A Review on the Role of the Water Market as a Management Approach with an Emphasis on the Situation in Iran

The global increase in water demand, along with its limited and declining supply, has caused the water crisis to threaten almost all parts of the globe, making it one of the greatest challenges in the present century. It is predicted that if the current trend of exploitation of these resources continues, more than 21 percent of the world's population will be exposed to severe water stress by 2050. Therefore, most countries have tended to adopt new policies related to water demand management instead of water supply management, as well as developing market-based mechanisms as a sustainable, flexible, and efficient method in managing of water resources and redistributing it between different uses. However, the effective role of water markets in strengthening the use of very limited water resources, increasing opportunities to improve productivity and efficiency of its consumption is well understood. However, the ability of the market to efficiently and optimally allocate water depends on the establishment of special conditions, and the use of this method in Iran requires knowledge of the necessary conditions for the formation of a water market as well as its economic consequences. The present article introduces a new approach to demand-based water management with a review-analytical approach, explains the theoretical foundations of the water market, its concepts, and features, and explains the requirements for its implementation in practice, examines past experiences of the water market in Iran and the world, and, depicts its advantages and challenges, then proposes solutions for reform with emphasis on the economic, social, and legal conditions governing the management of the country's water resources.