Measuring Willingness of Farmers to Pay for Groundwater in Ramjerd District: Application of Contingent Valuation Method

In many plains of Fars province, both free distribution and under pricing of irrigation water have led to inefficient use and misallocation of the scarce water resource. In such situation, water pricing is a policy instrument for improving water efficiency, reducing water demand, management of the irrigation systems and recovering costs. The underlying principle of water pricing is that it should reflect the opportunity cost of water. Thus, from the viewpoint of economic efficiency, water price should relate to the opportunity cost, but from the viewpoint of feasible revenue collection, water price depends highly on farmers’ willingness to pay (WTP) for water. In this study, Contingent Valuation Method was used to estimate the willingness of farmers to pay for the groundwater. Required data were obtained from a random sample of 190 farmers in Ramjerd Plain using Stratified Random Sampling. Based on the result obtained through CVM, the overall mean of WTP was 947 Rials/m³ and the WTP of farmers who use groundwater and surface water conjunctively was less than the WTP of farmers who use only groundwater. It was recognized that the crop pattern, area under cultivation of rice, framers’ income, age and land fragmentation to be significant factors influencing framers’ WTP.