ABSTRACT
Over-withdrawing groundwater, coupled with the destructive impacts of climate change and reduced recharge in hot-arid regions near desert plains, has significantly depleted strategic groundwater reserves. In light of these challenges, developing a national water resource management strategy requires the implementation of organized measures to regulate groundwater exploitation behavior. Therefore, these issues have highlighted the need for alternative criteria in managing the optimal use of water resources, which are grounded in the realities of economic decision-making by stakeholders. This study reviews common economic theories related to the management of common resources, with a particular focus on behavioral economics, to explore potential solutions for managing groundwater reserves effectively. It examines the role of government and economic factors in influencing social interactions related to water consumption. The findings suggest that, within the behavioral economics framework, interventions to control water exploitation should be indirect, emphasizing the identification and management of cognitive limitations and time inconsistencies in the decision-making of policymakers. This approach not only enhances the cost-effectiveness of water conservation programs but also fosters greater stakeholder participation, ultimately leading to more sustainable water management practices. Therefore, it is recommended that management regulations be clear, transparent, and enforceable over the planning horizon, with efforts to identify and mitigate behavioral biases in stakeholder decision-making. From the perspective of behavioral economics, such an approach can significantly boost stakeholder engagement and improve the overall effectiveness of the policy.
EXTENDED ABSTRACT
Introduction
Despite the limitations in water resource renewal, conservation techniques such as improved tillage practices and the introduction of drip irrigation have been implemented in recent years. These efforts have contributed to the expansion of greenhouse cultivation and improved water use efficiency. However, the behavior of groundwater users, particularly within the framework of agricultural policies (excluding production efficiency), has not been notably successful in curbing water consumption. For example, while Tehran province has the largest area of greenhouse cultivation in the country (22.9%), all plains within the province are currently in a critical state. In practice, water efficiency regulations have often been interpreted and adjusted in ways that prioritize increasing the cultivated area and maximizing the immediate income of farmers, rather than sustainable water management. As a result, despite regulatory laws and water efficiency measures, more than 60% of the country’s plains are now in critical condition. Data from the Iranian Water Resources Management Company indicate that from 2002 to the present, the discharge capacity of qanats and springs has decreased by 42% and 47%, respectively, while the number of officially drilled wells (both deep and semi-deep) has increased by over 70%. This is occurring despite the fact that the average annual recharge of underground water and aquifers in the country is estimated at 55 billion cubic meters, while extraction has reached 80 billion cubic meters annually, leading to an over-extraction of 25 billion cubic meters per year. The consequences of this include the intrusion of saline water, a decline in groundwater quality, and a further environmental and agricultural challenges in the region. Policymakers have recognized the risk of a water crisis for decades, and laws were enacted to empower institutions overseeing water distribution. However, regional water bodies have largely failed to protect groundwater, and a law allowing unregulated well harvesting has exacerbated the issue. This law has not significantly mitigated the pressure on groundwater resources. This article seeks to address a crucial question within the frameworks of classical and behavioral economics: How can the management of groundwater resources be improved, and what existing theories can inform the effective management of these resources? The following sections will explore these issues in detail.
Materials and methods
This section utilizes economic literature to examine the behavior associated with the exploitation of groundwater resources. It begins with a review of common economic theories relevant to resource management and then focuses on the psychological perspective offered by behavioral economics. The analysis will emphasize the management of underground resources, exploring how government and economic factors shape social interactions and influence water consumption patterns. This section utilizes economic literature to examine the behavior associated with the exploitation of groundwater resources. It begins with a review of common economic theories relevant to resource management and then focuses on the psychological perspective offered by behavioral economics. The analysis will emphasize the management of underground resources, exploring how government and economic factors shape social interactions and influence water consumption patterns.

Results and discussion
The exploitation of groundwater resources presents challenges because these resources do not exhibit the characteristics of private commodities and are inherently inseparable. Without appropriate intervention and monitoring, the quantitative and qualitative availability of these valuable reserves is at risk. This article reviews existing policies in the economic literature concerning the management of groundwater resources. The findings, derived from a comprehensive literature review and empirical experiences, suggest that the behavioral economics approach, which builds upon neo-classical economics, is more efficient and preferable for water policy. This approach accounts for the psychological aspects of water consumption behavior and incorporates more realistic assumptions about consumer decision-making compared to classical methods.

Conclusion
Effective groundwater management requires the design of laws and regulations, alongside protective measures such as aquifer replenishment through water recycling, purification, and the construction of artificial ponds. These policies should be implemented through indirect interventions to maintain user autonomy and improve government cost efficiency. It is also essential to consider the uncertainties in decision-making processes, such as time inconsistency and cognitive limitations of economic actors, including policymakers. To address these challenges, explicit, transparent, and binding laws should be developed and enforced, with efforts to identify and counteract behavioral biases. By adopting a behavioral economics approach, stakeholder engagement can be improved, leading to more effective water management policies.Effective groundwater management requires the design of laws and regulations, alongside protective measures such as aquifer replenishment through water recycling, purification, and the construction of artificial ponds. These policies should be implemented through indirect interventions to maintain user autonomy and improve government cost efficiency. It is also essential to consider the uncertainties in decision-making processes, such as time inconsistency and cognitive limitations of economic actors, including policymakers. To address these challenges, explicit, transparent, and binding laws should be developed and enforced, with efforts to identify and counteract behavioral biases. By adopting a behavioral economics approach, stakeholder engagement can be improved, leading to more effective water management policies.