Managing the consumption of water with the involvement of the farmer

By Brian Chatterton. ( or

This paper was revised March 2015 after a series of workshops held in Tehran and Isfahan from 20th to 26th Feb 2015.

Table of Contents:

1 Introduction.

2 Consumption of water.

3 Alternatives to the water market

4.Putting alternatives into practice.

5 Managing aquifers and wells

6 Equity

7.Rainfed dryland farming

8 Conclusions.

9 Further reading.


End of the hydraulic mission.

The hydraulic mission is a term used to describe the engineering project that has continued to supply farmers and cities with water. The project has been providing water for thousands of years but the pace of development accelerated in the last two hundred years when many more dams and canals were built and when modern pumping technology allowed more underground water to be exploited. It has brought enormous benefits to farmers and urban populations in the form of good, reliable supplies of water.

There are many definitions of the hydraulic mission but it can be summarised as “building your way out of water scarcity.” A central feature of the hydraulic mission was an open water resource. Supply was built to meet demand.

The era of the hydraulic mission is coming to an end. I do not want to enter the debate on individual dams or inter basin transfers. That is a question for each country and each catchment but leaving the details to one side we have to accept that the easy engineering has been done. Future engineering will produce much poorer cost-benefit ratios. Ultimately there is simply no more water. Storage will no longer provide more supply. We have already entered that phase in some catchments such as the Murray-Darling Basin in Australia and we need to plan for a future where the consumption of water must be managed within these natural limits.

Integrated Water Resource Management

Integrated Water Resource Management is the model that has emerged from the hydraulic mission. It is a model for water resource management that includes policy inputs from many disciplines – not just the engineers who were completely dominant during the era of the hydraulic mission. Integrated Water Resource Management uses a river basin as its administrative unit. A group of experts from the Ministries responsible for water, agriculture, the environment and urban distribution plan the optimum use of water within the river basin. A technological elite develops a centralised planning model for the water resource.

On the consumption side of the equation it has a number of failings. It is not a water resource model at all. It is a river and extractable ground water model – the visible water. The huge amounts of water in the soil are universally ignored. This invisible water is the rainfall that falls on the ground and is used by crops, pastures and forests directly from the soil without any human intervention. This water does not seep into the aquifers or runoff into rivers. It is used by plant directly from the soil. In Iran about two thirds of the rainfall never enters the rivers or underground aquifers. A large part falls in rangeland and desert areas where productivity is low but 70% falls on 30% of the land area and a large part of this can be used for the production of crops and pastures.

In Australia we have an Integrated Water Resource Manager in the form of the Murray Darling Basin Authority. On its web site it stated that only 3% of the rainfall in the basin entered the rivers through runoff and was available for irrigation. It went on to state that the rest of the water was wasted. This “waste water” in the soil profile happens to produce more than half of the Australian cereal crop, supports half its sheep population and produces many other products under natural rainfall conditions. This dryland farming sector is much more important for the Australian economy than all the irrigation production put together.

I have read some background papers on the problems of the Zayandeh Rud basin and there is not a single mention of the soil moisture resource yet it has enormous potential for resolving the water crisis in that area.

The Integrated Water Resource Management model also fails because it is water centric. By “water centric” I mean the whole plan is organised around water (and only the visible water) as being the only resource that matters. Most of the water is used by farmers. They want to obtain the optimum return from their farm as a whole. To do this requires a balance between all their inputs not just water. The farmer has to balance the return from water with the return from fertilisers, the return from labour and so on. It is a more complex matrix of inputs that the simple water = food model used by IWRM.

The Integrated Water Resource Management model has a technological elite as the core management group. As farmers are the major users they need to participate in a meaningful way in decision making. Environmental water is important but the priority given to the environment is a political decision not within the competence of a technological elite.

The IWRM model should not be dismissed out of hand for these failings but reformed to incorporate these additional requirements.

More efficient irrigation.

The Integrated Water Resource Management model has grown out of the supply side of water. It is not well suited to the consumption side. The model has been extended to engineering solutions to reduce water consumption through the use of under tree sprinklers, drippers and other improved methods of irrigation but water management is much more complex than this. Practical experience in countries as diverse as Australia and Morocco has shown that improved irrigation efficiency through engineering does not lead to reduced water consumption but to increased production. The water saved is used to extend the area under crops and pastures. In Australia we actually encouraged the expansion of irrigation using saved water. Under the arrangements of the Australia water market, farmers can sell their surplus water obtained from improved irrigation efficiency and are encouraged to do this as a means of obtaining capital to invest in the improved irrigation methods.

In Morocco the government subsidised the cost of drip irrigation. They hoped that farmers would draw less water from the aquifers which are being depleted but as there was no management plan is place the farmers used the surplus water to expand their production.

Improved irrigation efficiency is important. It is a vital part of any consumption reduction policy but it will not be effective alone. It must be used after a management plan for consumption is in place otherwise the water saved will be used elsewhere on the farm or another farm nearby. It will not be surplus to the agricultural sector.

While farm efficiency may be low that does not mean that the overall basin efficiency is low. The classic example is the Nile delta where drainage water is used again and again leading to a high overall efficiency. Some studies of the Zayandeh Rood basin claim that the farmer efficiency is 30% but due to the reuse of drainage water the basin efficiency may be 70% in which case further improvement will be difficult.


Farmers and water use

Farmers are the major consumers of the water – including a large proportion of the soil water. In most river basins at least 70 to 80% of the water diverted from rivers and wells is used by farmers. If you add in water that is held in the soil profile the dominant position of farmers as consumers of water is even greater. In Iran the national figures show that about 60% of the water resource is soil moisture from rainfall and about 40% is water in rivers and aquifers. Translating these figure into useable water is extremely difficult but they do give an indication of the scale of the soil moisture resource that is currently underutilised.

Farmers make all the important decisions regarding the consumption of water. Farmers decide the area of crops to be sown. They decide the type of crop. They decide when to sow and whether the soil moisture is sufficient. They decide if irrigation is necessary and how much should be applied. They decide on the allocation of funds between water, fertiliser, machinery and labour. It is these decisions that determine water consumption yet farmers are rarely involved in water management.

