Irrigation Water Pricing: The Case Study of Mashhad-Chenaran Plain

In the current study, the Generalized Maximum Entropy (GME) and Dynamic Positive Equilibrium Problem (DPEP) approach were introduced and used to estimate the set of dynamic supply functions of selected annual crops in Mashhad-Chenaran plain during the years 2003-2011.In addition, the Allen and Morishima elasticities of derived demand inputs, and supply elasticity of the crops were determined. The results showed that the estimated dynamic supply functions calibrate the observed supply for each year, accurately. Also, the policy of increasing irrigation water prices by 100 percent from the base year reduced the cultivated area and increased farmers’ intention to cultivate and supply crops with higher income, such as potato, tomato, onion and cucumber. Thus, considering the model‘s ability to estimate the observed supply in each year and to determine the impact of various policies, applying the model is recommended to analyze other policies imposed across various regions.