The role of agricultural water markets in the allocation and pricing of water resources (Case study: Mojen Water market)

Document Type : Research Paper

Authors

1 Expert of Deputy of Coordination and Monitoring at Presidential Institute, Iran

2 Assistant Professors, Department of Economic and Political Sciences, Faculty of Shahid Beheshti University, Iran

Abstract

Water markets are instrumental in efficient allocation and pricing of scarce water by enhancing allocative and price efficiency of water use. The prerequisites for water market formation are tradable water rights independent from ownership of the land, extensive water canals, water use associations, and adequate market regulations. Mojen water market has been facilitating exchange of alternative water rights for more than 40 years accommodating among other things 30% of total farmers water demand. The total volume of water exchanged through the marker over the 3 year period of (2002-2004) are 38, 54 and 88 Q3 , with average price of 555, 651, and 664 IR/Q3, respectively. The purpose of this research is to estimate water demand function and identify the roles that market plays in pricing and efficient allocation of water. The estimated demand price elasticities for single and joint production of potato and wheat are significant and negative. The differential among the absolute value of the estimated elasticities reveals that potato and wheat are the major and the minor crop choice in the farmers’ production plan. Producers are less sensitive to variation of water price when they produce potato and wheat jointly compared to their single plantation. The price elasticity of demand for the former joint outputs is -0.256 compared to that of potato and wheat alone which are -0.276 and -0.477, respectively. The difference between the average products of water for the said crops enforces the obtained elasticities results.

Keywords

References

A. bohlolvand, K. sadr, (2007). Measuring the state of competition in the mojen water market. Journal of Iranian Agricultural Economics Society, Selected papers of the 6th Iranian conference on agricultural economics, 30-31 Oct 2007. Holey MashHad, PP 63-79. (In Farsi)
B, H. baltagi. (2005), Econometric Analysis of Panel Data, (3rd Ed.). John Wiley & Sons
B, Bosworth and g, Cornish and c, Perry and f, van. Steenburgen. (2002), Water Charging in Irrigated Agriculture, HR Wallingford, British Government’s Department for International Development
.Dinar, A. & M, W. Rosegrant, & R, Meinzen-Dick. (1997), Water Allocation Mechanisms: Principles and Examples, World Bank, Policy Research Working Paper NO 1779, Washington, D.C .Boston.
Easter, K.W & M, W. Rosegrant, (1998), Markets for Water: Potential and Performance, In A. Dinar (Eds.). Kluwer Academic Publishers, Boston.
Easter, K.W and R, R. Hearne, (1995), Water Markets and Decentralized Water Resources Management: International Problems and Opportunities, American Water Resources Association, No 31.
Hearne, R.R., and K.W. Easter, (1995), Water Allocation and Water Markets: An Analysis of Gains-from-Trade in Chile, World Bank Technical Paper, No 315, Washington, D.C.
Hearne, R.R. and K.W. Easter, (1998), Economic and Financial Returns from Chile’s Water Markets, In Easter, Rosegrant, and Dinar (eds.) Markets for Water: Potential and Performance, Kluwer Academic Publishers, Boston.
K. Sadr. (1996). Market Pricing of Water in Islam, Journal of Water and Development, 7(2-3). PP87-96
K. Sadr. (1996). Principles of Efficient and Equitable Water Pricing, Journal of Water and Development, 7(3). PP44-56
J. hosseinzad, H. salami & K. sadr, (2007). Estimation of Economic Value of Water in Agricultural Productions Using AFP. Journal of Agriculture Science, 17(2), 1-14 (In Farsi)
K. Sadr, A. bohlolvand, (2007). Justice, Market and Fair price, Proceedings of 5th Biannual International Conference on Islamic Economics, Government & Market from Islamic Perspective, 31 Oct – 1 Nov 2007. Tarbiat Modares University, PP253-273 (In Farsi)
Kemper, K. E. & D, Olson. (2000), Water Pricing–The Economics of Institutional Change in Mexico and Ceará, Brazil, In A, Dinar (ed.), The Political Economy of Water Pricing Reforms, Oxford University Press (forthcoming).
Kristi, A. R, Farooqi, (2003), Economic Instruments for Water Quality and Quantity Management, Center for Applied Business Research in Energy and the Environment (CABREE), University of Alberta, School of Business.
Marino, M. & K, E. Kemper, (1999), Institutional Frameworks in Successful Water Markets, World Bank Technical Paper  No 427, Washington, D.C.
R, Meinzen-Dick, (1998), Groundwater Markets in Pakistan: Institutional Development and Productivity Impacts, In Easter, Rosegrant, and Dinar (eds.) Markets for Water: Potential and Performance, Kluwer Academic Publishers, Boston.
R, palmer-jones, (2001) Irrigation Service Markets in Bangladesh: practice. Provision of Local Public Goods & Community Regulation, Department of Society, Lund University, Sweden.
S, zekri. & Easter, K. W, (2004), estimating the Potential Gains from Water Markets: a Case Study from Tunisia, Agricultural water management, vol 2, issue 3, April 2005, 161-175.
W, Doppler & A, Z. Salman. & K, Al-Karablieh & H, P. Wolff, (2002), The Impact of Water Price Strategies On The Allocation of Irrigation Water: the Case of the Jordan Valley, Agricultural Water Management, vol 55, PP 171-182.
 
Iranian Journal of Agricultural Economics and Development Research
Volume 45, Issue 4 - Serial Number 4
January 2015
Pages 761-773

Files

Share

How to cite

Statistics