Estimation of the Shadow Cost of Groundwater Salinity Used in Irrigated Wheat Production

Environmental damage caused by agricultural activities has always been a concern for policy makers. Hence, the estimate of the economic value of the damages is very important. The object of this study was to estimate the value of environmental damage of water salinity in Iran’s wheat production in 1999 to 2012. For this purpose, a spatial output distance function has been developed. The results showed that the share of damage due to water salinity was 6.4% of wheat price. 16 percent of this damage was due to adjacency of regions. Also, the growth rate of shadow price of salinity was higher than the price of wheat during the period, which showed the importance of the environmental damage. Determining the shadow price of environmental pollutants can be considered to policy maker for determining the real price of wheat and sustainable cultivation in each province.