The aim of this study is to assess the effectiveness of water trading policy as a solution for optimal use of water between farmers in Voshmgir dam, Iran. For assessment, four villages were selected and two water allocation programs under non-trading and trading systems were designed by two-stage stochastic programming technique and uncertainties expressed as intervals and probability distributions. The results obtained from the two programs were compared based on water volume which is released through trading and decrease in water deficiency as effectiveness indices. The results show that the water allocation under trading policy has changed so that it has led to released water and decrease in water deficiency by keeping the agricultural profit under non-trading, but irrigated area is decreased under trading. Generally, trading policy can lead to more effective allocation from the view of released water and decrease in water deficiency, but it can remove some farmers from agricultural activities by decreasing the irrigated area. As a result, trading policy can be effective in the short term especially in drought conditions due to insufficient water supply and can be unnecessary in normal and wet years in this case study.

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