A senior spokesman for Iran’s water sector has warned that the hidden subsidies for water have become a serious problem for the entire industry.
In an interview with IRNA, he noted that water supplied to agriculture, drinking and industrial sectors is sold at government-set prices far below its real cost. The subsidies currently directed through water are not strictly for water itself but effectively support agriculture and domestic consumption.
Another expert, a researcher in water economics, elaborated that while debate often focuses on hidden energy subsidies, the water sector’s hidden subsidies have attracted far less attention.
He estimated that Iran spends roughly $15 billion annually on water—about $10 billion for agriculture and $5 billion for drinking water and other uses. According to this expert, water subsidies for industry may approximate the economic value of supplied water, but in agriculture and drinking water supply, that balance does not exist.
In fact, subsidies to agricultural water use amount to as much as five times the official national water budget, signifying a major distortion in water-related economics.
This system of deep subsidies distorts consumption patterns, encourages waste and drains public resources. Independent analysts have estimated that the water sector in Iran receives staggering hidden subsidies—on the order of around $2.17 billion annually—due to the gulf between actual cost and government-set prices.
The implications are far-reaching: the nation risks over-exploiting its scarce freshwater resources, undermining long-term sustainability, while the water industry remains financially unsustainable, accruing massive debts and unable to reinvest in maintenance and water-saving infrastructure.
If pricing reforms and efficient water-management policies are not implemented, Iran may face not just an environmental crisis but a collapse in agricultural productivity and public-finance sustainability. Without acknowledging the true value of water, the subsidies meant to support livelihoods may instead erode them irreversibly.
