---

Due to increasing demand for the scarce available water throughout the world it is an extremely important matter, in water management, to make serious attempts in determining its true economic value. This paper discusses the optimal allocation of water to agriculture, the relatively true economic value of water as well as the cropping patterns for the Shirvan Barzo (SB) dam area in North Khorasan Province of Iran. The analysis is based on linear programming (LP) and on multi goal linear programming (MGLP) models for determining solutions that can maximize net return to farmers. In the study, the priority of goals is developmental, social, economical, and environmental respectively. The results indicated that optimizing the cropping patterns along with proper the allocation of irrigation water has yet substantial potential to increase the net return from agriculture. It has already decreased the applied water as much as 19 percent. The results show that the economic value of each unit of agricultural water is estimated to be between 107 to 1296 IRR×104 per cubic meter. This suggests managing the allocation of water based on optimal models and bring water prices close to its true economic value to motivate the farmers to economize in the applied water.

---

Planning for optimal distribution of Zayandehrud Dam water to six Irrigation Networks (INs) located downstream of this dam was carried out based on a hydro-economic model under water scarcity conditions. The hydro-economic structure was developed through coupling the hydrologic simulation model (MODSIM) and economic optimization modelling approach (Positive Mathematical Programming, PMP). Water distribution priorities to the INs are based on the economic value of water used by crops in the current cropping pattern under different scenarios of normal (base year, 2014-2015) and drought conditions. Results showed that, in addition to the change in the priorities of water distribution throughout the six INs, the existing cropping patterns should also change. The order of water delivery to the six INs starts from Rudasht IN and ends with the Traditional IN. Also, the highest reduction in the area under cultivation in the base year, compared to the optimum cultivation, is related to alfalfa (in Nekoabad and Mahyar-Jarghouyeh INs), clover (in Rudasht and Abshar INs) and forage corn (Borkhar and Traditional INs). Beans cultivated area increases by 14 and 21% for Abshar and Rudasht INs, respectively. Based on the results, the economic value per m³ of water will rise on the average, if water is allocated on the basis of its shadow prices. Moreover, under drought conditions, the highest and the lowest increase in the economic value of water will take place in the Nekoabad IN (4,660 Rials m^-3) and Rudasht IN (3,890 Rials m^-3), respectively.