Irrigation Water Pricing in Iran: The Gap between Theory and Practice

Subject Areas : Environmental policy and management

Morteza  Tahamipour ¹ (Assistant Professor, Department of Economics, University of Shahid Beheshti.)
Mohammad  Kavoosi Kalashami ² (Assistant Professor, Department of Agricultural Economics, Faculty of Agricultural Sciences, University of Guilan)
Amirhossein  Chizari ³ (Assistant Professor of Agricultural Economics, Department of Economics and Agricultural Development, University of T ehran)

Received: 2015-08-05 Accepted : 2015-08-05 Published : 2015-06-01

Keywords: Pricing, Economic value, Golestan province, water, Supply cost,

Abstract :

Pricing policies play an important role in water demand management and its optimal allocation. Determining proper water price leads to optimal allocation of water especially in agricultural consumptions. Applying new subsidy targeting law in Iran which insists on pricing water based on its supply cost, will effects considerably on water resource management in agriculture sector. So, in this study, different Irrigation water pricing methods is investigated and proper irrigation water price is determined using survey data for 2010-2011 farming year in Golestan Province of Iran. At the first step using econometric approach, economic value of irrigation water in different agriculture crops is determined that shows demand side price for water. Then, supply cost of surface and ground water is calculated using accounting approach which shows supply side price for irrigation water. Finally, economic value and supply cost of irrigation water compared and different water pricing methods is evaluated. Results indicated that, weighted average of economic value and supply costs of irrigation water in Golestan province were 1795 and 1399 IRR per cubic meter, respectively. So, improvement of water demand and supply management could be achieved using price policies.

References:

1- Chambers, R.G. (1988). Applied production analysis: A dual approach, Cambridge University Press. USA.

2- Deacaluwe, B., Patry A., & Savard L. (2004). when water is no longer heaven sent: comparative pricing analysis in an AGE model Retrieved from http://econpapers.hhs.se

3- Debertin, D.L. (1997). Agricultural production economic, (M. Mosa Nejad & R. Najarzadeh, Trans), institution of economic research, Tarbiat Modares University.

4- Green, W.H. (1993). Econometric analysis, Macmillan publishing company, New York.

5- Guerrero, B., Wright, A., Hudson, D., Johnson, J., & Amosson, S. (2010). The Economic Value of Irrigation in the Texas Panhandle, Selected Paper prepared for presentation at the Southern Agricultural Economics Association Annual Meeting, Orlando, FL, February 6-9, 2010.

6- Guohau, X.U. (1986). Irrigation water charges in China, Report on the expert consultation on irrigation water charges, FAO, Rome, Italy.

7- He, L., & Tyner, W. (2004). Improving irrigation water allocation efficiency using alternative policy option in Egypt, Retrieved from http:// econpapers. hhs.se

8- Hosseinzad, J., & Salami, H. (2002). Select a production function to estimate the economic value of agricultural water, the case study of wheat production, the quarterly of agricultural economic and development, 48.

9- Huang, Q., Rozelle, S., & Howitt, R. (2006). Irrigation Water Pricing Policy in China. American Agricultural Economics Association Annual Meeting.

10- Hussain, I., Sial, M. H., Hussain, Z., & Akram, W. (2009). Economic Value of Irrigation Water: Evidence from a Punjab Canal. The Lahore Journal of Economic, 14(1), 69-84.

11- Hussain, R.Z., & Young, R.A. (1985). Estimates of the economic value productivity of irrigation water in Pakistan from farm surveys, Water Resources Bulletin (26.6): 1021-1027.

12- Judge, G.R.C. Hill, W.E. Griffiths. H. Lutkepohl, & Lee, T.C. (1988). Introduction to the theory and practice of econometrics. John Wiley and Sons, New York

13- Renzeti, S., & Dupont, D. (1999). An Assessment of the impact of charging for provincial water use permits. Paper presentation, 6th conference of the international water and resource consortium Hawaii, Agecon. [DOI via Crossref]

14- Sadeghi, A., Mohayidin, M. G., Hussein, M. A., & Baheiraei, A. (2010). Determining the economic value of water in production of wheat in Iran. Australian Journal of Basic and Applied Science, 4(6), 1391-1402.

15- Seagraves, J.A., & Easter, K.W. (1983). Pricing irrigation water in developing countries, Water Resources Bulletin, 19.4. 663-672.

16- Singh, K. (2007). Rational pricing of water as an instrument of improving water use efficiency in the agricultural sector: a case study in Gujarat, India International Journal of Water Resources Development, 23, 679–690. [DOI via Crossref]

17- Thompson, C.D. (1988). Choice of flexible functional forms: Review and appraisal, Western Journal of Agricultural Economics, 13, 169-183.

18- Young, R. A. (2005). Determining the economic value of water: concepts and methods, Washington, DC, USA.