Iran’s Water Pressure: Droughts, Floods and a Looming Crisis

Xander Sneider.

Summary

Iran has long struggled to manage its paltry water resources. As Tehran wrestles with the effects of decadeslong drought and record flooding, it’s clear that the way Iran accesses and uses its water resources adds yet another problem the already overstretched regime will have to deal with. This Deep Dive will examine how Iran got here, the scale of the challenge it faces, what possible solutions it may pursue, and the implications for the regime.

Iran’s water problem is intensifying. While the country is by no means a stranger to floods, record-high rainfall in March and April this year caused major flooding in several provinces that led to nearly 100 deaths, $10 billion in damage and significant political costs, to boot. Iran’s Supreme Leader Ayatollah Ali Khamenei approved the use of funds from Iran’s sovereign fund (which are usually reserved for infrastructure and other long-term projects) to support relief efforts. As often happens in arid climates, Iran is simultaneously dealing with a nationwide, decadeslong drought – approximately 40 percent of the country is experiencing severe drought. This only exacerbates the floods; the parched ground cannot absorb water fast enough during periods of intense rainfall. On top of all this, the regime’s water policies have led to overexploitation of the country’s already limited groundwater resources.

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As the drought drags on, it’s causing political problems for the regime. Large-scale nationwide protests broke out in December 2017 and lasted through early 2018, and since then, protests over polluted water and water shortages have continued across the country. More and more Iranian farmers, unable to irrigate their crops, have left rural provinces to find work in cities, meaning ever-growing numbers of angry Iranians are congregating in the country’s urban centers.

Tehran is going to have to come to terms – and quickly – with the realities begotten of its decades of poor water management and an unfavorable climate that will only get worse. The regime has a few options available, all of which will be costly and difficult to implement. Continuing on its current course, however, could be catastrophic for Iran.

Managing Water in an Unfavorable Climate

Iran has several climate zones that are shaped by the country’s location and geography. Its two main mountain ranges, the Alborz and Zagros, prevent moisture from reaching the interior of the country, thereby dissecting it into multiple climate zones ranging from arid to subtropical. As such, temperatures across Iran can range from minus 20 degrees Celsius to 50 degrees Celsius (minus 4 to 122 degrees Fahrenheit); precipitation ranges from less than 50 millimeters to more than 1,000 millimeters (2 to 40 inches) per year. The country’s average precipitation, at 250 millimeters per year, is about a third of the global average. But most of the country receives even less – under 100 millimeters per year.

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Despite this variation, approximately 85 percent of the country is arid or semi-arid, which means that it has relatively little arable land. What land can support crops is found primarily in the north, along the Caspian Sea, and in the northwest, which has a Mediterranean climate. Between its lack of land and insufficient water supplies, Iran has a limited ability to feed its own people.

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The country has struggled with its scant water resources since the days of ancient Persia. Those civilizations managed to build grand empires fed by advanced hydraulic infrastructure. For example, beginning more than 2,000 years ago the Persians constructed a system of wells, known as qanats, that tapped into deep underground reserves, as well as a system of pipelines, canals, aqueducts and dams to store and transfer water to the parts of the country that needed irrigation for crops.

But modern Iran’s population of 81 million and its accompanying water needs have led to overexploitation of its water resources. This is especially true of its groundwater – that is, water found underground in soil or in cracks and gaps in rocks. Because of Iran’s limited rainfall, groundwater is for many regions the only way crops can be irrigated. Groundwater accounts for more than 55 percent of Iran’s total water consumption, and 92 percent of water consumed in Iran is used for agriculture, compared to approximately 70 percent in many other countries. Yet from 2000-09, Iran’s rate of groundwater depletion doubled compared to 1960-2000, driven by both declining precipitation and the government’s self-sufficiency policies.

Following the 1979 revolution, the new regime pushed a policy of national food self-sufficiency, which involved producing enough staple crops to meet the country’s own needs instead of relying on imports. Strategically, this made sense; Iran wanted to decrease its dependence on the outside world at a time when it was importing approximately 65 percent of the country’s food. In practice, however, the policy encouraged farmers to plant water-thirsty crops, most notably wheat, which is now grown on roughly 60 percent of Iran’s arable land and which is heavily dependent on groundwater. Groundwater extraction is expensive and energy-intensive, so encouraging self-sufficiency meant that the regime had to offer subsidies to farmers for both water and electricity to make planting and growing wheat affordable.

