A seasonal smart market mechanism for sustainable groundwater management in agricultural regions

Abstract

The water market can be considered as a tool to reallocate water in a more efficient and equitable way in which both non-efficient and efficient users benefit from participating in the market by selling and buying their water quotas, respectively. The prerequisites on which an effective and efficient groundwater market relies is to consider both socio-economic and environmental factors. This paper aims to propose a seasonal smart groundwater market mechanism to improve production efficiency while adjusting the users' total water consumption to the available water. The proposed methodology provides the potential seasonal exchanges of groundwater entitlements among users and groundwater trading prices. Finally, a water banking mechanism based on the cooperative game theory is proposed to evaluate the effect of inter-basin water transfer on the proposed local groundwater market as well as sharing the benefits of water market between water donor and receiving basins. By applying the proposed methodology to the Nough region in central Iran, it is concluded that the average users' water productivity increases by 25% while satisfying environmental constraints. Based on the results of the market mechanism, the groundwater is fairly allocated to the agricultural users in proportion to the area of farms. After applying the water banking model, users in both the donor and receiving basins gained more profit than the status quo condition.