The effect of agricultural product pricing policies on the economic value of water (Case study: Sugar beet farming in the city of Nishabur)

Document Type : Research Paper

Authors

1 Assistant Professor, Faculty of Agricultural Economics and Development, University College of Agriculture and Natural Resources, University of Tehran, Iran

2 Former Graduate Student, Faculty of Agricultural Economics and Development, University College of Agriculture and Natural Resources, University of Tehran, Iran

Abstract

Setting the price of water equal to its economic value has important role in the management of water demand, especially in the recent water crisis. One of the main components in determining economic value of water is the price of the product. Therefore, it is important to adopt precise supportive policies on pricing the product. Therefore, the purposeof the presentstudyisto analysis the effect of guaranteedpricepolicy for sugar beet onthe realvalueof water and its optimal allocation inNeyshabur. To this end,at the first,the appropriate functional form conformed to the production technology of the sugar beetwas selectedbased on econometriccriteriaand usinginformation about95farmersin theyear2011 which were selected by two stage sampling method and marginalproductivity of water was calculated.Then, the economic value ofwaterwas analyzedinseveralscenarios consideringdifferent guaranteed prices. The resultsshowthatthe bestfunctional formforthe productionfunctionis Translogfunctionandeconomic value of waterbased on2011 price was estimated1430.5 Rails percubic meterswhichhasmajor differencewiththefarmers payingprice. Moreover, theresults indicatethat imposing different guaranteedpricesforsugar beet will lead tosignificantdifferences in theeconomic value ofwater. So,forimprovingefficiency of water use,guaranteed price of agricultural productsshouldbe determinedwith more cautionso as toreflect therealvalueof waterforpreventingwastageof it.