Those policies have persisted. The Baker Institute, a public policy think tank at Rice University, estimates that Iranian farmers still pay for only about 5 percent of the electricity their wells use to pump groundwater for irrigation. Further, the government guarantees wheat prices for a substantial portion of the country’s crop, providing both an incentive and safety net for farmers at a great cost to the government. In 2016, for example, the government purchased 85 percent of Iran’s wheat at guaranteed prices. Still, Iran manages to produce about 66 percent of its own food.

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As is so often the case with subsidized inputs of production, the low-cost water and energy led to overexploitation of groundwater. At the current rate of depletion, 25 percent of Iran’s groundwater cannot be replenished by natural sources, and 12 of Iran’s 31 provinces are expected to completely exhaust their aquifers within 50 years. What’s more, former Agriculture Minister Isa Kalantari claimed that Iran also uses approximately 97 percent of its surface water. That’s compared to Japan’s 19 percent, the United States’ 21 percent, China’s 29 percent and India’s 33 percent, although Iran has only slightly fewer cubic meters of surface freshwater per person than China and more than India. It’s also despite the fact that the total area in Iran equipped for surface water irrigation declined by 15 percent from 1993 to 2007. During this period, land area irrigated by groundwater increased by 39 percent, and wheat production increased by 50 percent. As surface water has become less available, more farmers have begun drilling illegal wells to tap into groundwater to support their business, further accelerating the groundwater depletion rate.

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Making matters worse, Iran has also overinvested in dams relative to other types of water infrastructure. The Islamic Revolutionary Guard Corps, which is enmeshed in Iran’s economy and particularly the construction industry, seems to have lobbied successive governments to build dams. However, many of the dams appear to be of poor quality, and much of the water they’re supposed to store evaporates or leaks back into the ground before it can be used. The focus on dams has also been at the expense of investment in other infrastructure like irrigation systems, drainage networks and artificial watersheds, which together would increase the efficiency of water storage and use. Indeed, when President Hassan Rouhani first came to power, he halted the construction of 14 dams, instead favoring the construction of pipelines that would limit evaporation. Still, as we’ll review in depth later, the other options that the Iranian government has at its disposal all face significant challenges as well.

A Hotter, Drier Future

Iran’s already harsh climate and the government’s poor water management are compounded by a bleak forecast for precipitation in the country and temperature rises, and its remaining resources are already paying the price.

Take Lake Urmia, for example. At one point, the lake measured 5,000 square kilometers (1,930 square miles) – the second-largest lake in the Middle East after the Caspian Sea. (That is, if you consider the Caspian to be a lake; more on this later.) But declining precipitation since the 1970s, along with the government’s diversion of the tributaries that feed the lake and the digging of thousands of illegal wells, led to an 80 percent reduction in Urmia’s water levels. Recent rainfall has helped the lake recover some of its surface area, but it’s now hovering at around 3,000 square kilometers.

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While the Iranian government is finally taking steps to limit Lake Urmia’s depletion, there’s not much it can do to halt the shifts in Iran’s climate patterns, which will affect far more than just the water levels of one lake. Diminished rainfall and higher temperatures will contribute to more extreme periods of drought, putting additional pressure on the country’s water supply and the regime’s ability to manage the fallout.

There’s some variation in forecasts of rainfall in Iran over the next 20 years, but most show a decline in nationwide average precipitation, while some show a substantial decline (up to 35 percent). The few forecasts that show little change on a national level predict meaningful changes at a regional level, indicating that the arid regions will get drier even if the northwest sees a slight increase in precipitation. There’s broad agreement, however, that Iran will see an increased frequency in extreme weather conditions – in both precipitation and temperature.