There have been attempts to remove all this decision making from farmers. The Soviet Union is the best known example but the British did the same in the Gezira scheme in Sudan for cotton and in Bangladesh for indigo. Decisions on crops to be grown, time of sowing, water applications etc. were all centralised. Their lack of success has meant there are few people currently advocating this type of water resource management.

Closing the water resource – rivers and wells

The first phase of restricting consumption is to close the water resource. For thousands of years most water resources have remained open to new entrants or expansion by existing users. Closing the resource is an indication that this era is over. As consumption has increased more engineering has increased the supply. Obviously there are exceptions such as the qanats in Iran where supply has always been fixed and consumption had to be managed.

Closing the water resource is an important symbolic action as it indicates that the management of consumption will become the priority rather than the increase in supply. Instead of building ourselves out of water scarcity we will manage our way out. It then becomes a political matter of allocating the water resource between different groups. Like most political changes it is not a complete prohibition on building new structures. These can still play an important part but they will no longer be the first option for solving water scarcity.

When the water resource is closed we are able to determine how much water we have. In some river systems and where there are large storages this can be done with reasonable certainty but in countries such as Australia and Iran that are dependent on variable rainfall for their runoff the amount of water available must be hedged around with a considerable degree of risk. During our great drought in Australia during the first decade of the 21st century we found we had greatly overestimated the minimum yield of the Murray Darling River system.

Closing a water resource to new entrants is not as easy as it seems. We have found that in Australia when we started closing our water resources in the mid 1960s. Closing a water resource throws up many questions. Who are the irrigators? Do people who are granted a permit but have not yet used it have the same rights as established farmers? There is also the more fundamental question of what is “irrigation.” In Australia some farmers utilised the natural flooding of rivers to irrigate large areas of pasture. Breaches were made in the banks to allow the water to flood more easily. Check banks on the fields made the distribution of the flood more even. Some farmers assisted the natural floods with very low lift pumps. Is this irrigation, flood recession agriculture or water harvesting? Many farmers successfully claimed it was irrigation and obtained water rights for large amounts of water. The rights entitled them to water not just from the occasional flood but with 98% reliability.

How much water is each farmer using? This is not easy to determine without meters and once farmers understand that meters are being installed to manage consumption they will increase consumption in order to obtain a larger quota. Can the rights to water be bought and sold?

The political and administrative policy required to close the water resource will take time to develop and implement. Farmers are quick in their responses and in Australia we found a rush of people trying to claim rights to water before the barriers to new entrants were firmly in place.

Allocating the water

Australia used a historical basis for allocating water. Farmers were given a water right based on their past usage. This allocation penalised efficient farmers who had already installed drippers and other more efficient means of irrigation. Those who were still using wasteful methods got a larger allocation.

In Australia the water was initially allocated to farmers on the basis of their historical use. As the water market developed the water allocation – now called a water right – was separated from the land. It could be bought and sold separately from the land. It could be owned by people not connected with agriculture such as investment funds. These funds might rent the water to farmers on an annual basis but their main motive for buying water rights was to speculate in the appreciating value.

A freely traded water right converts water into a commodity. It is no longer linked to the land and its use is completely outside any government policy for food security. While most farmers have water rights in order to produce crops they are not obliged to do so and some external investors (either Australian or foreign) hold water rights as another asset which they hope will increase in price. Production of crops from the water is not their priority.

For the farmer the first requirement was to obtain a water right. They could be one of the lucky first generation who were given the water right free of charge. They could have inherited the water right from their parents. Otherwise they would need to purchase the water right. Purchasing the water right is a once only capital cost.

Having the water delivered requires the payment of annual charge. Large farmers may pump directly from rivers in which case the delivery charge is an internal accounting transfer. Smaller farmers are part of irrigation areas. The irrigation area is managed by a private company or cooperative-trust who deliver the water through canals or pressurised pipes. The farmers pay per unit of water.

It is possible to allocate water on the basis of a formula although I have not heard of it being done. That is each farmer could receive an allocation based on the area irrigated, the soil type, the climate, the type of crops grown and any other relevant factor. With modern computers this is a tempting approach but I have considerable doubts about its efficacy or reliability. The only relevant experience I know of is the British attempt to use a complex formula such as this to allocate farmer subsidies. It was chaotic. The British had only two major factors to incorporate into their computer program – land ownership and land capability - yet it failed. Land capability turned out to be more complex than it seemed. The crisis was finally resolved by appointing hundreds of extra staff and making the assessment manually. For water allocation there would be many more factors to take into account. Iran has many more farmers than Britain. If the system failed it would be difficult to find the thousands of staff needed to carry out the task manually.

Using a formula will take time even if a computer is used and the aim should be to close the water resource and allocate the water quickly. The longer the period of transition the more disputed claims that will be made. In my suggested management plan I propose a means of correcting some of the over allocation made at this first stage.

The formula approach suffers from a major conceptual problem. It assumes that all the water allocation takes place just within the component that is visible. In fact as I have mentioned before the neglected rainfed production can play an important role. For example, a considerable amount of irrigation water in the Zayandeh Rood basin is used for alfalfa (lucerne), sainfoin and clover fodders crops. These irrigation-dependent crops are probably quite profitable but could be replaced by establishing rainfed pastures which are sustainable, low cost, and survive drought.

The market mechanism

A market for water is being advocated as the means of bringing supply and consumption into balance. Countries such as Australia, Chile and parts of USA already have water markets in operation and there is a great deal of academic literature extolling the virtues of the market as a means of managing the consumption of water.

We all learnt about the market and how it manages supply and demand in elementary economics. A high price for water should reduce consumption. Farmers with low margins on their water usage will find it unprofitable and stop irrigating. High prices will encourage the development of more supply as the returns on investment will be greater. If prices fall demand will increase and supply will fall. It is a great model which adjusts automatically without any external intervention. The whole concept of water scarcity becomes redundant. The market will adjust supply and demand. Those who cannot afford to pay get no water.

