MAGNT Research Report (ISSN ) Vol.3 (3). PP: Evaluating Demand Function and Price of Water for Corn (Case Study :Bavanat)

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1 Evaluatng Demand Functon and Prce of Water for Corn (Case Study :Bavanat) Mohammad Mrzae, Ebrahm Serr Dvshal* 2, Majd Zare and Fard Zare 4. Daryoon Branch, Islamc Azad Unversty, Daryoon, Iran 2. Department of Agrcultural Economcs, Islamc Azad Unversty, Arsanjan Branch, Arsanjan, Iran. Young researchers and Elte club, Arsanjan Branch, Islamc Azad Unversty (IAU), Arsanjan, Iran 4. Young researchers and Elte club, Arsanjan Branch, Islamc Azad Unversty (IAU), Arsanjan, Iran. (Receved: Dec. 204 & Publshed Onlne: Mar. Issue 205) Abstract: Accordng to ncreasng demands of water, determnaton prce can be supposed as one of the most mportant methods to use water n agrcultural porton. Generally, the purposes of ths research are to estmate water demand functon and determnaton of ts prce by usng producton functon (Corn).t should be remnded that n order to measure these functons, statstcal nformaton were collected by systematcal random samplng, ntervew wth farmers and questonnare n 20. After evaluatng producton functon, we can estmate water demand and proft functons. The results show that the fnal producton n each cubc meter s equal to.42 for Corn. On the other hand, the fnal prces wll be estmated626 rals. (Rate percent s 2%).there for the tensonal demand of water s equal to -.79 for Corn. The studes ndcate that f the estmated prce wll be equal to the fnal prce, just n ths case, water can be more tensonal. Here t s necessary to say that accordng to ths characterstc of water, the water prce can be useful to handlng water consumpton. As a result rals are proposed for each cubc meter of water. Keywords: produced functon, water demand functon, proft functon, Corn. Introducton Agrcultural sector to play ts role better n developng countres and ncreasng demand for food s bound to ncrease agrcultural producton, whch led to the quanttatve analyss n order to ncrease the producton of products at the polces of the be. Corn s one of the major hortcultural crops n the world s Iran. Gven the recent droughts mportance of water as a vtal factor s even more marked. If you do not plan for sustanable development of water resources n the country's future wll be faced wth the problem of non-resoluton vew of the fact that more than 94 percent of water used n agrculture. To acheve the objectves envsaged n the agrcultural sector have all the potental to be used. At the same tme the estng facltes to operate properly. Ths s especally mportant n the feld of water resources n the country. The average ranfall s 225 mm of ranfall s appromately one-quarter and one-thrd are n Asa. In addton to the low annual ranfall dstrbuton s also very poor. Most of the problems of plannng n developng countres, lack of knowledge and lack of talents and characterstcs of dfferent regons and optmal use of producton nputs are correct. The total area s appromately 65 mllon hectares, of whch about 5 mllon hectares sutable for agrculture and cultvaton. Due to lmted water resources n the country, of whch about 8 mllon hectares are rrgated and dry land about 6 mllon hectares have been planted and 4 mllon hectares of fallow as s. Due to the ncreasng demand for water n agrculture, water prcng as a way of optmal and sustanable use of water n the world s consdered. It seems that n ths cty farmers are seekng to mamze ther proft to the cost of etractng and transportng water to the value of ther margnal product. As a result of acton taken hgh, ncreasng the depth of wells drlled

2 banned altogether. On the one hand ths s caused by hopelessness about the future and the severty of the consequences of dehydraton. Due to the hgh dependence of agrculture on groundwater, t s feared that the loss of future severe water damage to the soco-economc fabrc of the regon. The Plannng and Polces for the balance between harvestng and groundwater recharge areas should be consdered, otherwse the future of agrculture and water resources rreparable damage wll be. Gven the fundamental role of water n sustanable development due to lmted water resources, water use, especally n agrculture Bavanat reform process s mportant. And the need for effcent and effectve use of water as the most mportant factor n agrcultural producton s essental. Bavanat man occupaton s agrculture and anmal husbandry. It should be a proper balance between eplotaton and recharge the groundwater resources and the proper and effcent use of estng water resources, effectve step to take s to serve agrculture. The purpose of ths research s to fnd ways to help prevent the destructon of groundwater resources s Bavanat cty. 2. Methods The value of the margnal productvty of water to estmate the prce elastcty of water demand and water was calculated and the prce of water to get the prce of water was calculated from the benefcares. Producton functon: In ths study of pomegranate producton functon of Cobb Douglas and Transcendental producton functon s used Transndntal. Mathematcal form of the Cobb - Douglas s as follows: (): y A )( n n Margnal Productvty: The fnal product the amount of addtonal productvty n the use of an addtonal unt of nput s producton nputs are sad to be fnal. In other words, producng the fnal product s equal to the amount of changes to the nput varable changes. (2) MP dy d (2) Average Producton: The average producton of one nput varable s the amount of product per unt of nput at every level of the product. And ts calculaton formula s as follows. () () AP Y X TP X Elatcty: Partal producton elastcty of the percentage change n the percentage change n nput varable s the product of these dfferent nputs can be compared wth each other to produce a slght tenson wth the E or e shows. As we sad n the fnal topc of the MP And wth average producton It can be concluded that (4): e MP. AP MP AP (4). Results Whte on test results show that the model problem of heteroscedastcty test data usng whte cross over and assume that the varance of the test was rejected ansotropy between phrases dsturbng. The Cobb-Douglas functon

