Prosperity of the agricultural sector is very crucial for the national economy but also for the regional development. However, this prosperity has quite often a significant environmental cost in terms of water resources overexploitation or pollution. The main objective of this paper is to create, apply and evaluate a model that aims at the simultaneous maximization of farmer’s welfare and the minimization of the consequent environmental burden. More specifically, lexicographic goal programming technique is employed. This technique is implemented on a representative farm around Mashhad in Iran to seek for a solution - in terms of area and water allocation under different crops. Results showed that application of a multi-criteria analysis may lead to a win-win situation.

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