Economy-Wide Analysis of Water Sector in Iranian Economy

Water is one of the most important factors in the Iranian agricultural production. In most districts, farming is not possible without irrigation. However, with increasing industrial and domestic water demand and other new demands like aquatic production and ecosystem preservation, the inter-sectoral competition for water is likely to intensify sharply; moreover the possibility for increased water supply appears more limited. Relative to the importance of agriculture in rural society and the macroeconomy, agricultural water reduction due to water scarcity or inter-sectoral transfer will most likely cause serious social and political instability. Therefore, it is necessary to assess the important aspect and prerequisite of water sector in the future. Holistic and systematic management of water resources allocation will be the important problem of policy maker. In this paper, the role of water sector in the economy analyzed by using general equilibrium approach. The data framework is the Iranian social accounting matrix in 2001, based on the supply and use table, T table in national accounts and the database of ministry of Jahad-Keshavarzi, Iran water resource management company and water and wastewater company. The model identifies five factors of production: labor, capital, irrigationwater, irrigated land and rainfed land. At final, the role of water has been analyzed in the national accounting.