Impacts of Irrigation Water Pricing and Government’s Financial Facility Policies on Pressurized Irrigation Technology Adoption: Case Study of Hamedan

اقتصاد و توسعه کشاورزی

Article 4, Volume 30, Issue 4, December 2017, Pages 331-344   

Document Type: Research Article

DOI: 10.22067/jead2.v30i4.53188

Authors

H. Balali^* ;

Bu-Ali Sina University

Abstract

Introduction: Nowadays, efficient use of scarce water resources is one of the government’s importantgoals for dealing sustainable development in the agricultural sector. In addition to optimal exploitation and using of surface and groundwater resources, choosing of efficient types of irrigation technologies is a very important factor in sustainable water resource management. This study tries to analysis the effects of some economic policies, including irrigation water pricing and government financial facilities on farmer’s acceptance of pressurized irrigation technology in Hamedan.
Materials and Methods: The methodology of the research is mathematical modeling on the basis of the System Dynamics approach, by using of STELLA. A sample size of this research includes of 316 people of wheat farmers, who have selected by random method. To evaluate the reliability of the questionnaire also, firstly, a primal questionnaire was prepared and asked 30 farmers and Ranking Theta was calculated about 82 %.
Results and Discussion: Results showed that the policy of increasing irrigation water price, at some price levels, has not meaningful effects on farmer’s acceptance process about pressurized irrigation technology. However, this policy (irrigation water pricing), with government financial facilities such as banking facilities, has more effects on increasing of farmer economical motivation of using pressurized irrigation technology. Our results also showed that on the base scenario (current condition), the water pricing policy has more effects on acceptance of pressurized irrigation technology than the scenario in which government does not consider any financial facilities and pay any subsidy for farmers to accept and use irrigation technology. On the other hand, on the scenario without government financial supports, farmers do not have any economical motivation for acceptance of pressurized irrigation technology. In this scenario, the economical benefits of using pressurized irrigation technology of farmers, are very lower than the opportunity cost of capital used for providing and preparing of this technology, and thus, farmers do not accept this technology. The first scenario is the case without any government grants or financial supports and with no any banking facilities for farmers to use pressurized irrigation technology. In the second scenario, 50 percent of pressurized irrigation technology, performance costs are paid through loans by the supportive interest rate of 5 percent yearly. The third scenario introduces a current condition, including government grant and subsidized loans, and the fourth scenario contains the condition in which 50 percent of irrigation technology’s implementation cost is paid by government grants. Results showed that in the first scenario, at all levels of irrigation water price, the benefits of technology acceptance are lower than acceptance opportunity cost, and thus farmers of the study area do not have any economical motivation to use pressurized irrigation technology. But only at the irrigation water price of 1200 rials for one m3 of irrigation water, farmers accept to provide, implement and use pressurized irrigation. In the second scenario, in which 50 percent of pressurized irrigation technology performance costs are paid through loans by the supportive interest rate of 5 percent yearly, the farmers will accept the technology at all level of irrigation water prices. In the third and fourth scenarios also, farmers accept the technology in all levels of irrigation water prices. Results showed that the policy of increasing irrigation water price, at some price levels, has not alone meaningful effects on farmer’s acceptance process about pressurized irrigation technology. But, this policy (irrigation water pricing), with government financial facilities such as banking facilities, has more effects on increasing of farmer economical motivation of pressurized irrigation technology using. Results showed also that on the base scenario (current condition), the water pricing policy has more effects on acceptance of pressurized irrigation technology than the scenario in which government does not consider any financial facilities and pay any subsidy for farmers to accept and using irrigation technology. on the other hand, on the scenario without government financial supports, farmers do not have any economical motivation to acceptance of pressurized irrigation technology. In this scenario, the economical benefits of using pressurized irrigation technology of farmers, are very lower than the opportunity cost of capital used for providing and preparing of this technology, and thus, farmers do not accept this technology. Results also, showed that economic variables of reduction of water consumption costs, land leveling costs reduction, financial ability of farmers, adequacy of loan amount have important and meaningful effects on irrigation technology acceptance.
Conclusion: The policy of increasing irrigation water price, at some price levels, has not meaningful effects on farmer’s acceptance process about pressurized irrigation technology. however, this policy (irrigation water pricing), with government financial facilities such as banking facilities, has more effects on increasing of farmers economical motivation of using pressurized irrigation technology.

Keywords

Financial facilities; Hamedan; Modelling; Pressurized irrigation technology; System dynamics; Water price

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