Economic Management of Water by Using Valuation Policy in Mango Orchards with an Emphasis on Environmental Inputs in Chabahar County

Authors

1 Faculty of Economics, Chabahar Maritime University, Chabahar, Iran

2 Department of Agricultural Economics, Faculty of Management and Economics, University of Sistan and Baluchestan, Zahedan, Iran

Abstract

Sustainable management of water resources in order to maintain environmental needs requires an economic approach in the agricultural sector. Given the development and transformation of Iran’s national economy, the agricultural sector has emerged as the pivot of economic security and viability. In the economic approach, managing demand requires determining the real price of water. The present study uses the cross-sectional data for the 2018-2019 crop years in order to estimate the price of water for mango and also to estimate its demand with an emphasis on environmental inputs. To this end, the real price of water is determined by the residual method, and the demand function is estimated by the translog cost function and the equations of the contribution of inputs in cost. The results support the good fit of the model used for the cost function of mango in the studied county. The results for the coefficients in Chabahar County indicate that water cost has a positive relationship with the prices of manure, water, seedling, and crop yield and a negative relationship with the prices of pesticides and chemical fertilizers. Based on the results of the water demand function, water is a substitute for manure, chemical fertilizer, and seedling with partial elasticities of >1, revealing the impact of water use management and economic valuation on improving the use of other environmental inputs (pesticides, manure, and chemical fertilizers) and seedling, as well as the water itself, in mango production in this region. It is recommended to adopt policies like optimal pricing of inputs including pesticides, manure, chemical fertilizers, and seedling in order to curb the resulting environmental pollution.

Keywords

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Iranian Economic Review
Volume 26, Issue 4
December 2022
Pages 727-738

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