Water supply in the market

If we try to apply the market model to the real world of water and irrigation it fails. How exactly do high prices for water increase supply? The starting point in the whole debate on restricting consumption is the fact that we are reaching the supply limits of the water resource. There is no more water and further engineering is of limited value. High prices for water do not make it rain. This may sound so obvious that it verges on the stupid but that is the only way supply can be increased.

The failure of this model is apparent in the experience of a water market in Australia. There was a drought for four years in the first decade of the 21st century. The market price of water rights increased by three times. The high price for water rights did not increase the supply. It did not make it rain. It did not increase the release from dams as they were already very low.

This should not come as any great surprise. Water is a natural resource like land. A high price for land does not create more land. It might at the margin bring some marginal land into production but that is extremely limited.

The water market is a misnomer. It is not a market for water but a cap and trade scheme. The closing of the water resource is the imposition of a cap. After the cap is imposed the market trades the entitlements. Their short term value is based on scarcity or abundance but in the longer term depends on the resource rent from the water.

Water consumption in the water market

On the consumption side of the market model it is possible to create a water market that manages demand. A theoretical market model for water could start with a monthly auction by the water provider. Farmers would need to bid for their monthly supply. It would require a sophisticated system of smart water meters. The authority would decide, based on its projections, how much water could be safely released to farmers. This would be allocated on a short term basis. The price would be determined at auction.

It would also result in a constantly fluctuating price for water.

Farmers already suffer from huge price instability for their produce and from seasonal yield variations due to climatic factors besides water. Do we really want to impose on them another considerable risk? Do we want to increase the price of water during seasons of poor rainfall? They will need more water and they will also pay more for each cubic metre. Of course the theoretical economists will argue that they should not have planted their crops if they are going to lose money on them but the farmers did not know that when they planted them. There are also the farmers with tree crops and vines who must apply water to protect their investment. In fact it is doubtful whether farmers would plant these perennial crops as the risks due to highly fluctuating water prices would be too high for such a long term investment.

Such a theoretical model for a water market would completely abolish all farmers' rights to a secure water supply and would provoke strong opposition. Many farmers in the Zayandeh Rood basin have water rights dating back 400 years to a royal scroll. To abolish these rights and force these farmers to bid every month for a water allocation is not a feasible plan.

If we look at the market for carbon credits we see another market that has become an expensive joke. The concept was to buy and sell carbon credits so investors would be able to build renewable power generation plants and sell their carbon credits as part of their return on the investment. To do this requires some price stability – not necessarily a fixed price – but some stability.

In fact the price of carbon credits has fluctuated wildly which has suited the speculators but made carbon credits totally useless as an incentive to invest in efficient clean power generation.

Some water markets in action

The water market in Australia, Chile and parts of USA is not a real water market. A real market is a market where producers or traders sell a product to consumers. These water markets are markets in water rights not in water. It is a most important distinction.

One of the central justifications for a water market is to manage consumption. A market in water rights does not manage consumption as consumption has already been fixed by the amount of water that has been allocated as water rights. That is the cap. The water market will manage water consumption by the individual farmer as he can buy or sell water but the overall consumption for the river systems as a whole is already fixed.

Water rights have been issued by water suppliers to consumers (the farmers). They are fixed. The total consumption of water is not managed but is defined by the amount of water allocated in the form of water rights. These fixed water rights are traded between between farmers – not between the supplier of water and farmers. The need for water by farmers varies according to the season but the demand is fixed by the total amount of water rights that have been issued.

The water rights are based on an estimate of average yield of water from the water resource. Records do not cover a long period of measurement nor do not they allow for exceptional periods of drought or any effect of global warming. In Australia during the first decade of the 21st century and in the western US over the last few years these water rights cannot be fulfilled. The need for water has increased because of the lack of rainfall. The supply has fallen because of a lack of rain. The water rights cannot be supplied. Where is the balance promised by the advocates of the water market?

Advocates of water markets based on these rights have admitted that the market mechanism is not perfect but have placed the blame for the failure of the market to balance consumption with supply on the poor initial allocation of water rights. They argue for the “right water rights.” and more competence on the part of politicians and management bodies. It is easy to place the blame on politicians and administrators for allocating excessive water rights. The claim does have considerable merit in Australia where too much water was allocated in the form of water rights. In the real world the farmers become aware of the limits of the water resource long before the managers who are racing to catch up. The concept of the “right water rights” also implies a level of certainty about a secure level of supply that simply does not exist.

The management of water consumption needs to be much more flexible than that provided by a water market based on water rights. If we look at the electricity market we see a much better combination of controlled load shedding and price gradations. Of course the electricity market has to be managed on a daily basis or even hourly while water is managed over a year or more. The providers of electricity wish to avoid blackouts and have realised that increasing supply alone is not the most efficient use of investment funds.

In Australia the water authority simply defaulted on the water rights it had issued when supply was reduced due to drought. There was no controlled shedding of the load so it was the equivalent of a blackout. They had guaranteed certain levels of secure supply to the holders of water rights but as the drought continued there was no more water in the dams and they had to default on these guarantees.

Farmers can of course purchase water rights from other farmers. These water rights in turn will not be supplied in full but at least they may acquire some additional water on an individual basis.

Here again we need to examine whether the market mechanism has delivered a sensible result. In the case of the Australian drought it did not. Some farmers with large financial reserves continued to irrigate annual crops of rice, wheat and cotton while other farmers without these reserves of cash were unable to irrigate their tree crops and vines which died as a result.

There is a form of managed consumption in Australia but it does not come from the water market. The Australian government has been purchasing water rights from farmers and cancelling them. This is an expensive ($9 billion has been spent over five years) and clumsy method of managing consumption and the only role the water market plays is to provide a price for this form of government compensation.

The effect on food production and established communities is extreme and cannot be reversed once relatively normal rainfall replenishes rivers and storages.

The market as a means of allocating water to high value crops.

Chart 1

As well as managing the overall consumption of water it is claimed that water markets even those for water rights will encourage the transfer of water from low value crops to high value crops.

