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Abstract

With the widening of the gap in water supply and demand in recent years and the schemes of the Ministry of Energy to restore and balance underground tables, the agricultural sector is projected to be under increasing pressure due to the rationing programs and the allocation of water resources to other sectors with higher economic efficiency in water use. We explored the economic impacts of non-pricing policy of limiting water supply and the policies of water pricing, taxing, and subsidization as per each m3 water use over or below the average gross requirement of the planting pattern on the components of the agricultural sector in Qazvin Province using the data and statistics for the 2013-2014 growing season and the expansion of positive mathematical programming model with the maximum entropy approach. The results showed that the non-pricing policy of 50% limitation of water supply would have the highest economic return per m3 water use. It is estimated to be $0.23. The highest reduction of chemical fertilizer use would be accomplished in the scenario of 50% limitation of water availability and the integrated scenario of 30% water availability limitation + 50% higher price for water. According to the comparison of employment per unit area vis-à-vis the reference year under different scenarios, the scenario of 50% limitation of water supply (20% increase per ha versus the reference year) would be the best for employment creation followed by the integrated scenario of 30% limitation of water availability. Since the non-pricing policy of limiting water availability would be more effective than the pricing policies in improving water use status and changing planting pattern, it is recommended to apply a combination of these policies in the studied region.

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