Estimating Economic Value of Water in Production Function Method, Applying Classic and Entropy Approaches (Case Study: Wheat in Mashhad)

Reform of pricing system based on economic value of water in agricultural sector is one of the most efficient tools of demand management, which led to arrangement of water consumption model. It is hoped that demand of water and its waste decrease by reforming water tariffs in agricultural sector; and ground of saving for water is prepared. Current paper in this direction, for defining economic value of agricultural water applied production function method in wheat in Mashhad. In this method, Classic and General Maximization Entropy approaches are applied for estimating coefficients of production function. Results showed that Entropy approach wasn’t able to estimate accurately coefficients of functions and it couldn’t use its results for obtaining economic value of water. Whereas, in classic approach, Translog among different forms of functions was selected, as the best function form in wheat crop, and the economic value of water was calculated in 1870 Rials.