Economic Value Determination of the Agricultural Water based on Crop-Type in Markazi Province, IRAN

Economic development and efficient use of water resources is largely dependent on water as an economic good, and it is to be considered using the economic approach in order to manage it. The main objective of this paper is to determine the economic value of agricultural water based on crop-types and financial efficiency of farmers in seven areasof Markazi province, Iran in the 2012-2013 crop year. For this purpose, a localized developed mathematical model was used to calculate the economic value of water for 4 crops including wheat, barley, alfalfa and corn by three different weighting methods including the volume of water, the area under cultivation and the income from each one of the products. Among the above mentioned methods, the weighting method - which is based on the volume of water - is selected as the most appropriate method. The economic value of water based on this weighting method and for the studied areas including Mahallat, Komijan, Shazand, Saveh, Delijan, Khomein and Ashtian were obtained equal to 5700, 5550, 5000, 6700, 3800, 4800, and 6050 rials per cubic meter of water, respectively. The financial efficiency for all the three alternatives; free water, 10% of the calculated price and the actual price of water from the farmer were calculated. Results revealed that financial efficiency is sensitive to changes in income and it is more sensitive than changes in costs. Irrigation efficiency and financial efficiency are not aligning in all cases. This means that in the first place, in order to increase farmers' financial efficiency, the farmers' incomes should be increased, and secondly, by subsidizing in other conditions, the farmer’s costs should be reduced.