Determining Economic Value of Water in Wheat Production (Case Study: Underground Water Resources in Damghan Region

The necessity of recognition and optimal exploitation of underground water sources results from the fact that these resources contribute to 99% of total useable soft water of the world. In our country the agricultural sector is the main user of water among different economic sectors. Therefore, applying scientific and appropriate management measures and approaches for desired utilization of this production factor is critical. Taking into account of real value of water in water management of agricultural sector can lead to development of motivation required for saving its usage and also helps its optimal allocation in production. Generally, water has two types of real prices. One is supplier (producer) point of view and the second includes demander perspective. In this study, real price of water from producer and demander point of views was determined by the use of production function approach for wheat production at underground water sources (wells) of Damghan. The required data were collected from 184 farmers of Damghan in agricultural year 2007-08. According to superior production function(Generalized Quadratic), economic value of water in wheat production is 403.2 Iranian rials and this is more than the usual value in the area