An Econometric Estimation of Irrigation Water Demand for Watermelon in Iran
. Iran is located in an arid and semi-arid area with scarcity of water resource for its agricultural activities. About 93 percent of the total annual Iranian water consumption is for agricultural activities. Not with standing high irrigation water demand in the agricultural sector, farmers pay v...
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Main Authors: | , , , , |
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Format: | Article |
Published: |
2012
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Online Access: | http://library.oum.edu.my/repository/907/1/018-ICEBM2012-K10001.pdf http://library.oum.edu.my/repository/907/ |
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Summary: | . Iran is located in an arid and semi-arid area with scarcity of water resource for its agricultural
activities. About 93 percent of the total annual Iranian water consumption is for agricultural activities. Not
with standing high irrigation water demand in the agricultural sector, farmers pay very low price for water
and the cost borne by farmers for irrigation water is much lower than the actual value of water. The low
irrigation fee has caused not only inefficient allocation of water resources in this sector, but it has also
resulted in farmers producing crops which require relatively large amount of water as well as non-essential
crops. The main objective of this study is to estimate the demand for irrigation water, and to analyze the
current pricing mechanism (policy) for water. The demand elasticity of goods, services and input determines
which a change in price, ceteris paribus, affects users’ quantity demanded. This study investigated the
structure of irrigation water demand by estimating the derived demand for water on a particular crop,
watermelon, in Iran. A derived demand function is estimated after performing the relevant statistical tests.
The price elasticity of irrigation water demand and other elasticities are also computed. The price elasticity is
found significant. Data and information from 2001 to 2006 from 21 provinces in Iran is employed.
Parameters for the demand functions were estimated using Ordinary Least Squares (OLS). The parameters of
models were estimated using the econometric method on panel data. The estimated water price coefficients
are found to be negative which confirm the economic pricing theory. (Abstract by authors)
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