Estimating Economic Value of Water in Onion Production in Zanjanrud Basin

In economics, each resource that is scarcer should have a more accurate pricing mechanism. Water is one of the most valuable natural resources and, as one of the main inputs for production of agricultural products, has a special place in sustainable development of agricultural sector. Determination of economic value of water in Zanjanrud river basin significantly helps to promote water use efficiency and saving of water users and demand management. By means of production function for onion and colleting questionnaire from 99 onion farmers in this region in 2012-13, we evaluated the economic value of water. Production inputs including cultivation area, irrigation, chemical fertilizer, pesticide, manpower and also pressurized irrigation method were the imaginary variables. After estimation of the flexible trans-log, generalized second order functions and generalized Leontief and according to the criteria and econometric tests, the quadratic generalized function was recognized as the best production function. The results from the analysis of the data showed that the economic value of water in cubic meters per kilogram of onion production was 1707 Rials. This exchange value of water was higher than the exchange value of water at peak demand, which was 705 Rials. Therefore, in Zanjanrood river basin, the economic value of water was more than the exchange value of water.