Investigating the potential of groundwater recycling as an alternative to groundwater trading in terms of resource efficiency

Water and in particular groundwater is undoubtedly a natural resource of fundamental importance to humanity. However, their limited availability and the large increase in demand observed in recent years call for its optimal management. In this context, tradable water rights systems and the circular economy of water, which promotes water recycling, are two concepts on which management policies towards sustainable and efficient water management can be based. This paper attempts to highlight the potential that a management policy based on the circular economy of water can have against a policy based on tradable water rights in terms of economic efficiency of the resource. Thus, the research hypothesis of this paper is that under certain conditions water recycling can lead to higher economic efficiency for the resource than water trading can. For this purpose, two time-dynamic models are formulated, one for each different management policy, concerning the pumping of water from an aquifer by two different categories of users, and the corresponding optimal control problems are solved. The results of the simulations based on hydro-economic data of a region in Northern Greece show that there is a high dependence of the efficiency of the water recycling system on the recycled water tariff. Thus, it is concluded that for charging prices up to and beyond 0.20€/m3 a management policy of an aquifer based on the concept of circular economy can lead to a higher economic efficiency of water.