Estimating the Economic Value of Water in Wheat Production in Gorgan County

Water pricing is one of the most important economic tools for increasing water demand management in the agricultural sector. In this regard, the purpose of this study, was to determine the economic value of agricultural water from the perspective of demand by using production function approach in wheat for Gorgan County, in 2012-13. In this study, flexible and inflexible functions were used. After estimating these functions, Cobb-Douglas function was chosen as the best production function. Water economic value calculated for wheat crop was 1564.5 Rials per cubic meter. Also, the price elasticity of demand for these products was calculated. According to the results, the absolute price elasticity of water demand for wheat was estimated at 1.28, which is larger than unity and shows that price policies can be an important factor in the control of non-optimized consumption of this valuable input.