Water loss in agriculture and loss of social welfare: evidence from pistachio production in Iran

This study aims to use a partial equilibrium model simulation for welfare analysis in the Iranian pistachio market. For this purpose, the pistachio supply and demand sides and their welfare surplus were evaluated. Based on the results, the unadjusted social welfare in the pistachio market is estimated at around 6,143,539 US dollars. Considering the economic value of water loss, it was found that $884,670, equivalent to about 14.4% of social welfare, is caused as an adverse side effect of pistachio production in Iran. The interpretation of the last figure is that every 10% reduction in water loss in pistachio production in Iran leads to an increase of about 3% in social welfare. Government investments to modernise the components of Iran's agricultural irrigation system as a strategy with long-term effects and provide low-cost facilities to farmers for better water management are discussed as the most operational recommendations.