Keywords

References

Aghapour Sabaghi, M. & Azizian, A. (2007). Determining real water price in irrigation and drainage networks (case study: Maron). Sixth Conference of Iranian Agricultural Economics, 30 October 2007. (In Farsi).
Amidi, A. (1999). Sampling theory and its application. First volume, University Publication Center, Tehran, Iran. (In Farsi).
Amirteimuri, S. & Bagherzadeh, A. (2008). Survey of water position in Iranian agriculture and its pricing. The Third Iranian Water Resources Management Conference. (In Farsi).
Aminian, F., Dashti, G. & Hosseinzad, G. (2009). Estimating economic value of water in the production of pistachio (case study: groundwater resources Damghan city). The 6Th Iranian Conference of Agrieconomics, November, Mashhad, Iran. (In Farsi)
Blaug, M. (1985). Economic theory in retrospect, (4th Ed.). Cambridge University Press, Cambridge.
Becker, G.S. (1965). A theory of the allocation of time. The Economic Journal, 75(299), 493-517.
Berndt, E. & Christensen, L. (1973). The Translog function and the substitution of equipment, structures and labor in U.S. manufacturing, 1929-1968. Journal of Econometrics, 1, 81-114.
Chambers, R. G. (1988). Applied production analysis: A dual approach. Cambridge University Press.
Chizari, A. H. & Mirzaei, H. (1999). Pricing methods and demand for agricultural water in the pistachio orchards of Rafsanjan. Journal of Agricultural Economics and Development, 26, 99-113. (In Farsi).
Chizari, A. H., Sharzehi, GH. & Keramatzadeh. A. (2006). Determination of the economic value of the irrigation water using goal programming (case study of Shirvan Barzo dam). Journal of Economic Research, 71, 39-66. (In Farsi).
Cosgrove, W.J. & Rijsberman, F.R. (2000). World water vision: making water everybody’s business. London: Earthscan Publications.
Dashti, GH. Aminian, F., Hosainzad, G. & Hayati, B. A. (2010). Determining estimating value of water in wheat production (case study: underground water resources in Damghan region). Sustainable Agricultural Knowledge, 2 (1), 121-131. (In Farsi).
Dehghanpour, H. & Sheikh Zeinodin, A. (2013). Determining the economic valuation of agricultural water in Ardakan- Yazd plain of Yazd province. Agricultural and Development Economics, 21 (82), 68-45. (In Farsi)
Diewert, W.E. (1971). An application of the shepherd duality theorem: A generalized Leontief production function. The Journal of Political Economy, 79(3), 481-507.
Doppler, W., Salman, AZ., Al-Karablieh, EK. & Wolf, HP. (2002). The impact of water price strategies on the allocation of irrigation water: the case of the Jordan valley. Agricultural Water Management, 55, 171-182.
Ehsani, M., Dashti, G., Hayati, B. A. & Ghahremanzadeh, M. (2011). Water economics value estimation in wheat product in Qazvin plain irrigation network: A dual approach. Journal of Agricultural Economics and Development (Science and Agriculture Industry), 25 (2), 245-237 (In Farsi).
Ehsani, M., Hayati, B. A. & Adeli, M. (2010). Water economics value estimation in maize product in - a case study of the central city of Alborz in Qazvin province. Agricultural and Development Economics, 18 (72), 93-75 (In Farsi).
Gomez-Limon, JA. & Riesgo, L. (2000). Irrigation water pricing: Differential impacts on irrigated farms. Agricultural Economics. 31, 47-66.
Griliches, Z. & Ringstad, V. (1971) Economies of Scale and the form of productionfunction. North-Holland Publishing Co., Amsterdam
Greene, B. & Kennedy, P. (1990). A guide to econometrics. MIT Press, Cambridge.
Griffin,RC., Montogomery, JM. & Rister, ME. (1987). Selecting functional form in production analysis. Western Journal of Agricultural Econometrics 12(2), 216-227.
Gujarati, D. (2004). BasicsEconometrics. Translated by Hamid Abrishami, Volume II, Third Edition, published by Tehran University. (In Farsi).
Halter, A.N., Carter, H. O. & Hocking, J.G. (1957). A note on the Transcendental production function. Journal of farm Economics, 39,966-974.
Heydari, N. (2009). Strategic plan to improve productivity of agricultural water use. Research reports of research project of providing strategic plan for improving water productivity in agriculture, Agricultural Engineering Research Institute, Organization of research, education and agricultural extension, registration number 65/88 dated 16.01.88. (In Farsi).
Hosseinzad, G. & Salami, H. (2000). Estimate of economic value of water, land, labor inputs in Sugar beet production (case study of Khorasan province). Proceedings of the Conference on Agricultural Economics, Mashhad, Iran. 2000. (In Farsi).
Hosseinzad, G., & Salami, H. (2004).Choosing an empirical production function to estimate economic value of irrigation water. Journal of Agricultural Economic and Development, Vol., 12, pp: 53-74. (In Farsi)
Hosseinzad, G., Salami, H & Sadr, S. K. (2004). Estimation of economic value of water used in agricultural products using flexible production function (case study: Maragheh-Bonab plain). Journal of Agricultural Science, 17 (2),1-14 (In Farsi).
Howe, C.W. & Easter, K.W. (1971). Interbrain transfers of water: Economic issues and impacts. Baltimore and London: The Johns Hopkins Press for Resources for the Future.
Khajeh Roshanayi, N., Daneshvar Kakhaki, M. & Mohtashami, Gh. R. (2010). Estimating determining the economic value of water in production function methods, applying classic and entropy approaches (Case study: Wheat in Mashhad city). Journal of Agriculture Economics and Development (Agricultural Sciences and Technology), 24 (1), 113-119 (In Farsi).
Khalilian, S. & Zare Mehrjardi, M. R. (2005). Valuation of ground water in agriculture exploitation - case study of the wheat farm in city of Kerman (2003-2004). Agricultural Economics and Development, 13 (51), 1-14. (In Farsi).
Ku, S. J. & Yoo, S. H. (2012). Economic value of water in the Korean manufacturing industry. Water Resources Management, 26(1), 81-88.
Lloyd, P.J. (1969). Elementary geometric/arithmetic series and early production theory. Journal of Political Economy, 77, 21–34.
Madariaga, B. & McConnell, K.E. (1984).Value of irrigation water in the Middle Atlantic States: An econometric approach. Southern Journal Of Agricultural Ecomimics1984.
Mohammadinejad, A. (2001). Economic value of agricultural water (case study: central plain of Saveh). MS Thesis Agricultural Economics, Department of Agricultural Economics and Development, Tehran University (In Farsi).
Moolman, CE., Blignaut, JN. & Eyden R. (2006). Modeling the marginal revenue of water in selected agricultural commodities: a panel data approach. AgEcon. 45(1), 78-88.
Pakravan, M. R. & Mehrabi Bshrabady, H. (2010). Determining economic value and demand function of water in producing sugar beet in Kerman. Iranian Water Research, 4 (6), 83-90. (In Farsi).
Shajari, Sh., Barikani, A. & Amjad, A. (2009). Water demand management and water pricing policy in datepalms in Jahrom. Agricultural and Natural Resources Research Centre, Fars, Iran, 17 (65), 55-72. (In Farsi).
Shamsedini, A., Mohammadi, H. & Rezaei, R. (2010). Determining economic value of water in sugar beet growing in Marvdasht district. Journal of Sugar Beet, 26 (1), 93-103. (In Farsi).
Sharzei, Gh. & Amirteimuri, S. (2011). Determining the economic value of groundwater: A case study of city of Ravar (Kerman province). Faculty of Economics, 98, 113-128. (In Farsi).
Shephard, R.W. (1970) Theory of cost and production functions, Princeton Univ. Press, Princeton, NJ.
Soleimani, H. & Hassanli, A. M. (2008). Estimation of water unit cost, water use efficiency and water added value for major crops in Darab as an arid land. Dynamic Agricultural, Spring 2008, 5 (1), 45-60 (In Farsi).
Thompson, C. D. (1998). Choice of flexible functional forms: Review and appraisal. Western Journal of Agricultural Economics, 13, 169-183.
Wang, H. & Lall, S. (1999) Valuing water for Chinese industry: A marginal productivity approach. World Bank Policy Research WorkingPaper, No, 22-36.
Wicksteed, P.H. (1894). An essay on the co-ordination of the laws of distribution. Macmillan & Co., London. Retrieved June 28, 2013, from http://cepa.newschool.edu/het/texts/wicksteed/wickess.pdf
 
 
Iranian Journal of Agricultural Economics and Development Research
Volume 46, Issue 3 - Serial Number 3
October 2015
Pages 609-621

Files

Share

How to cite

Statistics