| Summary: | Iran is an arid country, surplus water existing only in small areas in the northern and western parts. Much of the cultivated and potentially arable land of Iran is a considerable distance from the zones of high precipitation. For successful crop production in such areas water has to be transported from regions with excess water. In many cases this can be achieved by tapping rivers which rise in the uplands, or ground water reserves which are replenished in zones of abundant water supply. To overcome the problems associated with water supply, Iran has started one of the most significant developments within the field of water resource management, through the construction of a number of large reservoir dams. This has taken place over the last three decades. Multi-purpose dam construction schemes constitute part of the overall five national development plans of Iran which have been carried out since the Second World War. The early development plans placed emphasis on the provision of water for agricultural use. At a later stage more attention was paid to the provision of water supplies to meet the rapidly increasing demands of water for industrial and domestic use. So far the Mohamad Reza Shah Pahlavl Dam in Khuzestan has-been the largest and the most expensive dam Iran has yet commissioned. The Mohamad Reza Shah Pahlavl Dam is part of the integrated regional development plan of Khuzestan which has always been given the highest priority. The master-plan for the Khuzestan region was drawn up by the Development and Resources Corporation of New York in 1959. The plan has aimed at the maximum utilization of the land and water resources of the five major rivers of the region. The Mohamad Reza Shah Pahlavl Dam has been in operation since 1963. The objectives of the scheme are: the utilization of water from the reservoir to irrigate 124,000 ha of the Khuzestan lowlands. In addition 520,000 Kw-of electricity will be produced to meet the industrial and domestic electricity demands of the region. The achievement of these objectives will improve the economic and social status of the local population, who until recently were poor and their standards of living low. The objective of this study is a full appraisal of the Dez scheme, and the establishment of a proper basis for development project evaluation. With the construction of the dam, a new cropping pattern for the area was prepared, providing a diversification of crop types together with changes in the areas of crops already cultivated. Improvement of agricultural methods raised crop yields by large amounts in the Dez Pilot Agricultural Project which constituted l6% of the Dez Irrigation Project. The implementation of the Khuzestan lowlands project was not, however, without its problems. After the supply of regulated water, there was not the necessary incentive for the peasant farmers tousle water resources more efficiently and to raise agricultural production under the old system of landlord-peasant share cropping. As a result land reform was carried out in the Dez Irrigation Project area in 1962. By 1965 the Khuzestan Water and Power Authority, which had been established in 1960 to control and distribute the water and power from the dam, found it difficult to develop the DIP. This was because the bulk of the development budget had already been spent for the construction of the dam and its associated hydro-power installations. In addition landlords refused taco-operate in the development programme and the small farmers were incapable of large financial undertakings. The costly water from the dam was used inefficiently by the farmers and they were not able to pay water charges. In order to use water resources more efficiently and to increase agricultural production in order to become largely independent of food imports, a new phase in agrarian reform was introduced in 1968. On the lands downstream of large dams irrational fragmentation of land was prevented through the consolidation of land. As a result agro-business farms and farm corporations are being set up as alternatives to small family farms. Agro-businesses are large mechanized farms run on a commercial basis and capitalized by foreign equity participation. So far five of these companies have been established on 68,000 ha of the Dez Irrigation Project land which were bought from the farmers and leased to companies for a long term of 30 years. In addition four farm corporations were established on a further 12,500 ha of the land of the Dez Irrigation Project. In the long run farm corporations which are backed by free grants from the government will eventually achieve high yields as an inevitable consequence of large scale capitalist farming. Against this advantage stands the disadvantage of the rural unemployment as an unavoidable result of mechanized farming. The performance of agro-businesses has been somewhat unsuccessful. Their cost, which is imposed on the government, is high and their social impacts have been devastating. As a result a number of them have been taken over by the government and the future of the rest is a controversial topic. The only successful project of the Dez scheme is the government sugar cane project of Haft-Tappeh. Although the project is costly, its great advantage is the creation of Jobs for thousands of skilled and unskilled local people. The hydro-power project of the Dez dam scheme has been in operation since 1963 and all the generators were installed by 1971. The social Impacts of the project have been considerable. However, the high electricity tariff has discouraged the development programmes to a higher extent than was initially expected. As a result of the lack of an electricity market in Khuzestan, electricity has been transferred to Tehran at a low price. Consequently the hydro-power project has been a losing proposition so far. A consistent objective evaluation of the Dez scheme through the application of a cost-benefit analysis technique established a proper basis for the appraisal of government Investment in the supply of infrastructure for the regional development. This made it possible to determine the objective priorities and to consider alternatives for resource allocation in regional development planning. The water pricing mechanism has been used as one of the most important and immediate means for the modification of the political framework of water resource management In the Dez Irrigation Project. It is very likely that the new price of water will encourage efficiency in water use in the Dez Irrigation Project. The model outlined in this study for water pricing can be tested and applied for other irrigation schemes, yet its application is conditional to reliable statistics and data availability. Today after almost two decades of operation of the Mohamad Reza Shah Pahlavl Dam it is well recognised that the operation of the dam has not had the expected beneficial effect on the local agricultural economy. The reasons for this are varied and Include environmental, economic and social factors. These factors are defined in an analytical way in this study.
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