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In recent decades, due to water crisis, most countries have been more interested in new policies for managing water demand instead of regulating the water supply. In dry and semi-dry areas of Iran such as Fars province, water scarcity is not only the important factor that impedes economic development but also special input in production. Drought in year 2007 could be considered as a risk of crisis in water supply. So, the purpose of this study is managing water demand through economizing surface water and groundwater resources which is of special importance in the region. It is self-evident that agricultural economy has a close relationship with water management. In this research the standard Positive Mathematical Programming (PMP) method is used to calibrate the agricultural sector model. A two-stage stratified random sampling through personal interviews of Bakan from Eghlid farmers has been applied, where abundant water resources and groundwater exist. By selecting a real sample of farms, model calculation for both areas is carried out. Two scenarios are identified. In the first scenario, by using PMP model for each group from water resources are calculated separately. They differ in terms of net revenue which is because of overly cost of construction and operation of wells between the two groups of surface water and groundwater. Results show that 10% decrease in water supply or doubling the prices will not change the optimal crop pattern in comparison to the base pattern. The results of model calculation shows that through running new irrigation methods (intensive irrigation) and also by effective pricing policies, investment can be encouraged in the water sector and in the area and therefore, through optimum management of water demand the water resources can be saved and any form of waste avoided.

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In order to study the effects of subsidies targeted plan on Iran agricultural sector, a regional agricultural sector model is made. For this purpose, Iran is divided into 9 equal radar regions agro-climatologically. Then agricultural sector is modeled within 14 commodity groups and 23 production activities using positive mathematical programming (PMP) method and applying generalized maximum entropy (GME) approach. The results indicate that making subsidies targeted by increasing prices of inputs (irrigation water, fertility, pesticide and machinery), escalating energy prices for poultry and dairy farms and raising transportation cost, leads to decrease total surplus of agricultural sector, decrease in many crop and livestock activity levels in different regions, increase in prices, decrease in consumption and exports and increase in imports of some agricultural products. According to the results, if subsidies targeted policy is mixed with support payments to producers, dependent on amount of support payment, the social surplus of agricultural sector may decrease or increase. A support payment equal to 25 percent of production costs can compensate losses of producers due to targeted subsidies, transmit loss of social welfare to zero and decrease volatility of economic variables such as activity levels, price and quantity of consumption of commodity groups.  

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Water is considered as the most important component, but a limiting input, for agricultural production in Iran. In the context of water resources management, due to the limited availability of water and high cost of supplying it to the users, improvement of water use productivity has been regarded as one of the most appropriate approaches to manage water demand. Various tools have been applied for water management policy in the context of preventing high levels of water deficit. In the present study, different policy scenarios related to water supply management are assessed. These include estimation of the impacts of each policy scenario on physical and economic productivity indices and employment, using positive mathematical programming methods and maximum entropy. This methodology was applied to water use in the Qazvin Plain, Iran. Results suggested that application of these policy scenarios not only decreased water consumption but also generated desirable social and economic effects. Results of the ranking showed that the policy of imposing tax on input generated the best results for the study area. However, it is admitted that selection of the best policy scenario is dependent on the weight that policy makers would select for various indicators.