Water pricing and reducing the costs of the implementation and maintenance of irrigation sys-tems have been a challenging topic for a long time. Water pricing issues combine two complex dimensions. The first dimension is the economy of the farm and its association with the broader economic system and farming practices. The second dimension is the hydrology and intercon-nection of the plot with the irrigation system, the river basin, and the underlying water policy framework. Accordingly, this study aimed to investigate how the institutionalization of water consumption applied would affect water productivity through the implementation of a water-pricing policy. To this end, this study formulated a Positive Mathematical Programming (PMP) model with a gross margin maximizing objective function to assess the data collected from 213 farms in Hamadan-Bahar Plain, Iran. The results revealed that a water-pricing policy can change the cropping pattern and also irrigation system within the limitations of the case study. It can also be a driver to motivate farmers to use a modern and more efficient irrigation system. Therefore, an appropriate water-pricing policy could improve water productivity and also re-duce water