Temperatures in Iran are broadly expected to increase by 1.1 degrees C to 2.5 degrees C by the middle of this century, and by up to 7.9 degrees C by 2100. The frequency and length of heat spells will also increase, which will lead to longer droughts. This, in turn, will result in more evaporation of surface water and a shrinking amount of arable land that can be irrigated by rainfall rather than groundwater. Iran’s farmers will be forced to tap further into already drained groundwater, creating a risk of depleting it entirely. At present, over 50 percent of the area used for wheat cultivation is in water-scarce sub-basins. The combination of increased groundwater exploitation and declining precipitation could reduce aquifer recharge in eastern Iran by 50-100 percent.

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Research also shows that the frequency of heat waves in Iran and West Asia will climb by up to 30 percent. As heat waves become longer, hotter and more frequent, parts of Iran (along with the Middle East and North Africa more broadly) will become uninhabitable. A 2015 Massachusetts Institute of Technology paper predicted that in the following 30 years, temperatures in the Persian Gulf, including Iran, would exceed the threshold for human habitability. Jos Lelieveld, director of the Max Planck Institute for Chemistry and a professor at the Cyprus Institute, agrees, saying that “prolonged heat waves and desert dust storms [resulting from both heat and drought] can render some regions uninhabitable.” NASA scientist Benjamin Cook said that an increase in temperatures and drought could create severe food scarcity in the region. Such research seems to broadly corroborate a claim by Kalantari, who is now serving as the head of Iran’s Department of Environment, that by the middle of the century Iran’s water resources may be so diminished that 50 million Iranians – a whopping 70 percent of the population – will be forced to flee the country.

The frequency of short periods with intense rainfall is also expected to increase. This coupled with long periods without rain will make dry areas increasingly prone to flooding and, therefore, less habitable. This will especially be the case in Iran’s arid climate zones, which may contribute to a greater prevalence of uninhabitable living conditions.

The combination of drought, dwindling water resources, extreme heat and declining rainfall will intensify internal migration from rural areas to urban centers, with the attending political implications. Frustration with the regime’s handling of water is already widespread and has led to protests in affected regions. That frustration won’t fall away as people move into the cities; rather, the number of unemployed or underemployed Iranians angry at the regime will only grow and become concentrated in urban areas.

Syria: An Analogue

The Iranian government, in trying to understand the net political effect of this internal migration, might do well to look to Syria. The regime of Hafez Assad, who led Syria from 1971 to 2000, also instituted food self-sufficiency policies, encouraging agricultural production by providing fuel subsidies to make it easier for farmers to access groundwater. This led to a substantial decline in Syria’s groundwater resources, making rural communities more vulnerable to inevitable droughts. When Hafez’s son, Bashar Assad, came to power, he implemented a number of liberalization measures to reform the Syrian economy. Among other goals of these reforms, Bashar hoped to end his father’s fuel subsidies – in part to curb overexploitation of groundwater.

But then drought struck. In fact, between 2007 and 2010 Syria experienced its worst drought in recorded history; 2008 was its driest year on record. It decimated the production of small- and medium-scale farmers. Many livestock herds were completely destroyed. Bashar Assad’s government, however, kept its reform policies in place, exacerbating farmers’ lack of access to water.

As a result, as many as 1.5 million rural Syrians were forced to move to urban centers like Damascus and Aleppo, crowding into the cities’ peripheries and putting pressure on already strained services and infrastructure. School attendance in Syria’s northeast fell by 80 percent as families with children, who were increasingly suffering from malnutrition, relocated. As food production fell, food and livestock feed prices increased, in some cases by double or more, making an already difficult living situation for many Syrians untenable. Syria was forced to import large quantities of wheat for the first time since it declared itself self-sufficient in wheat production in the mid-1990s.

By early 2011, Syrians had taken to the streets, in part to show their frustration with the drought and their dissatisfaction with the government’s response.

The similarities with Iran are striking: Exhaustion of groundwater driven in part by government policies to achieve food self-sufficiency made rural communities particularly vulnerable to changes in climate patterns. When an unprecedented drought struck, anti-government sentiment spread but was concentrated in the cities as millions of rural Syrians were forced to migrate. Forecasts here are not needed – this is already happening in Iran.

Problematic Propositions

The scale of the water challenge facing Iran paints a bleak picture. Iran has a handful of options that it can pursue, but each has limitations.

Increase food imports

Iran may have to turn away from its agricultural policies promoting self-sufficiency and import more food instead. This is the path taken by Saudi Arabia, which realized that using its meager water resources to cultivate grains in the desert was unsustainable.

