Exploring the Long-Term Relationship Between Freshwater Withdrawals and Agricultural Output in Azerbaijan: Evidence from ARDL and Cointegration Analysis (2000-2021)

Effective management of water resources plays a critical role in maintaining agricultural productivity, especially in regions that face increasing water scarcity.In the case of Azerbaijan, where agriculture constitutes a significant component of the national economy and freshwater resources are under growing pressure, it is essential to understand the relationship between water consumption and agricultural output for informed policy development.This study explores the long-term equilibrium association between annual freshwater withdrawals and agricultural gross domestic product for the period from 2000 to 2021, based on annual time series data.The autoregressive distributed lag bounds testing approach indicates the presence of a cointegrated relationship, as the computed F-statistic of 4.986 exceeds the upper bound critical values at both the five percent and ten percent significance levels.Subsequent analysis using the fully modified ordinary least squares method identifies a statistically significant and positive long-run relationship, showing that a one percent increase in agricultural output leads to a 0.025 percent rise in freshwater usage.The Engle-Granger cointegration test further validates this finding, yielding a tau-statistic p-value of 0.015, which confirms the existence of a stable long-term connection between the variables.These findings highlight the importance of implementing coherent water and agricultural policies in Azerbaijan, including measures to improve irrigation efficiency, invest in waterconserving technologies, and ensure that agricultural development is aligned with the principles of sustainable water resource management.