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[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.]
Published: Nov 11, 2020
Keywords: Energy subsidies; Groundwater depletion; Irrigation water; Political economy; Price reform
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