The chart above seems to be so logical. Everyone benefits from higher returns to water so facilitating the transfer will be a good thing.

Actually there is no evidence at all that vegetable, grape and fruit production is limited in Australia by a shortage of water except in periods of severe drought or, as in the recent case, a misallocation of water to crops such as cotton and rice. The limits on production from year to year come from a lack of market opportunities. Vegetables provide the highest returns to water but Australians cannot eat any more vegetables and exporting them to South East Asia by air is costly. Vegetables provide a high return on the water used but production costs are high and farmers' profits may not be high. In other words farmers are managing the water in the context of a complex balance of production costs, market prices and market opportunities.

The concept of maximising returns to water alone is flawed. It is a version of the slogan “more crop per drop” while farmers need “more profit per drop.”


Managing consumption

I have identified four main methods of managing the consumption of water.

A price for water.

Water needs to have a price but the market is not the only means of determining a price. In fact the Australian water market does not price water for the majority of farmers who obtained their water rights free at the time of the initial allocation or by inheritance from that first generation. It does price the water for those who have purchased their water rights since that initial closure of the water resource. Most Australian irrigation farmers pay a charge for the delivery of their water right to their farm. These delivery charges have no connection with the water market. They are determined locally by the water delivery organisation.

A managed price for water rather than a market price has more flexibility. Different levels of reliability of supply can be given different prices. Annual water quotas can be cheaper than water under the 28 year lease. Prices can be progressive with large consumers paying more per unit. There has been considerable discussion of a two tier pricing policy in Iran which is a simple and practical method of introducing a progressive system of charging. Low cost or free water for small farmers and a higher price for larger farmers with 1 ha or less being the change over point.

The actual price for the water in the larger farmer category has also been discussed and a cost recovery price has been suggested by most authors but this can be hard to calculate and is often politically difficult to implement.

There has been no discussion on where the money from the water charges goes. While it is logical that it should be paid to the authority that incurs the cost of delivery, charges will be more politically acceptable if farmers pay them to their Local Management Committee who would then become responsible for local water distribution networks. If the money goes to a central treasury in Tehran farmers will see it as a tax rather than a payment for services.

Water quotas.

Quotas are another means of limiting consumption. They are not easy to determine as outlined above. They can also be linked to the price. Water quotas can be allocated with varying levels of reliability and each level can have a different price.


Incentives are another means of managing consumption. Incentives for the use of more efficient irrigation methods is an obvious example. Of course efficient irrigation methods are only effective in some irrigation areas. Where a large amount of drainage water is recycled the efficiency of individual farms is not important. One farmer's drainage water becomes the next farmer's irrigation.

Public campaigns

Social pressure can play an important role not just in the reduction of consumption but the enforcement of management plans. We have a huge industry called marketing which has the objective of increasing consumption. It should be possible to reverse the marketing message to that of reducing consumption. These public campaigns can be very effective. In Adelaide during the 1960s we managed an acute water shortage in the city without legal restrictions using only a public campaign. It is most important when it comes to the larger picture of long term reduction of water consumption by the farming sector that we do not blame the farmers as the source of all our problems. They are the largest consumers but they have been encouraged to use large quantities.

Encouraging farmers to use their sprinklers only at night when evaporation is much lower is another area when public campaigns and pressure can be most effective. In this case the savings are real as high evaporation from sprinklers during the day is a loss not just to the farmer but to the basin as a whole.

A price for water.

Water needs to have a price. If water is too cheap there will be little incentive to improve efficiency. There are many ways to determine a price for water. A water market does not determine a price for the water only for the water rights. If these are allocated free to existing farmers (as in Australia) it will be a number of generations before the price of the water right has any real impact.

The price of water is not the only factor in improving the efficiency of irrigation. “More crop per drop” has been a popular slogan in water policy forums but for the farmer a more appropriate slogan would be “more profit per drop.” Profit is much more complex than crop yield. It is not just a return on the water but a whole range of other inputs such as labour, machinery and capital. When all these inputs are factored into the profit margin there is still the question of markets for the produce.

If we accept the fact that the supply of water is not a fixed amount we need to allocate water with varying degrees of reliability. Variable supply should be balance by variable consumption. I have suggested 28 year leases and 1 year leases for water. The price of water within each groups would vary. It is important to keep the pricing system simple and understandable.

Quotas and the 28 year lease

This is an idea I have borrowed from the management of the South Australian rangeland (the zone with less than 150 to 200 mm but not true desert) that could be applied to water. The history of the rangeland has many similarities to water. The rangeland is a huge community resource that is easily overexploited. In South Australia we began by forcing overexploitation. The government was so concerned that farmers would take leases on the rangeland for purposes of speculation that they demanded as a condition of the lease a minimum number of sheep per ha. In modern language we would call this a development approach. When the rangeland became over grazed and started to blow away the government realised its mistake and reversed the conditions on the lease from a minimum number of sheep to a maximum number of sheep per ha. This could be called a sustainability approach. This new law stabilised the situation but did nothing to improve it. The law came into force about 100 years ago with severe penalties for non performance but they were so severe that they have never been enforced.

In the 1980s the law was changed again. New leases were granted for 28 years with environmental conditions. The government has tried to work with the owners rather than trying to force them through high penalties to carry out restoration work.

How the 28 year lease works when applied to water.

The water is allocated to the farmers on the basis of their historical use. Not all the water is allocated in the form of a 28 year lease only the water that is secure. One can never be 100% secure but the experience of the last decade has given a good idea of how much water is secure during a period of sustained low rainfall.

The balance of the supply available during an average year is provided to farmers in the form of an annual quota. Farmers will have confidence that the 28 year lease water will be available with a very high level of security while the annual water is allocated when available.

The 28 year lease provides the farmer with security to invest in his farm, to plant trees or vines if that is appropriate and to borrow from the bank if required.

The lease is divided into four periods of seven years. Conditions are placed on the lease. At the end of the first seven year period the operations of the farm are inspected. If the farmer has fulfilled the conditions place on the lease then lease is renewed for another 7 years. That means it is again 28 years. Providing the farmer continues to fulfil these condition the lease is renewed every 7 years. It is in effect a permanent tenure.

