The first water market pilot scheme in Iran is planned in some regions, namely Khorasan Razavi Province, in summer and will be expanded if the results are positive, director of the National Water and Wastewater Engineering Company of Iran (Abfa) said.
“Setting up water markets where buyers and sellers trade water rights through short- and long-term leases will help better manage surface and ground resources that are dwindling rapidly,” Qassem Taqizadeh Khamesi was quoted as saying by ILNA.
This system permits farmers to buy and sell water that can be within catchments, between catchments or along rivers depending on actual need. Water trading has become a vital business tool for farmers in many countries such as Spain, Australia and the US, he said.
Geological studies warn that shortages of the natural resource in Iran are worsening despite being home to a network of rivers, most of which originate in the rugged mountain regions and flow into interior basins. Nineteen rivers flow along Iran's international boundaries and are shared with six neighbors.
"Water markets encourage more efficient water use," Taqizadeh Khamesi said, adding that well-structured markets can augment water conservation efforts that have made little progress so far.
Such markets help allocation of more water to productive economic sectors. The farming sector, for instance, uses more water relative to its economic output than other sectors.
"Of the total use 90% is in agriculture. Household and industries account for 7% and 3%, respectively," Khamesi said, echoing the growing concern of conservationists and economic experts in Iran about the poor agro performance and the cost it is imposing on the economy saddled by a growing problems.
The government has been mulling water markets since 2016 and studies have been conducted, the Abfa official, who doubles as a deputy energy minister, said.
“The first market will open in Khorasan Razavi Province and if it produces the desired results more will be launched in other regions."
Comparing two types of trade in the water market, experts say short-term transfers lessen the economic impact of shortages during drought by shifting water to activities and places where the lack of water will have consequences.
Long-term arrangements entail risk for water buyers if water demands do not match current forecasts. Furthermore, they usually require storage of surplus during wet years that is very costly.
Drawing Attention
Water markets will very likely draw greater attention as water deficits become more frequent and intense, he said. Such markets constitute a regional-friendly measure that can help alleviate scarcity, and it is for this reason that academia, conservationists and water experts are calling for and support such measures.
When consumers and those in charge are open-minded and concur that water is and will be a precious economic good, regions can make efficient use of market instruments to flexibly reduce overexploitation of existing resources, rethink consumption patterns and increase efficiency.
An added advantage, he noted, is that when jurisdictions move from a centralized allocation of limited surface and underground water to market instruments, users are likely to be more cautious about the valuable resource and consume it with utmost care.
This, however, does not imply that governments have no role when water markets are in place. Public authorities have to make sure that water rights are well defined, secure and reflect actual use pertinent to buyers and sellers.
Referring to the multiple constraints, the senior official argued the cost of transporting water is another challenge to the success of water markets. Water is heavy and transportation costs are high relative to its value to users. Consequently, trade is often highly localized or restricted to areas with well-developed water infrastructure.
The potential economic and environmental benefits of water markets make them valuable. As climate change threatens to aggravate the disturbing mismatch between water need and availability, water markets hold a promise of improving efficiency and sustainability of water use.
