Water Market in Theory and Practice: Market Failure and Public Policy

Document Type : review paper

Author

• M.R. Nazari

Shahid Beheshti University

10.22067/jwsd.v3i1.59448

Abstract

The development of market-based task allocation mechanisms is currently being discussed as sustainable, flexible and efficient approaches to water resources management and its redistribution among different users. Nevertheless, the market potential for efficient water allocation depends on the specific circumstances of the market and the item being traded i.e., water. Experience has demonstrated that the potential for creating such a market allocation is not unlimited, and it comes with its associated risks whereby the improper structure of the market may lead to the failure of said mechanisms. The aim of this research, as well as providing a theoretical explanation of the water market, is to describe the requirements necessary for its practical implementation and the identification of issues that lead to its deficiency and the failure of the water market. Therefore, public policy suggestions and solutions to resolve the aforementioned deficiencies, based on domestic and global experiences with the emphasis on social, economic and legal conditions governing the state water resources management, are provided.

Keywords

• Water market
• Efficient allocation
• Market failure
• Public policy

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