If the farmer fails to fulfil the conditions the lease is not renewed for another 7 years. The farmer still has 21 year remaining on the lease. The farm is inspected again after 7 years. The farmer has the opportunity to comply with the conditions and renew the lease back to its original 28 years. A failure to comply again and again would mean the lease would expire after 28 years and the farmer would lose the water.

The conditions that are applied will be determined locally by the Local Water Management Committee. During the first 7 year period the conditions applied to the leases will bring all farmers back to benchmark levels of consumption.

Granting water allocation on the basis of historical use is unfair as it gives large allocations to farmers who have used water extravagantly and penalises those who are more efficient. The benchmark levels need to be set locally and will gradually bring all farmers back to a reasonable level of usage.

Over the next period of seven years further efficiency savings can be made, pollution levels reduced and other appropriate conditions applied but only through the Local Water Management Committee.

The great advantage of this system is that it applies gradual pressure on the farmers. They are not penalised with fines they cannot pay or sudden confiscation of their water but are given time to adapt. The 28 year lease gives them security sufficient to borrow money to pay for the drippers and other suitable water efficient technology. Provided they comply with the conditions they have permanent tenure.

Annual Allocation

The balance of the water allocation is provided in the form of an annual quota. This is only supplied to the farmer if it is available.

It must be made plain to the farmer that this is still part of his water allocation. If the farmers believe that the annual quota is a scheme to take 10 or 20% their water without compensation for other uses (urban uses or the environment) they will lose faith in the water managers. The only reason that the annual water is not provided to the farmer is because it is not available. It is important to stress to the farmer that the water authority cannot promise to supply water if rainfall is low. It is not a mechanism for diverting, by covert means, water to other users and the environment.

Farmers may not be able to use their annual quota. A local water market would be a good means for transferring the unused water to other farmers or if the government wants it could buy annual water in the market for environmental uses.

Surplus water.

Over a period of the 7 years farmers will use less water through efficiency savings and to comply with the conditions on their leases. This water is a real surplus and is returned to the IWRM Authority for that river basin. It will probably be needed for domestic and industrial use or the environment.

The policy for reduced water consumption is based on the principle that it is achievable through improved efficiency and changed crops. The farmer will use less water but not have a lower income.

Farm improvement groups

These groups will be discussed later but are an important part of the reduction in water consumption. The conditions on the 28 year lease provide the push to change but the Farm Improvement Groups provide the farmer with the knowledge on how to change.

Practical difficulties

Putting a price on water and establishing a quota (28 year lease and annual quota) requires the water use to be measured. Obviously water meters are the best solution but they are expensive and take time to install. There is considerable interest in smart meters connected to computers. This is a useful piece of technology but that is all. It is a means to an end. It does not help us find the end point. A satellite navigator is a great means of finding the way but it does not decide the destination.

Alternatives may be needed in the short term. We cannot wait for the perfect solution to the problem. There are other ways of measuring water which may be used as an interim method. In Australia we used electricity consumption for water taken from wells. In some parts of India the pumping of water from wells has been placed on a separate electricity supply network. The purpose is to shed load from the electricity supply network but it could be used equally for controlling water consumption. The size of the outlet pipe may be sufficient for small users. The lack of water meters should not delay attempts to measure water for the purpose of quotas and pricing.

For example in the Zayandeh Rood basin there are 170,000 farmers. The small farmers with less than 1 ha number 90,000 and could receive their water as they do at present by means of outlet size and time. It would be ideal if larger farmers were metered. Only 80,000 meters would be needed compared to 170,000. However management of consumption should begin immediately using “restricters.” We used these in Australia to put pressure on people who had not paid their water charges. The restricter reduced the size of the outlet pipe. They are not the perfect solution as they are obviously even easier to tamper with than meters but they are a start. Reading the numerous discussion papers on the Iranian water crisis I have found that some people advocate a data – model – technology (smart meters) approach but this package is the servant of management policy not management policy itself. Models will not solve the tough political decisions. The political decisions will take more time and effort as they require farmers to be persuaded. Technology is simply a matter of money.


I have been critical of the water market both the real one that sells water from suppliers to consumers and the fake one that sells water rights from one consumer to another consumer. Markets fail to provide a useful mechanism for the management of the consumption of water on farms.

Consumption management for water is still a recently explored territory and all I can do is to point out a few paths that might be effective. My starting point is the involvement of the real water managers – the farmers. These measures to restrict consumption should harness both classes of motives. They should be aimed at improving the profits of farmers and the should also build on the farmers' sense of community benefits.

I have outlined above four mechanisms - price, quotas, incentives and social pressure. The mixture to be used in a particular areas cannot be determined by a national plan but needs to be developed locally.

Local Water Management Committees

These are in the middle of the organisational chart for water management but are the key organisations for the management of consumption as they are the people who set the conditions on the 28 year leases. They have the difficult task of reducing water consumption without reducing the income of farmers.

Community of interest.

We should try to manage consumption in a reasonably compact area. That is many little consumption management schemes rather than a few large ones. In Australia we have a water market for the whole of the Murray Darling River Basin. That is an area of about one quarter of Australia – an area greater than the whole of Iran. It is an economist's dream but that is all. In such an enormous area there is no community of interest among farmers.

In the Zayandeh Rood basin there are 170,000 farmers. This is much too big a group to have a community of interest. There are too many existing conflicts between the upstream and the down stream farmers for a single water management committee to cover the whole basin. The Zayandeh Rood basin is already divided into many irrigation areas (Chedaga, Upper Karevan, Lower Karevan etc.) and these could form the zones for farmer participation in consumption management. Ideally the Local Water Management Committees would manage about 1000 to 2000 farmers. The Zayandeh Rood basin might need a hundred Local Water Management Committees.

