Pricing of Groundwater Resources of Hamadan-Bahar Plain using Spatial Econometric Approach

In recent years, with excessive extraction of groundwater resources, Hamedan-Bahar-plain’s ground water level dropped severely. So it is important to apply appropriate management strategy for the optimal utilization of this resource. In the economic management of water resources, the main issue is a balance between supply and demand for water. In creating this balance, an important role is the economic value of water, like the prices of other inputs are. For this reason, to keep the sustainability of water resources in agriculture, water pricing method is used as an indirect method. The aim of this study was to estimate the economic value of water using spatial econometric approach. Because of the relationship between farms and groundwater resources, this study tried to answer the question of how this relationship affects the welfare of farmers. By accepting this issue, the use of spatial econometric approach is recommended. The correlation coefficient of the estimate showed that the use of spatial regression is superior to the classical regression model. The required data in this study were collected through field research and a questionnaire to farmers in 2016. The results show that the real price of water in potato production is 2040 rials per cubic meter. Therefore, controlling water consumption and balancing of supply and demand for water can be generated from the existing price gap for water pricing policies.