Determine Appropriate Water Pricing in the Agricultural Sector: A Case Study of Fars Province

Abstract
Proper pricing of water as one of the economic measures can play a role in reducing waste and optimizing water use in agriculture. Accordingly, the aim of this study was to determine the appropriate price of water in irrigation and drainage network of the province, which is in line with the implementation of the targeted subsidies law. To achieve this goal by using linear programming, shadow prices of water for agriculture and using engineering economy, the cost of water from surface and groundwater sources were calculated, respectively. Then these prices were comprised with the water tariff determined by water companies and the prices that paid by farmers at current situation and according to this comparison, the some offers were proposed to determine the price of water in agriculture. The results showed that the average cost per cubic meter of water from surface and groundwater resources in Fars Province were 860 and 544 Rials, respectively, while each cubic meter of water in agricultural production provides a net benefit of 350 Rials. According to the findings, in a long-term schedule, it is possible to achieve real price in agricultural water. Also, it is recommended that water resources management policies in line with targeted subsidies law to be leads to the balance between full cost and full value of water.

JEL Classification: Q25, D46, L11, D24

Keywords:
Water, Agriculture, Economic Value, Pricing, Cost, Fars Province