Improving demand technology and internalizing external effects in groundwater market framework, case study: Qazvin plain in Iran

Abstract

Water supply and demand policies have associated with different implications for sustainable groundwater management. These policies are adopted aimed to improve the welfare of the water beneficiaries. Accordingly, this study has analyzed the effects of improvement on the irrigation systems efficiency and the internalization of external effects of groundwater extraction in a dynamic market framework in Qazvin plain. For this purpose, firstly water supply and demand functions are estimated, and the effects of applying two different scenarios have been evaluated using the dynamic programming model. The Spatial Lag model has been used to estimate the groundwater extraction function and internalization of external effects of groundwater extraction. According to the results, improvement of irrigation systems has a more effective role in improving aquifer status. Also, applying internalization scenario on the 50-year horizon will reduce the present value of the welfare of the exploiters by 33%, while improving irrigation system will increase their welfare level by 143%. Also, this policy can reduce the rate of water table reduction in the aquifer. Accordingly, it is recommended that supportive policies be developed by the government to improve the efficiency of irrigation systems.