Cooperative action

Small consumption management zones would enable the development of a cooperative means of controlling consumption. The competitive model assumes every farmer is trying to maximise his water consumption at the expense of other farmers with high prices pushing out the weak. A cooperative association would encourage a group management approach. Farmers are not stupid. They realise that the arms race to dig deeper wells and use more powerful pumps will eventually only benefit a few but they have no alternative to follow at present.

Participation by farmers.

A rigid formula for consumption based on theoretical models developed in a central administration excludes the participation of farmers. They would not have any decisions to participate in. They would be required to implement a national formula or model. I have suggested that farmers should be involved in the negotiation process to set the benchmark levels of efficiency imposed on the 28 year conditional leases.

Composition of the Local Water Management Committees.

These committees should be composed of farmers and government officials in equal numbers. I suggest three of each with the Ministry of Energy and Agriculture being essential members. The other member could be from Environment or the local administration. The farmer members are elected by the farmers in the irrigation area.

On many small farms the male farmer works off the farm and it is effectively managed by women farmers. Action needs to be taken to ensure they are adequately represented.

There should be an independent president acceptable to both sides. If the committees divides between farmers and official on every decision it has failed. It should be possible to negotiate decisions with the president's vote being used on rare occasions.

The concept of a water management committee is a part of the Iranian tradition. The local Mirab or water manager played a similar role for centuries.

Setting the conditions on the 28 year lease

This is a major task for the Local Water Management Committee. The first set of conditions would relate to the fair distribution of water. Those farmers who received large amounts of water because of their extravagant use in the past would be required to meet benchmark levels of efficiency over the first seven year period. The benchmark levels would be determined from a comparison with other farmers.

Over time the benchmark levels would be set to increase efficiency even further but the general principle to be used is that the farmers' reduction in water use should not mean a reduction in overall monetary return. This is a difficult concept to define precisely because market prices or farm output vary considerably but it should be a guiding principle for the committees.

Another task of the Local Water Management Committee would be to carry out inspections and decide whether farmers have complied sufficiently with the conditions imposed on their leases for them to be renewed for a further 7 years.

Maintenance of the distribution system and charges.

The Local Water Management Committees would be responsible for the maintenance of the local distribution system of pipes and canals. It would charge farmers a price for the water to cover these delivery costs. Farmers will find it more acceptable to pay for water if they can see the money going to a local organisation where they are represented rather than the treasury in Tehran.

Beyond water centric.

The Local Water Management Committees should look beyond the management of irrigation water to the wider management of all water and other inputs for farmers.

Local water markets.

The Local Water Management Committees would also supervise the local water markets in annual quota water. The 28 year leases and annual quotas should be registered on a central computer accessible to all. The transfer of annual quota from one farmer to another or from a farmer to the government following a sale within the water market should be signed off by the Local Water Management Committee.

Farm Improvement Groups

These are groups of 100 to 200 farmers within the irrigation areas managed by the Local Water Management Committee. These groups are totally farmer managed and do not have an executive decision making role. They are the organisations that channel advice from the Ministry of Agriculture, Universities and other institutions to the farmers so they can improve their water use efficiency, improve the efficiency of other inputs, change to more profitable crops and improve farm profits overall.

The combination of pressure to change under the conditions of the 28 year lease and the advice on how to change from the Farm Improvement Group will be the driving force for a reduction in the consumption of water.

Basin management

Moving up the organisational chart there needs to be an authority for the whole river basin to make bulk allocations of water to the Local Water Management Committees. This authority needs to incorporate all water not just the water in the rivers and wells.

It also needs to have strong lines of accountability to the main water consumers – the farmers. This could be done through regular meetings with the Local Water Management Committees (either individually or in groups). At the meetings, the basin authority could be questioned and challenged on it decisions.

National bodies

Better coordination is required between the Ministries interested in water. In particular the need for Agriculture and Energy to work together on developing the potential of rainfed dryland farming in a way that it can relieve pressure on the visible water resources.

5 Managing aquifers and wells

The crisis of over exploitation of aquifers in Iran is more acute than the over exploitation of irrigation water from rivers. It is also more difficult to manage the consumption of water from wells. With irrigation from rivers the farmers are connected to a distribution system and can be identified reasonably easily. When the resource is closed there will be other farmers claiming some right to water but these will be relatively few in number.

With wells the closure of the water resource will be much more difficult as many farmers have dug wells without permission. The numbers of wells and their output is only known approximately. While it may be tempting to close illegal wells that is politically impossible. The impact on the farming community would be considerable. Protests would soon reverse the decision.

Registering wells

For example in the Lake Urmia region there are about 100,000 unauthorised wells. Bringing these wells into a water management system is going to be a difficult task. One needs to accept as a starting point that there will be a partial amnesty. A policy of closing all these unauthorised wells immediately is politically unrealistic.

A partial amnesty would be a good opportunity to prevent more unauthorised wells. That is to close the resource to some degree. The first stage would be to register all the wells. This could be done on an incentive and penalty basis. The incentive is that those wells that are registered are part of the partial amnesty. Those that are not registered would always be at risk of being closed. This registration process is the first step towards closing the water resource to new entrants. It does not prevent more water being pumped from individual wells but it is the beginning of the process of management.

Water management areas

The area needs to be divided into separate aquifers and a separate Local Water Management Committee established for each aquifer or part of an aquifer. These Local Water Management Committees have been described above. Establishing the Local Water Management Committee highlights our first major problem – who is a consumer?


Participation has become a fashionable slogan for all international development organisations. Stakeholder participation has become a compulsory requirement of all projects. We are urged to participate in water management, electricity and gas supply and the recycling of rubbish but we do not have the time. We just want a good cost-effective service. Not all farmers are likely to participate in the Local Water Management Committee because they simply do not have the time. They work full time off the farm and find it difficult to attend meetings. The farm is managed by women who find it even more difficult to attend meetings because of their other domestic responsibilities. One solution would be for the government to appoint a “champion” for this group on the Local Water Management Committee.

The selection of wells in the smallholders' category can be decided on a points score. Those with low powered pumps, shallow wells, small outlet pipes and limited irrigation area would qualify. They would in effect receive a full amnesty. Their wells would be registered and inspected on a random basis but they would not be restricted by metering.

