The Effect of Increasing Electricity Price on the Price of Groundwater and Profitability of Agricultural Production

Morteza Tahami Pour Zarandi^1, and Tahere Rahmani²

¹Assistant Professor, Department of Economics & Political Science, Shahid Beheshti University, Tehran, Iran

²MA in Economics, Department of Economics & Political Science, Shahid Beheshti University, Tehran, Iran

Cite this paper

Morteza Tahami Pour Zarandi and Tahere Rahmani. The Effect of Increasing Electricity Price on the Price of Groundwater and Profitability of Agricultural Production. American Journal of Water Resources. 2018; 6(1):15-24. doi: 10.12691/AJWR-6-1-3

Abstract

The agricultural sector is the largest water user in Iran, therefore, the government plans to increase water cost in this sector by increasing the price of electricity used by agricultural wells, thereby helping to reduce water losses. This research aimed to study the effect of increasing water price on agriculture profit. For this purpose, the cost of agricultural water was calculated in Qazvin province of Iran, for different electricity tariffs of the agricultural, industrial, and public sector of year 2015 by using economic appraisal method, which indicated that the cost of agricultural water was 0.035, 0.052 and 0.094 US$, respectively. Then, the volume of water consumptions and water price share in the cost of production and agriculture profitability were determined for five major crops in Qazvin province. The results indicated that a substantial change has taken place in the water price share, leading to negative profit in agriculture.

Keywords

irrigation cost, economic appraisal method, electricity tariff, groundwater, profitability

Copyright

This work is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/

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