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EghtesadOnline: To establish the first regional water market in Iran for alleviating scarcity, an agreement was concluded with the private sector in Khorasan Razavi Province on Monday.

The deal was signed between Mohammad Alaei, the head of Khorasan Razavi Water Company, and Amir Farzad, managing director of a private firm named Rahrovan Sepehr Andisheh, ILNA reported.

“As per the deal and to ensure sustainable development in mining industries, the private firm is obliged to supply iron ore mines in Khaf County in the province with water in a way that ground water resources are not depleted,” Alaei said.

The official stressed that the water market scheme will not affect farming water resources and it will be expanded to other region in the country if the results are positive.

“Setting up water markets where buyers and sellers trade water rights through short- and long-term leases will help better manage surface and ground resources that are dwindling rapidly,” he said. 

“This system permits farmers and industry owners to buy and sell water that can be within catchments, between catchments or along rivers depending on actual need. Water trading has become a vital business tool for farmers in many countries such as Spain, Australia and the US.”

Geological studies warn that the shortage of this natural resource in Iran is worsening despite having a network of rivers, most of which originate in the rugged mountain regions and flow into interior basins. Nineteen rivers flow along Iran's international boundaries and are shared with six neighbors.

"Water markets encourage more efficient water use," he said, adding that well-structured markets can augment water conservation efforts that have made little progress so far. 

Such markets will help boost the allocation of more water to productive economic sectors. The farming sector, for instance, uses more water relative to its economic output than other sectors. 

"Of the total consumption, 90% are used in the agriculture sector. Household and industries account for 7% and 3%, respectively," Alaei said, echoing the growing concern of conservationists and economic experts in Iran about the poor agro performance and the cost it is imposing on the economy saddled by growing problems. 

The government has been mulling the establishment of water markets since 2016 and studies have been conducted, he added.



Water Deficits

Water markets will very likely draw greater attention, as shortages become more frequent and intense, the official said. 

Such markets constitute a regional-friendly measure to help alleviate paucity and for the same reason, academicians, conservationists and water experts are supporting such measures.

When consumers and those in charge concur that water is a precious economic commodity, regions can make an efficient use of market instruments to flexibly reduce overexploitation of existing resources, rethink consumption patterns and increase efficiency. 

An added advantage, he said, is that when jurisdictions move from a centralized allocation of limited surface and underground water to market instruments, users are likely to be more cautious about the valuable resource and consume it with utmost care. 

According to Mohammad Borzouei, the head of water resources’ affairs in the provincial water company, the pace at which groundwater resources are depleting has become a serious source of concern and a preventive measure in this regard should combat illegal water wells.

“Of the 4,000 illegal wells in the province, 2,000 were sealed in 2020, which helped save 62 million cubic meters of water,” he said.

With 7 million people, the province is a big and populous region. More than 30 million pilgrims from in and outside Iran visit Mashhad every year, the provincial capital and Iran’s most important shrine city. 

Borzouei said close to 97% of the province’s water supply come from underground resources that explain why extraction from renewable resources is critical, as 25% of what is being consumed now belong to future generations.


Private Sector Khorasan Razavi Water Market