Externalities of groundwater overdraft on the supply of agricultural products: A Case Study of wheat in Marvdasht.

Overdraft of groundwater in Marvdasht city reduces the salinity and level of water in this area. In this study, the results of the suitable wheat supply function are provided regardless of externalities. The externalities of using groundwater resources on income, expenses and profits of farmers in the context of wheat supply function have been studied. The results of this study showed that by applying the externalities on income, due to increase in product performance and therefore farmer's income, wheat supply has been increased. In this regard, increase in farmer’s income for one percent because of the overdraft of groundwater resources, increased wheat supply percentage by 0.36. Inclusion of the externalities of exploitation of groundwater resources on the cost of pumping in the supply function, reduced wheat supply. So that a one percent increases in costs resulting from the overdraft of groundwater resources caused, about 0.03 percent decrease in wheat supply. Also, importing the externalities of the exploitation of groundwater resources on wheat farmer's profit decreased about 0.1 percent of the supply.