Strategic Importance of Water in Iranian Overall Economy: A CGE Modeling Approach

Water is a vital resource for every biological and human phenomena. Nowadays, water management and conservation has a great importance not only in developing countries, but also in developed countries. In traditional economics, water is not taken into consideration as a factor of production in the national accounts. Nevertheless in reality, water is the primary input of many goods and services directly and indirectly. Water quality and quantity issues are one of the main challenges facing Iranian development process. In Iran the structure of related organizations in water management is based on the separated policy responsibilities and functions. This study tries to analysis the role of water in Iranian economy by using computable general equilibrium modeling. Results show that the share of water sector in the economy has been undervalued, because of the problems in water national accounting and no market price for water. Given the importance of water resources in economic and social development, it is necessary to change the sectoral management to integrated water resources management (IWRM). Thus, integration of hydrological and economic information and providing the water satellite account system is the first step of IWRM.