The Energy-Water Nexus in Iran: The
Political Economy of Energy
Subsidies for Groundwater Pumping
Tinoush Jamali Jaghdani
and Vasyl Kvartiuk
Abstract
The depletion of groundwater resources due to
irrigation water pumping in Iran has become a
serious problem that threatens both rural life
and sustainable development in the country.
The latest estimates show that 70% of groundwater resources have been overexploited over
the last 15 years. The number of deep and
shallow wells used for groundwater irrigation
almost doubled in the last decade, reaching
more than one million, which includes both
permitted and non-permitted wells. Skyrocketing water consumption has become one of the
primary reasons behind the devastation of
groundwater resources. Cheap energy, resulting from energy subsidies, which have been
provided for many years, made deep water
pumping possible and huge investments in
deepening and relocating wells feasible. This
study focuses on the Iranian government’s
unsuccessful attempt to reform its subsidy
policy in December of 2010 when they tried
to phase out energy subsidies for groundwater
pumping, however, they only did so for
domestic and industrial consumers but failed
to do so for the agricultural sector. We discuss
the political economy of implementing these
reforms using the World Bank’s framework for
policy reforms analysis. This overview study
argues that the political overrepresentation of
rural interests in Iranian politics impeded a
successful reform implementation. Negative
economic shocks to the Iranian rural economy
may be counteracted by developing adjustment
strategies that promote alternative livelihoods
for residences of rural areas. Neglecting the
political economy surrounding Iranian energy
subsidies may further delay reform implementation and lead to further water depletion.
Keywords
Energy subsidies Á Groundwater depletion Á
Irrigation water Á Political economy Á Price
reform
1 Introduction
Adopted by the United Nations in 2015, the
Sustainable Development Goals (SDGs) are a
universal call to action to end poverty, protect the
planet, and ensure that all people enjoy peace and
The original version of this chapter was revised:
Incorrect sentence in this chapter has been corrected.
The correction to this chapter is available at https://doi.
org/10.1007/978-3-030-57530-4_16
T. Jamali Jaghdani (&) Á V. Kvartiuk
Leibniz Institute of Agricultural Development in
Transition Economies (IAMO), Theodor‐Lieser‐Str. 2,
06120 Halle (Saale), Germany
e-mail: jaghdani@iamo.de
V. Kvartiuk
e-mail: kvartiuk@iamo.de
© Springer Nature Switzerland AG 2021, corrected publication 2021
S. Hülsmann and M. Jampani (eds.), A Nexus Approach for Sustainable Development,
https://doi.org/10.1007/978-3-030-57530-4_8
107
Political Economy of Energy
Subsidies for Groundwater Pumping
Tinoush Jamali Jaghdani
and Vasyl Kvartiuk
Abstract
The depletion of groundwater resources due to
irrigation water pumping in Iran has become a
serious problem that threatens both rural life
and sustainable development in the country.
The latest estimates show that 70% of groundwater resources have been overexploited over
the last 15 years. The number of deep and
shallow wells used for groundwater irrigation
almost doubled in the last decade, reaching
more than one million, which includes both
permitted and non-permitted wells. Skyrocketing water consumption has become one of the
primary reasons behind the devastation of
groundwater resources. Cheap energy, resulting from energy subsidies, which have been
provided for many years, made deep water
pumping possible and huge investments in
deepening and relocating wells feasible. This
study focuses on the Iranian government’s
unsuccessful attempt to reform its subsidy
policy in December of 2010 when they tried
to phase out energy subsidies for groundwater
pumping, however, they only did so for
domestic and industrial consumers but failed
to do so for the agricultural sector. We discuss
the political economy of implementing these
reforms using the World Bank’s framework for
policy reforms analysis. This overview study
argues that the political overrepresentation of
rural interests in Iranian politics impeded a
successful reform implementation. Negative
economic shocks to the Iranian rural economy
may be counteracted by developing adjustment
strategies that promote alternative livelihoods
for residences of rural areas. Neglecting the
political economy surrounding Iranian energy
subsidies may further delay reform implementation and lead to further water depletion.
Keywords
Energy subsidies Á Groundwater depletion Á
Irrigation water Á Political economy Á Price
reform
1 Introduction
Adopted by the United Nations in 2015, the
Sustainable Development Goals (SDGs) are a
universal call to action to end poverty, protect the
planet, and ensure that all people enjoy peace and
The original version of this chapter was revised:
Incorrect sentence in this chapter has been corrected.
The correction to this chapter is available at https://doi.
org/10.1007/978-3-030-57530-4_16
T. Jamali Jaghdani (&) Á V. Kvartiuk
Leibniz Institute of Agricultural Development in
Transition Economies (IAMO), Theodor‐Lieser‐Str. 2,
06120 Halle (Saale), Germany
e-mail: jaghdani@iamo.de
V. Kvartiuk
e-mail: kvartiuk@iamo.de
© Springer Nature Switzerland AG 2021, corrected publication 2021
S. Hülsmann and M. Jampani (eds.), A Nexus Approach for Sustainable Development,
https://doi.org/10.1007/978-3-030-57530-4_8
107