Analysis of Effects of Energy Subsidies Adjustment on Groundwater Balance and Exploitation

Some economists believe that low price of agricultural inputs and governments supportive payments to agriculture sector as important factors cause low efficiency of agricultural inputs in the most of developing countries. Although governments supportive payments to agricultural activities is fulfilled for the purpose of increasing of social benefits, but it will cause some economic and environmental externalities. The objective of the study is to analyse the impacts of energy subsidies adjustment as policy scenarios on aquifer conservation of Hamedan-Bahar plain in Hamedan province, by considering the dynamic relations between aquifer groundwater balance and the agriculture sector. For this purpose the combined use of simulation and optimization (S/O) techniques is considered in a dynamic framework. Analysing of the results indicate that adjustment and reduction of energy subsidies in agricultural sector of Hamedan-Bahar plain, will reduce total exploitation of aquifer groundwater and increase the economic life of Hamedan- Bahar plain aquifer.