If the distribution of wells follows the usual pattern these smallholders are large in number but use a small proportion of the water. The net benefit of fitting meters and other controls is unlikely to be positive.

Local Water Management Committee

The Local Water Management Committee could then be formed with a mixture of farmers elected by the registered owners of wells - above the smallholder threshold - and by government officials representing, Energy, Agriculture and the Environment. The president would be independent. The tradition exists in Iran of elected water managers in the form of the Mirab. The committee would carry out similar functions to the Mirab.

Even with professional farmers participation will not be easy. It will take time. In Australia we have a system whereby farmers pay a small tax on their output to fund agricultural research. Naturally farmers wish to be involved in the allocation of these research funds and are therefore members of the management committees. It took many years for them to become active members. They had to learn the language of formal presentations based on data. Now they have learnt that language the research funds are allocated much more widely and include groups of farmers.

Setting objectives

The water management objectives should be set in terms that are easily understood by farmers. For example raising the water level in test wells by a certain amount over a period of five years by reducing consumption. Objectives should not relate only to water but include wider objectives such as increasing the productivity of cereal production in terms of kg per mm of rainfall and irrigation. Moving from low value crops to higher value crops. Using fertilisers more efficiently after soil testing.

Supply-consumption balance

Unlike the water from rivers and storage dams the water in aquifers can be managed on a longer term basis. Achieving a balance between consumption and recharge over the long term is just as important. The Local Water Management Committee can use the same 28 year lease as a means to gradually reduce consumption. There has been considerable research undertaken by the Ministry of Agriculture that shows that yields can even increase while water consumption is reduced.

The experience in Morocco has been that more efficient irrigation does not save water as farmers use the water saved to expand irrigation. It is important that efficiency improvements are linked to a management plan that uses the surplus water to restore the aquifer.

6 Rainfed dryland farming

The role of rainfed dryland farming is particularly important for the management of the consumption of water from wells. Most farms in this sector are integrated dryland and irrigated. Improving the production from the dryland sector will reduce the pressure to irrigate from wells. Those farms in the rangeland below 200 mm have limited potential for improved productivity in their dryland farming operations. The advice on improve dryland farming and improved irrigation efficiency can be channels through the Farm Improvement Groups.

Coordination between Energy and Agriculture will be extremely important. The program needs to start with the registration of wells and the establishment of the Local Water Management Committees. The next stage is to establish the Farm Improvement Groups and launch a program for dryland farming and one for improved irrigation.


Property rights

Granting water leases to farmers contains an important matter of principle. The water is still the property of the community but the farmer is given secure access to the water (with varying levels of security) as a user. The 28 year lease grants the water to the farmer for ever provided he fulfils the conditions of the lease. It comes close to private ownership. The idea that a water right can be granted to farmers implies that the farmer has acquired a certain volume of water in some lake or dam in a remote region as his private property. In fact the water resource in lakes and rivers in Iran is a community resource (Law of Iranian Parliament 1983) which is granted to farmers to use.

Water is not just a volume in a lake. It is transformed by engineering, paid for by the community, into water that can be used by the farmer in the right place at a convenient time. A water right (as granted in Australia) implies that this water is the private property of the farmer to use or not use as he sees fit.

Water is not a private possession such as a carpet. The owner of a carpet can choose to clean it or not clean it. He can buy one or sell one. He can put the carpet in storage in the hope that it increases in value. If he likes he can destroy it. Water is in a completely different category and property rights that apply to carpets should not be applied to water. Unfortunately in Australia we have something like the carpet model of ownership.

I have tried to think of an example of private-public property and cars provide a similar case to water. The car is a piece of private property and people are free to purchase any model and any colour they like but beneath the exterior features cars have to meet common standards of safety, pollution and even fuel economy. The owner can use a car to go where he wishes to go but ownership is not as straightforward as the carpet. One needs a driving licence, the car can only be used according to traffic laws, parking is controlled and access into certain areas is restricted. We might like to call a car private property but the reality is quite different from the carpet model of ownership.

The 28 year lease that I described earlier has the properties of a joint private-public property. The farmer has secure water. While the lease is for 28 year it can be renewed for ever. The public involvement is through the conditions on the lease. Initially these will probably relate to water efficiency but nitrate pollution and other conditions can be added later but only through the Local Water Management Committees. The management committees include farmers. The conditions on the lease are similar to the restrictions on the use of the car. They include economical use of water.

I am not a legal expert but I believe that the 28 year lease is compatible with Iranian law. The 1983 Law stated in translation that: “All the water resources of the country are treated as the property of the national community.” it also stated that: “The right to water can be owned by farmers.” While these appear to be in contradiction I do not believe that is the case and a lease that is renewed without limit but with conditions is a means of reconciling private ownership with public responsibility.

The conditions on the lease seem to be compatible with the 1982 Law amended in 1990 regarding fair water distribution. Fair distribution is not easy to define but bringing all farmers to a benchmark level of usage does seem to be fair.

The concept of imposing gradual sanctions on farmers who ignore the conditions on the lease is not only practical but within the traditions of Iranian water management.

Higher prices

Water has been cheap in Iran and electricity to move water has also been cheap. This distorts the consumption of water and gives farmers the impression that water can be used extravagantly. However price is a very sensitive political issue and using the price mechanism alone is not practical option. Full cost recovery is considered an ideal but costs are difficult to estimate and allocate. How much should be charged to farmers, to domestic and industrial users and the environment. The reality is that prices will be negotiated.

We have all seen political crises around the world when the World Bank has advised governments to abolish subsidies on food or other commodities in a single act. If prices for water are increased the process must be gradual.

The US government did not use the price mechanism when it wished to encourage more efficient car engines. Instead of increasing the price of petrol they introduced regulations on fuel economy. They had limited success because they allowed exemptions for SUV vehicles. They thought that increasing the price of petrol was too politically unpopular.

