Cost Structure of Irrigation Water in the Sultanate of Oman

Abstract

Agriculture in the Sultanate of Oman depends mostly on irrigation and consumes more than 94% of the national water resources. Previous studies have regarded water supply as perfectly elastic and consequently have concentrated on water management issue. This Study relaxes the above hypothesis and constructs a separate cost function for irrigation water. Substitutability among capital, labor and energy in the production of irrigation water was investigated. Results show substitution possibility between labor and energy and reveal the existence of increasing returns to scale in water production.