Abstract for: A System Dynamics Approach in Water Resource Management and Government Subsidy Policy: A Case Study of Tajan Basin in Iran

After announcing the fuel rationing policy in 2008, government decided to eliminate subsidies in order to manage consumption of natural resources. Thus, a cashing subsidy policy has been applied since end of 2010. In first stage, different kinds of energy and resources like water were considered. Government's plan was to pay subsidies directly to consumers. In this paper, we focused on the consequences of removing water subsidy in Tajan, an area in the north of Iran. We modeled different ways of water supply and demand in Tajan by concepts of system dynamics. We tried to show the effects of cashing subsidies policy in municipal demand of water in Tajan and examined two kinds of implementing this policy. In the first strategy, water price is increased smoothly over modeling horizon which is considered to be 24 months. While in the second one, price is increased suddenly in the first month, exactly similar to the way the government has done. We designed third strategy in which no subsidy elimination happens and prices increase according to inflation. A water surplus indicator was considered for comparing these strategies which was calculated by decreasing water supply from its demand. First strategy was shown to be best one.