In Europe regulations on fuel efficiency were combined with high petrol prices and one can say the policy was successful as the average car in Europe is much more efficient than the average car in USA but it had unintended consequences. Wealthy people purchased cars with poor fuel economy and sold them on to poor people as their second hand value was low. Poor people purchased cheap cars which were expensive to run. High petrol prices became a disproportionate burden on poor households – a regressive tax.

Farmers are more likely to accept a price for water if it is not seen as a tax that disappears into the treasury of the central government but instead is used for their own benefit in supporting the Local Water Management Committees. Over time governments would be able to shift more of the responsibility for local distribution networks to these local committees who would collect water charges to pay for the work.


Physical restrictions are probably the most effective means of consumption management. I have suggested the 28 year lease with conditions. The easy bit is setting up the system. The hard bit is enforcement. Obviously meters are needed but enforcement requires a blend of inspection and cooperation. In Australia most of the water is metered but during the great drought meters were tampered with. Now new tamper proof meters are being installed but I am sure, over time, these will prove to be vulnerable too. If farmers are involved there will be a local level of enforcement which is based on peer pressure rather than inspectors and fines.

Large, medium and small users.

This is an area of debate. Equity is another version of fairness and Iranian law says water should be distributed fairly. Should consumption management be spread equally across all users or should the large users have greater restrictions.

The distribution between small and large users is usually that 20% of the users consume 80% of the water and 80% of users consume only 20% of the water but this type of distribution is completely different where land reform has been implemented. From a purely practical point of view placing restrictions on the 20% larger users is much easier and more effective as it has an impact on 80% of the water consumed. Fewer meters and other monitoring devices and a limited inspection staff are needed.

Local and national.

The balance between small and large users is one that is subject to considerable debate. Efficiency has become the overriding aim of economic theory. There are economies of scale and these lead to more efficient production. In agriculture the economies of scale are limited because the variability of soil, rainfall and labour require a greater degree of local knowledge and local decision making but there are some economies of scale that cannot be ignored.

Larger farmers do have more funds to invest so they are better able to improve water use efficiency and thus reduce their water consumption.

Efficiency is not the only driving force of policy and smaller farmers provide food for their families and are the foundation of local communities. If small farmers leave the land they will find it difficult to find housing and jobs in the cities.

Trying to develop a balance between the two should be done locally but that does not prevent some national guidance. This can be provided by giving the Local Water Management Committees some powers to give priority to small farmers and to introduce progressive charges on large users but to limit these powers so excessive costs are not applied to larger farmers.


The Integrated Water Resource Management model emphasises the consumption of water from rivers and aquifers. The soil moisture is a huge underutilised water resource. To put it in dramatic terms less than half the soil moisture potentially available for agriculture is used in Iran. That is not literally true as the crops and pastures grown on this soil moisture use all the available water in the soil profile each season but under current farming practices this soil water produces less than half its potential. With a better farming system the output could be doubled.

If we compare the output from Iranian rainfed dryland farming with Australia in the same climatic zones of rainfall and temperature and similar soils we find that the yield of cereals in Australia is double and that for pasture is three or four times greater. This comparison is not based on theoretical studies in the laboratory but what is achieved by Australian farmers and farmers on projects established throughout the WANA region.

Improved efficiency of use for soil moisture is not a separate issue but an integral part of water management. Improving the productivity of the rainfed sector will take considerable pressure off irrigation to provide food for the nation.


A water market has been proposed as a solution to the crisis in water management in Iran. Advocates of the market say that it will bring supply and consumption into balance. They say it will provide a mechanism for pricing water and that it will encourage farmers to grow high value crops.

I have shown that a water market based on water rights does nothing to reduce consumption as consumption is fixed once the water rights have been allocated to farmers. The price of these water rights in the market only affects farmers who are buying water rights. The vast majority of farmers will receive their water rights free. They will not be influenced by the price. I have shown that there is no evidence that the production of high value crops is limited by a shortage of water.

My alternative to the water market is:

Most water consumption takes place on the farm. It is the farmers' decisions that will determine consumption within the limits set by supply. This should be the starting point for consumption management policy.

The key to changing the consumption of water by farmers is a mixture of compulsion and encouragement. The compulsion is in the form of conditions on the 28 year lease that require farmers to use water more efficiently. These conditions are set and enforced by Local Water Management Committees.

The encouragement comes from the Farm Improvement Groups which channel advice from a range of organisations to the farmers. This advice will show them that they can reduce consumption and maintain or even increase their income.

Water is a community resource. The management of nearly all the water from rivers, aquifers and moisture in the soil is carried out by farmers. Our aim should be to build a local community of farmers to manage it.

Organisational Chart

River Basin Authority (for example Zayandeh Rud Basin)

Responsible for macro management of river water, ground water and soil moisture (rainfed dryland farming).

Estimates low and average supply for river and sustainable yield from ground water resource.

Rainfed dryland farming

Increased emphasis on the improvement of rainfed dryland farming through the use of medic pastures and medic pastures in rotation with cereals.

Irrigated Agriculture

Domestic and industrial


Low river supply allocated to irrigation areas. Local Water Management Committees for each area then allocate quotas to farmers on the basis of 28 year lease.

Minimum amount allocated to domestic and industrial users. With maximum water saving in place.

Minimum flow to wetlands

Average river supply. Additional water allocated to Local Water Management Committees and then to farmers in form of Annual Quotas.

Restrictions less severe.

Better flow to wetlands.

Over the first 7 year period of the 28 year lease water released by farmers due to improved efficiency.

Additional water available for increased population and more industry.

More water for wetlands.

Farm Improvement groups play a key role in demonstrating this new farming system.

Farm Improvement Groups play a key role in bringing new technology to farmers. The aim is to produce the same or more income with less water.


Brichieri-Colombi, Stephen. (2009) The world water crisis. Failures of resource management. I.B. Taurus, London and New York. English and Arabic.

Chatterton Lynne and Chatterton Brian. (1996) Sustainable Dryland Farming. Cambridge University Press. English but being translated into Farsi.

Chatterton Brian, ( Revised edition 2014) What is wrong with water markets? Pulcini Press. English but being translated into Farsi.