Document Type: Original Article

Authors

1 Ph.D. Student of Agricultural Economics, Sari University of Agricultural Sciences and Natural Resources

2 Associate Professor, Department of Agricultural Economics, Sari University of Agricultural Science and Natural Resources

3 Associate Professor, Department of Water Engineering, Sari University of Agricultural Science and Natural Resources

Abstract

Water pricing is considered as one of the most important management tools of water resources, which can result in optimized allocation in the agricultural sector. In this regard, this study estimated the cost of water and the value of water in the farmlands covered by the selected manmade ponds (MMPs) within the Alborz project area in Mazandaran Province using the engineering economics methods and production function calculation. The required data were collected via a survey conducted in 2013-2014 growing season. Sample size was estimated to be 198 people. After studying various production functions, transcendental production function was chosen as the best functional form. Next, the economic value of water for rice in the basin covered by the selected MMPs was calculated to be 19,065 IRR per m3 using an estimation of the production function. In addition, the cost of water per m3 in the selected MMPs was obtained as to be 868 IRR at the interest rate of 22% and 394 IRR at the interest rate of 12%. Comparing the cost of water with the economic value of water demonstrated that the economic value of water is higher than the cost of water in the selected MMPs, and that both of them had great difference with the price paid by farmers. The implication is that the existing gap between the real price and the price paid by farmers should be filled by the economical pricing of water.

Graphical Abstract

Highlights

Water pricing is an effective mechanism to manage water use.

There is a gap between the real price of water and the price paid by farmers for water.

Marginal value of water provides important information for policy-related analysis of water development or allocation.

The economic value of water is higher than the price of water in the selected MMPs of Alborz project area.

Keywords

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