Estimating the Economic Value of Water Using Willingness to Pay of Potato Farmers and the Value of Marginal Product

Document Type : Research Paper

Authors

1 PH. D Student Department of Agricultural Economics Engineering, Tarbiat Modares University, Tehran, Iran

2 Assistant Professor Department of Agricultural Economics Engineering, Tarbiat Modares University, Tehran, Iran

3 Graduated Department of Agricultural Economics Engineering, Tarbiat Modares University, Tehran, Iran

Abstract

In many plains of Hamedan province, free distribution and low water subsidies paid by farmers have led to its overexploitation at the fields, which can threat the existing water resources and agricultural sustainable development in the region. Undoubtedly, one of the most important tools for optimal allocation of water resources is economic valuation, which emphasizes the long-term development strategy of the country. In this regard, the purpose of this study was to determine the economic value of agricultural water in potato fields in Razan-Ghahavand plain of Hamedan province using two approaches; production function and willingness to pay farmers using conditional valuation method (CVM). The required information was collected by completing a questionnaire from 150 potato farmers using a two-stage cluster sampling method in 2015-2016. In order to achieve the research objectives, the estimation of various forms of production functions was used, and the best form of the function was determined according to the results obtained by the transcendental production function. The results of the production function method showed that the average economic value of water producing potato crops was 2461 Rials per cubic meter. Also, the average willingness to pay farmers of this product after estimating the Logit model was 3452 Rials per cubic meter. Regarding the reported results, better achievements can be derived, if the water pricing policy is depended on effective factors, including the willingness to pay farmers, as well as the farmers' participation in decision-making.

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References

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Iranian Journal of Soil and Water Research
Volume 50, Issue 4
August 2019
Pages 1023-1037

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