Irrigation water demand management with emphasis on pricing policy

Abstract

Serious constraints in increasing water supply have led countries around the world to seek solutions for managing water demand. Proper pricing of water is one of the foremost water demand management policies which can lead to the optimal water use. On the flip side, the quality of agricultural water is declining due to the uncontrolled abstraction of groundwater. In this regard, the present study aims to determine the economic value of different qualities of water throughout pistachio-growing regions of the Rafsanjan-Anar plain in Iran. Results reveal that the economic value and price elasticity of water demand differ among different groups. Freshwater, moderately saline water and highly saline water have the highest to lowest elasticity and shadow price, respectively. Additionally, comparison of the gross margin, which represents the profit from each activity, in two conditions including the unsustainable status quo and sustainable conditions intended by the Ministry of Energy, shows that although water use has declined by 50%, the gross margin has decreased by only 36%. This implies it is feasible to reduce water use in pistachio orchards by water re-allocation with a minimum decline in profit, which will both reduce water use and ensure high economic benefits for farmers.