Evaluation of the Potential Effects of Establishing a Local Water Market in the Face of Drought and Water Shortage in Tehran Province

Establishing a local water market in the agricultural sector is a promising solution to increase the economic efficiency of water in the event of drought, water shortage, and reduced agricultural productions. With the opportunities created in the water market, farmers will rent and sell this scarce input by improving the methods of water supply management and will work to provide water that can be sold in the market. In addition to managing surface water resources, this reduces farmers' pressure to use groundwater resources. Due to the importance of this issue, in the present study, the economic effects of the formation of the local water market in the five regions of Tehran province under the conditions of drought, water shortage, and reduced crop production in Tehran province were evaluated. This work was done by using a combined economic model of Statewide Agricultural Production (SWAP), hydrological model of Water Evaluation and Planning (WEAP), and related statistical data to the years 2013-2019. The results showed that with the establishment of the local water market and balancing agricultural water trade between the study basins of Tehran province, the negative consequences of drought in the use of available water resources are reduced by about 12/7 percent compared to the base period. In addition, the establishment of the local water market as a customary and legal institution in Tehran province, despite the transfer of surplus water resources from the eastern and northern basins (M1 and M2) to the southwestern basins of Tehran province (M3, M4, and M5), caused increasing the reliability of farmers' access to irrigated water and preventing the reduction of profitable crops (tomatoes, corn, watermelon, and sunflower) in optimal cropping patterns. Also, this structural institution by realizing the policy of sharing agricultural water resources and increasing the “profit to water ratio index” from 5/89 to 11/06 percent, reflects optimally allocates the issue of allocation and optimal management of water resources between different agricultural activities in the five basins of Tehran province. Finally, according to the positive and effective results of the local water market in the management of water resources and agriculture, the implementation of the preparations for its formation is proposed to the relevant authorities and organizations in Tehran province.