The Economic and Welfare Effects of Different irrigation Water Pricing Methods, Case Study of Khomein Plain in Markazi Province of Iran

The scarcity of water resources and supply resources limitation, have caused an increasing gap between water supply and demand specially in recent decades in almost all regions of the globe. One of the best known solutions proposed by the economists is using the different water pricing approaches thereby obtaining the optimal allocation and social justice. To this purpose, this paper uses the positive Mathematical Programming (PMP) and Econometric Mathematical Programming (EMP) in a comparative analysis to study the economic and welfare impacts of alternative water pricing approaches in the agricultural sector during agricultural period 2011/2012 in Khomein plain of Markazi province in Iran. Results show that the EMP can be a better alternative approach instead of PMP to better analyze of agricultural policies. According to the final outcomes, it is suggested to apply the block tariff in place of volumetric pricing method to reach the optimal allocation and promoting the water efficiency in the price range of 198 to 853 Rials.