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In most arid and semi arid regions, as in most parts of Iran, insufficient supply of water has become one of the most important constraints to economic development. In these areas, the main issue in water management is to fulfill the ever-increasing demand for water. The supply of water is usually limited, while the quantity of water demanded has increased mainly due to population growth. It is believed that a rationalized water pricing system would play a crucial role in the optimal allocation of water resources. Planning for efficient use of water is important when there is a severe limit to its availability. The demand elasticity for every good, service, or input determines how a change in price, ceteris paribus, affects users’ quantity demanded. This study investigates the structure of irrigation water demand by estimating the derived demand for water on one particular crop, barley, in Iran. The analysis is based on deductive econometric method, and on total statistical and panel data. A demand function was estimated after performing the relevant statistical tests. The price elasticity of irrigation water demand and other elasticities were also computed. Data and information from 2001 to 2006 from 26 provinces in Iran was collected from secondary sources

Estimation of Irrigation Water Demand for Barley in Iran: The panel Data Evidence