Impact of Elimination of Energy Carriers Subsidy on Cost Share of Water and Wheat Finished Price in Golestan Province

Document Type : Research Paper

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Abstract

The high consumption of gas oil and electricity in utilization of water resources and the high share of agricultural water in the total water consumption of the county is one of the most important economic problems in agricultural sector. The aim of this study was to determine the effect of price changes of energy carriers (electricity and gas oil) on each cubic meter of water used in agriculture, the cost share of energy carriers (gas oil and electricity), water share, and cost of wheat production in Golestan province. To this end, using techniques of adjusted industrial cost accounting and Delphi approach, in three scenarios of "before the plan" (165 Rial/liter for gas oil and 20 Rial/unit for electric power), "during the plan" (1500 and 3500 Rial/liter gas oil and 140 Rial for unit of electrical power), and " complete elimination" (7900 Rial/liter for gas oil and 550 Rial/unit electrical power). The results showed that share of water cost would change from 4 and 12 percent "before  the plan" to 42 percent (complete elimination of gas oil subsidy) and 84 percent (complete elimination of electric power subsidy). Implementation of the plan would increase the unit cost of wheat from 2120 Rial to 4420 Rial (complete elimination of gas oil subsidy) and 16890 Rial (complete elimination of electric power subsidy), respectively.

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Journal of Water Research in Agriculture
Volume 27, Issue 4
April 2014
Pages 465-474

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