The Role of Economic Instruments in IWRM: The Case Study of Irrigation Water Pricing in Western Basins of Iran

Present study investigates aspects of irrigation water pricing as an important economic tool in integrated water resources management (IWRM) in the basin level. In this way, using linear programming model, water shadow price (the demand price of water) was estimated in Kohgiloye & Boyerahmad's basins. Then, using engineering economics method, the cost of water in farm level (the supply price of water) for Kowsar dam was calculated. From comparison of these two prices with existing tariff rates, the appropriate approach to agricultural water pricing was introduced. The results showed that the shadow price for each cubic meter of water is less than the cost of water. So, water pricing according to get all the cost of water supply, transmission and distribution of agricultural water is not suitable option and implementing this policy in line with the IWRM requires government support and preferential pricing policies in the long-run.