Abstract
This article was set to estimate the extraction costs of groundwater and its efficiency use in producing dates in Riyadh Region, Saudi Arabia. This was achieved through the estimation of capital inputs and operational costs for each unit of water (cubic meter M3) used to produce dates. Also, the production function for dates was estimated to measure water economic efficiency in dates' production. This study used data collected from a random sample of date palm farmers in Riyadh Region in 2015. Results showed that: (1) The cost of extracting groundwater increases as the depth of drilling for wells increases. Using a 15% discount value, the cost of extracting groundwater increased from 0.436 Saudi Riyals (SR)/M-3 for 100 meters deep wells to 0.658 SR/M-3 for 200+ meters deep wells. (2) a 10% change in irrigation water, labor, and fertilizers results in a positive change in dates production of 4.8%, 0.8%, and 0.4%, respectively. (3) Marginal return for irrigation water used for dates production was estimated to be 699 SR/1000 M-3. (4) The use of groundwater was economically efficient because the value of marginal product of water (VMP) was greater than its marginal cost (MC) of extraction. (5) Given the scarcity of water in Saudi Arabia, this study stresses the need to include the " economic value" of irrigation water of date palms in order to conserve water.