3 varables, water, cultvaton, sprayng pestcdes, ntrogen and machne workng hours have a 2 sgnfcant effect on maze producton. R Ths equaton shows that about 70 percent of the dependent varables n the model are justfed. F statstcs were F = 4.82, whch s sgnfcantly less than % level and ndcates the correct choce of model varables. Table (). Estmaton results corn wth Cobb-Douglas and transcendental functons Varable Cobb-Douglas Transcendental Coeffcent Statstcst Coeffcent Statstcs t Intercept *, ** * The water *, ** Sprayng pestcdes * Ntrogen fertlzer *, ** Phosphate Fertlzer *, ** Workforce * Logarthm of water * *, ** Log acreage 78.. *, ** - - Log toc pestcdes * * Log Ntrogen *, ** *, ** fertlzer Logarthm of *, ** phosphate fertlzer Logarthm of labor *, ** Logarthm of tme machne * - - Transcendental functon varables n water, sprayng pestcdes, ntrogen, phosphate fertlzer and labor are sgnfcant. Accordng to the statstc F n corn producton functon regresson s statstcally sgnfcant at the % level. In order to dentfy the best model can be made usng constraned least squares F test. Results show that unconstraned model or transcendental producton functon of corn and determne the best model to nterpret the prce elastcty of water demand for agrculture. 4. Producton elastcty The results show that the producton elastcty of corn felds related to water (97/0) s below the level of phosphate fertlzer and labor elastcty s postve. Therefore, there s a drect correlaton between the use of nputs and producton. Smlarly, a one percent ncrease of water producton rate of 97/0 percent ncrease. The stretch of water, phosphate fertlzer and 5. Determne the value of the margnal productvty of water n corn producton Gven that the average maze producton per hectare to,500 kg and an average of 9,200 cubc meters of water to rrgate a hectare of labor are between zero and one farmer n the second zone (economc zone) are workng. In other words, the amount of nput logcal and economcal. Ton producton elastcty of nput 8 / 0- and ntrogen fertlzer producton elastcty than s -24. Farmers use pestcdes and pestcde nputs of ntrogen fertlzer n the regon of producton were weak because the pull factor s negatve. maze consumpton, and average sales per klogram of maze to 262 dollars. Therefore the margnal product per cubc meter of water n the transcendental form calculated as follows:

