Abstract

In most arid and semi arid regions, as in most parts of Iran, insufficient supply of water has become one of the
most important constraints to economic development. In these areas, the main issue in water management is to
fulfill the ever-increasing demand for water. The supply of water is usually limited, while the quantity of water
demanded has increased mainly due to population growth. It is believed that a rationalized water pricing system
would play a crucial role in the optimal allocation of water resources. Planning for efficient use of water is
important when there is a severe limit to its availability. The demand elasticity for every good, service, or input
determines how a change in price, ceteris paribus, affects users’ quantity demanded. This study investigates the
structure of irrigation water demand by estimating the derived demand for water on one particular crop, barley,
in Iran. The analysis is based on deductive econometric method, and on total statistical and panel data. A demand
function was estimated after performing the relevant statistical tests. The price elasticity of irrigation water
demand and other elasticities were also computed. Data and information from 2001 to 2006 from 26 provinces in
Iran was collected from secondary sources.

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