Agricultural Economics and Development

Agricultural Economics and Development

Deriving Demand Functions and Determining Economic Value for Water in the Production of Major Crops in Seidan-Farough Plain, Marvdasht, Iran

Authors
E. Fallahi
S. Khalilian
M. Ahmadian
10.30490/aead.2015.58990
Abstract
As it has been confirmed by the international organizations responsible for water management, demand assessment is considered as the central core of processes for coping with crises and problems involved in this area as well as the prerequisite of sustainable planning and directing investment decisions. The present study aimed at driving demand functions and determining economic value for irrigation water in the production of major winter crops including wheat and barley and major summer crops including forage corn, grain corn and tomatoes in Seidan-Farough Plain, Marvdasht, Iran using profit maximization approach in 2010-2011. Derived demand functions for water confirmed a direct relationship between water demand and crop price, but an inverse relationship between water demand and water price as well as the price of other inputs. Own-price elasticities of water demand indicated that farmers’ response to price changes is different in water demand for winter crops and summer crops so that price policies, as a tool for optimal control of water use, are expected to be more successful for summer crops. Moreover, the estimated economic value of water in the production of summer crops is significantly higher than that of winter crops.

JEL Classification: Q12, Q21, Q25, D40