Estimation of Water Demand Function in Rice Production in Gorgan County: Application of the Seemingly Unrelated Regression (SUR) Method

Given the changing cropping pattern of Gorgan County in favor of rice as more irrigated product on one hand and groundwater level decline on the other hand, it is more important to study and identify the factors affecting rice water demand.

In this study, the estimation of water demand function in rice production was investigated using system estimation methods and seemingly unrelated regressions (SUR). The required data were collected through filling out 314 questionnaires by farmers. Sample farmers were selected by stratified random sampling method in Gorgan in 2017-18.

The results showed that most of the coefficients were significant at the 5% level and Allen's partial elasticity had the expected sign.  This indicates that there is a reverse relationship between price and quantity of water demanded. The self-price elasticity of water demand indicates that for a 1 percent increase in water price, water demand decreases by 0.19 percent.

The demand for water is inelastic, That is, with the increase in water prices, water demand will not decrease significantly. Accordingly, it is recommended to use complementary policies such as increasing efficiency and using modern irrigation methods along with water pricing policy.