Century old water markets in Oman

Water rights in Oman were instituted centuries ago and are still active. These water rights are treated similarly to real property rights since they are sold, rented, and inherited independently of the land on which water is used. In most of the observed irrigation schemes, water auctions are present. The common water rights are mostly leased. The paper discusses the efficiency of these auction markets as well as the revenue generation and equity. The paper also provides an analysis of quantitative data on Falaj auction markets through a case study of Falaj Belfae. During periods of low supply water prices increase drastically. It has been observed that water prices might increase 200-folds during periods of scarcity. The benefits of water markets revert to the farmers’ community through a well maintained irrigation system. However during periods of water abundance observed water prices are below their long run marginal value. This is explained mainly by the absence of engineering mechanisms to prevent the groundwater from flowing to the surface and prevents its conservation for drought periods. In this sense the water market has not been sufficient to trigger the adoption of water saving technology at the supply level.