarraz Municipality, Al Mubarraz 36341, Saudi Arabia

Sustainability, 2025, vol. 17, issue 10, 1-19

Abstract: This study investigated the dynamic factors influencing food security in Saudi Arabia, a critical concern for the nation’s stability and development. The purpose of this research was to analyze the impact of several key determinants on the Food Security Index and to distinguish between their short-term and long-term effects, thereby providing evidence-based policy recommendations. Using annual time-series data spanning 1990 to 2023, the research employs the Autoregressive Distributed Lag (ARDL) and Vector Error Correction Model (VECM) methods. We specifically examined the roles of agricultural GDP contribution, agricultural insurance coverage, food price stability, government policies related to agriculture, climate change impacts, agricultural productivity, and technology adoption. Short-run estimates reveal that agricultural GDP contribution, government policies, and agricultural productivity express a significant positive influence on food security. Importantly, climate change showed a counterintuitive positive association in the short term, potentially indicating immediate adaptive responses. Conversely, food price stability exhibited an unexpected negative association, which may indicate that the index captures high price levels rather than just volatility. The long-run analysis highlights the crucial importance of sustained factors for food security. Agricultural GDP contribution, agricultural insurance coverage, and agricultural productivity are identified as having significant positive impacts over the long term. In contrast, climate change demonstrates a significant negative long-run impact, underscoring its detrimental effect over time. Government policies, while impactful in the short term, become statistically insignificant in the long run, suggesting that sustained structural factors become dominant. Granger causality tests indicate short-term causal relationships flowing from climate change (positively), agricultural GDP contribution, government policies, and agricultural productivity towards food security. The significant error correction term confirms the existence of a stable long-run equilibrium relationship among the variables. On the basis of these findings, the study concludes that strengthening food security in Saudi Arabia requires a multifaceted approach. Short-term efforts should focus on enhancing agricultural productivity and implementing targeted measures to mitigate immediate climate impacts and refine food price stabilization strategies. For long-term resilience, priorities must include expanding agricultural insurance coverage, investing in sustainable agricultural practices, and continuing to boost agricultural productivity. The study contributes to the literature by providing a comprehensive dynamic analysis of food security determinants in Saudi Arabia using robust time-series methods, offering specific insights into the varying influences of economic, policy, environmental, and agricultural factors across different time horizons. Further research is recommended to explore the specific mechanisms behind the observed short-term relationship with climate change and optimize food price policies.

Keywords: food security index; agricultural insurance; climate change; ARDL; VECM; Saudi Arabia (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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