Social Welfare Decrease Due to the Drop in Groundwater Level (Case Study of Wheat Farmers in Orzuiyeh Plain)

Excessive withdrawal of groundwater resources in recent decades has led to many negative externalities that one of its consequences is decreased welfare of farmers. In the present study, to survey the effect of the declined groundwater level on the welfare of farmers, first, wheat production function was estimated using generalized quadratic function and then marginal production of each input, including water input, was calculated. Then, the welfare function caused by reduced water level was calculated by estimating extraction cost function. Finally, using the envelop theorem and differentiation of welfare function with respect to groundwater levels, welfare changes due to water level decline was measured. The results showed that for every one meter groundwater level decline due to excessive withdrawals, welfare of farmers reduces 124546820 Rials and the total decreased welfare caused by the Orzuiyeh plain reservoir deficit is 129 billion Rials which is considerable. In addition, reduction of welfare per cubic meter of water is equal to 209.7 Rials. According to the results, reduced welfare of farmers is due to excessive consumption of groundwater resources which must be prevented by taking policies such as forced shutdown of motor pumps, reducing the acreage, determination of cropping pattern, culture of consumption, and increasing the farmer participation in the management of natural resources.