Evaluation of the Financial Efficiency of Farmers Based on the Economic Value of Water Resources in Arak Plain, Iran

Water is the most crucial factor for agricultural development. Therefore, the economic evaluation of water resources is critical. The purpose of this paper was to determine the economic value of water resources, to evaluate the financial efficiency and to decide on the price of agricultural water in Arak plain. For this purpose, the economic value of water resources for wheat, barley, alfalfa and corn was identified in 2015- 2016, using the mathematical model developed in this research. The results showed that the financial efficiency was calculated for three alternatives: free-cost water, water cost equal to the 10% of the calculated price and water cost equal to the exact calculated price.  The irrigation efficiency of 40% financial efficiency was 2.38%, 1.68% and 0.47% , respectively, for the  aformentioned methods, and  the irrigation efficiency of 70% financial efficiency was 2.07, 1.92 and 0.71, respectively. Also, the sensitivity analysis of the financial efficiency was performed, with 10% change in the farmers income and costs. The results also revealed that irrigation efficiency and financial efficiency were not aligned when farmers had free water; however, they were aligned when the farmer paid 10% of the calculated price. Financial efficiency was more sensitive to changes in the farmers income when compared to the changes in costs.