4 ) MP wa 0/97(500kg/9200m ).42kg/ m The producton value of each cubc meter of water n the transcendental functon s: MP wa Accordng to the calculaton of the transcendental functon, margnal productvty 42/ kg per cubc meter of water per cubc meter was used, meanng that ecess water s added almost 42/ kg per hectare for maze producton. The value of the margnal product of water, was 464 dollars per cubc meter, n other words by addng addtonal water durng producton, farmers earn 464 dollars per hectare s added. Water demand: Demand s calculated as follows: DX D wa n ( ) ( ) n r ( y / A) [ ( ) ( ) ] 2 r As the demand for water, but the amount of water demand at a prce per cubc meter of water has an nverse relatonshp. In other words, an ncrease n prce per cubc meter of water, the water demand for corn producton decreased. The amount of water demand functon and nversely wth the amount of ntrogen fertlzer consumpton s drectly related to the area under cultvaton and sprayng pestcdes. Prce elastcty of demand for water: The nterest rate s 8% of the cost of water s equal to 2 dollars prce elastcty of demand s 4. Indcate that water demand s elastc so that a one percent ncrease n the prce of water 6. Dscusson and Concluson The results show that the ndependent varables of water, cultvaton, ntrogen fertlzer, phosphate fertlzer, fertlzer, machnery, ron and hours of work have a sgnfcant effect on corn producton has sgnfcant nfluence and that the average water consumpton per hectare farm corn green cubc meter s equal to The value of the margnal product of water n the corn feld 464 Rals. Accordng to satsfy demand for the products corn water demand s resulted n a 4% decrease n demand for water. And the nterest rate s 2% and the cost n 2 dollars s the prce elastcty of water demand of 79/ s. Elastcty of demand for water n ways that suggest that a one percent ncrease n the prce of water to decrease the demand for water s 79/ percent. And the nterest rate s 5% and the cost n 42 dollars s the prce elastcty of water demand /'s. Elastcty of demand for water n ways that suggest that a one percent ncrease n the prce of water to decrease the demand for water s.%. Elastcty of demand for water due to water can be safely sad that prcng wll be a determnant role n the applcaton of these nputs. nversely related to the prce per cubc meter n accordance wth the law of demand. by ncreasng the prce per cubc meter of water n the quantty demanded decreases producton of corn. The water demand for the producton of green corn cultvaton, seed, machnery, or the amount of seed hours, and hours of work s drectly related to machnery and labor. Ths ndcates that the producton of corn farmers who are seekng to ncrease ther profts by ncreasng unt costs mentoned n order to acheve the mamum beneft, they consume

5 more water. The Water demand s an ndrect relatonshp wth Ntrogen fertlzer. The negatve coeffcent functon can compensate for References. Dhehb, B. and Lachaal, L.( 2006). Productvty and economc growth n Tunsan agrculture: an emprcal evdence. Poster Papared for presentaton at the Internatonal Assocaton of Agrcultural Economsts Conference, Gold Coast. Australa, Agust 2-8, Gomez lmon,j.a.,and L.,Resrgo,2004,Irrgaton water Prcng: Dfferenttal mpacton rrgated farms,agrculture Economcs,: Jahansson,R.,200,Prcng rrgaton water,a lterature survey, web 8.worldbank.org 4. Abo-zed,H.,and C.,lacrgnola.995,Water crss the medteranean: Agrcultural water demand management, Water nternatonal He,L.,and W.Tyner,2004,Improvng rrgaton water allocaton effcency usng Alternatve polcy opton n Egypt, Econpapers. 6. Pasad,K.,and P.K.,Rao 99,On rrgaton water prcng n Inda,Water resources Development,No.7(4): Petra,I.,and J,G.J.,Hellegers.,2002.Treatng water n rrgated agrculture as an economce good,ac.l./ economce/kenes-hellegers. pdf 8. Saleth,R.M.,998,Water markets n Inda:Economce and nsttutonal aspects n Easter,Rosegrant and Dner(eds)Markets for water potental and performance:kluwer Academc publshers,boston. 9. Sampath, R,.992, Issues n rrgaton prcng n developng countres, word development, No.20(7): Stern, A. (200). Storage capacty and water use n the 2 water-resource regons of the Unted States geologcal the lack of water, whch seeks to ncrease ther profts by takng and the use of fertlzer to ncrease producton. survey. Internatonal Journal of Producton Economcs, (8-82):-2.. Unver,O.,and K.R. Gopta 2002,Water prcng:issues and optons n turkey. In web 8.worldbank.org 2. Tortajada,C.,2002,Water prcng for Amercas,Thrd world center for water management,brasl.-5.june.200. Gomez-Lmon,J.A.,Y.Martnez (2005),Mult-crtera Modelng of rrgaton water market at basn level:a Spansh:case study,euy.j. oper.res., Rahm, m.,(200) Factors affectng productvty aqueduct water (case study of pomegranate orchards cty Arsanjan), MS Thess ((Agrcultural Economcs)), Islamc Azad Unversty Arsanjan. 5. Rosegrant, M., Rngler, c., mcknney, D.c, ca, keler, A., and donoso G.200. ntegrated econmc- hydroloyc nater modelngc. The basn scale : the mapo research Rver basn, chle.nteynatonal food polcy nsttate.washngton D.c. pp: Perry, c. j. 200.chargng for rgaton water: the ssues and optons,wtha case study from ran research report 52. Inte rnatonal water management Insttate. Colambo, sr lanka Yngzhuo yu, jefferyd.mullen,and gerrt Hooyenboom(2006), E ffect of water prce on the multcrop producton decson:applng fed Allocatable nput model n Georga. 2-8