Evaluating the Impact of the Water Rights Market on the Sustainability of Groundwater Resources with an Emphasis on Equilibrium Price (Case Study: Qazvin Plain)

Document Type : Research Paper

Authors

• Seyedeh Marziye Hosseini ¹
• hamed mazandarani zadeh ²
• Mohammad Mahjoub ³
• Hamid Azizmohammadlou ⁴

¹ Ph.D. Student, Water Science and Engineering, Imam Khomeini International University, Qazvin, Iran

² associate professor, water eng. group, Imam Khomeini International University، Qazvin

³ PhD in Chemistry, Executive director of Qazvin province water rights market project.

⁴ Department of of Accounting, Imam Khomeini International University, Qazvin, Iran.

Abstract

Keywords

• Partial Equilibrium
• Pricing
• Productivity
• Water level
• Water Resources Sustainability

Main Subjects

• منابع آب

Introduction

The Qazvin Plain, one of Iran’s major agricultural regions, has experienced increasing pressure on its groundwater resources over the past decades. The declining groundwater levels pose a serious threat to the sustainability of agriculture and the economic livelihood of the region. To improve water use efficiency and protect groundwater, a formal water rights market was established in the plain in March 2023. Previous studies on water markets highlight their positive role in reallocating water to higher-value uses, improving productivity, and enhancing pricing mechanisms. However, most of these studies focus on economic outcomes, while few have examined the long-term effects of water market formation on groundwater balance. Building on this literature, the present study investigates the impacts of a water rights market on groundwater levels over a 25-year horizon. Given the crucial role of water prices in influencing water-saving behavior and market participation, economic principles combined with a system dynamics approach are used to analyze market equilibrium and its long-term effects on groundwater resources.

Method

A system dynamics model was developed, consisting of two interacting subsystems: the water resources subsystem and the water market subsystem. In this framework, water prices influence market participation and traded volumes, which in turn affect groundwater extraction and storage. Supply and demand were represented using linear functions estimated from local data, while market growth was modeled through a combination of linear components reflecting external factors such as awareness and incentives, and logistic components capturing price-dependent participation. Annual transaction volumes were simulated, and the effect of partial aquifer recharge was incorporated into the model. The model was calibrated using observed groundwater level data from 2000 to 2019. Model performance was evaluated using RMSE, MAE, and R² indicators, showing satisfactory agreement between observed and simulated values. Sensitivity analysis was conducted to evaluate the effect of varying storage fractions (5%, 10%, 15%, and 20%) on groundwater levels. Two scenarios were simulated: one without a water market, in which water withdrawals follow conventional patterns and illegal abstractions continue, and one with a water rights market incorporating partial recharge. Assumptions included fixed cropping patterns, constant irrigation efficiency, and rational economic behavior of market participants, while structural, technological, or institutional changes were not considered due to data limitations.

Results and disscution

Simulation outputs indicate that groundwater levels decline over the 25-year horizon under both scenarios; however, the rate of decline is lower in the market scenario. Model results show that the establishment of a water rights market reduces cumulative groundwater withdrawals by approximately 49 million cubic meters over the study period. The difference in groundwater levels between the two scenarios increases gradually over time, reflecting the cumulative effect of reduced annual withdrawals under the market mechanism. On average, groundwater levels in the market scenario are approximately 19 cm higher than those in the absence of a market. This gap widens toward the end of the simulation period, indicating the persistent moderating effect of the market on extraction volumes.

Sensitivity analysis of storage fractions in market transactions shows that increasing the fraction can slightly improve groundwater levels by reducing withdrawals. However, excessively high storage fractions increase the effective water price, reduce participation, and limit the overall effect of the market. These findings emphasize the importance of identifying an optimal intermediate storage fraction to balance aquifer protection, economic efficiency, and social acceptance. Overall, while the water rights market provides a positive effect on groundwater sustainability, the impact is limited. The long-term declining trend persists under both scenarios, indicating that additional management and regulatory interventions are necessary.

Conclusions

This study demonstrates that the establishment of a water rights market in the Qazvin Plain can reduce groundwater extraction and slightly improve groundwater levels. However, the effect is modest, and the long-term declining trend continues, indicating that the market alone cannot halt aquifer depletion. The market’s main contribution lies in reducing withdrawal intensity and managing demand rather than producing substantial improvements in groundwater levels. These findings underline the importance of employing the water rights market as a complementary tool within a comprehensive management framework. Appropriate storage fractions, combined with policy measures such as monitoring, enforcement against illegal withdrawals, and improved irrigation efficiency, are essential to achieve meaningful impact. In summary, the water rights market has potential to alleviate pressure on groundwater resources, but it cannot independently resolve the decline in groundwater levels, and must be implemented as part of an integrated and adaptive policy package for sustainable groundwater management.

Funding

This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.

Authorship contribution

Conceptualization, Hosseini S.M. and Mazandarani Zadeh H.; methodology, Hosseini S.M., Mazandarani Zadeh H. and Azizmohammadlou H.; software, Hosseini S.M.; validation, Hosseini S.M., Mazandarani Zadeh H; formal analysis, Hosseini S.M., Mazandarani Zadeh H.; investigation, Hosseini S.M. and Mazandarani Zadeh H.; resources, Hosseini S.M.; data curation, Hosseini S.M., Mahjoub M.; writing—original draft preparation, Hosseini S.M.; writing—review and editing, Mazandarani Zadeh H, Mahjoub M.; Azizmohammadlou H. and Hosseini S.M;. All authors have read and agreed to the published version of the manuscript.

Declaration of Generative AI and AI-assisted technologies in the writing process

During the preparation of this work the authors used ChatGPT in order to simulate the water rights market. After using this tool, the authors reviewed and edited the content as needed and take full responsibility for the content of the publication.

Data availability statement

Data available on request from the authors.

Acknowledgements

The authors feel it necessary to express their gratitude to Zist Ab Porab  company for their sincere cooperation in advancing the present research.

Ethical considerations

The authors avoided data fabrication, falsification, and plagiarism, and any form of misconduct.

Conflict of interest

The authors declare no conflict of interest.