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But Iran couldn’t accomplish this without some challenges. First, far more Iranians are employed in agriculture than Saudis – roughly 18 percent compared to Saudi Arabia’s 5 percent (even when Riyadh was still pursuing self-sufficiency, that figure was only 8 percent). Second, while both the Iranian and Saudi economies are highly dependent on oil exports, Iran is under serious sanctions pressure from the international community. This limits foreign currency inflows, resulting in a vulnerable and weak rial that makes imports exceptionally costly. Already there have been reports of food rationing in Tehran, and the regime has been forced to subsidize staple foods.

If Iran moves away from self-sufficiency, it will likely need to limit subsidies to farmers. That could put it on a trajectory similar to Syria’s, risking the kind of large-scale internal migration and dissatisfaction that contributed to the outbreak of the Syrian civil war.

Increase water desalination

Faced with limited freshwater resources, Iran has been desalinating water from the Persian Gulf for several decades. Still, it’s a small quantity, meant to provide drinking water for urban populations. It doesn’t address the underlying issue of overuse by the agricultural sector – which, recall, accounts for over 90 percent of water consumption in Iran.

Desalination is also an energy-intensive process. The Baker Institute estimates that, if Iran were to increase its production of desalinated water to irrigate 10 percent of its wheat crop, it would have to redirect roughly 10 percent of its gas supply to desalination. This would be costly, of course. And since the majority of Iran’s electricity is generated from natural gas, redirecting these resources to desalination may also risk exposing certain regions of the country to electricity shortages. That’s a risky proposition for the regime, given that power shortages have already sparked protests in regions like Khuzestan.

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Further, this approach would complicate Iran’s energy trading. It would cut the amount of natural gas available for export, reducing the already sparse flow of foreign reserves into Iran and weakening the rial. And any diminished generation capacity would curtail Iran’s ability to export electricity; last year, protests broke out in the Iraqi city of Basra when the city’s supply of Iranian electricity fell. With the U.S. and Iran competing for influence in Iraq, this would be another blow to Iran’s ability to project power.

The Baker Institute estimates that building the capacity required to supply enough water for just 1 percent of Iranian wheat would require $1.4 billion in investment in desalination plants. But beyond the immediate cost of the desalination process, Iran would also need to build infrastructure to transport seawater from the Persian Gulf to inland agricultural zones. This would require additional energy to pump water over the mountains that separate Iran’s Gulf coast from the rest of the country.

Anyone familiar with Iran’s current fiscal circumstances will know that, between Iran’s estimated $10 billion in lost revenue since November and the country’s burgeoning defense costs, the regime isn’t exactly flush with the kind of cash needed to pursue this route.

Exploit Caspian Sea resources

In December 2018, Iran decided to move forward with a plan to build a pipeline to carry water from the Caspian Sea to the northern province of Semnan. The proposed pipeline would transport 200 million cubic meters of water from the Caspian each year for drinking and industrial use. Like the water from the Persian Gulf, it would have to be desalinated. Rouhani’s administration has reportedly set aside $1.2 billion for the initial phase of the project.

This isn’t a new idea – in 2012, former President Mahmoud Ahmadinejad suggested refilling Iranian reservoirs from the Caspian Sea. The IRGC was supposed to build the required infrastructure, but the project was met with such stiff resistance from Iranian lawmakers and environmental officials that it was tabled until last year. But the resistance didn’t dissipate, and lawmakers from the Caspian-adjacent Mazandaran province have vowed to end the project, saying it is impractical and would damage the region’s economy and ecology. For now, however, it appears to be moving forward.

At present, the planned pipeline will only service three Semnan province cities – Damghan, Shahroud and Semnan. Of course, Iran could attempt to expand this infrastructure to carry water from the Caspian to regions across Iran, especially to more drought-prone areas. But, like building out infrastructure to carry desalinated water inland from the Persian Gulf, it would be expensive. And, unlike Persian Gulf desalination, there’s no existing infrastructure to build upon.

If Iran should come to depend too heavily on desalinated water from the Caspian Sea, it could cause the sea to drain. As it is, the Caspian Sea’s water level has been declining since 1995 as incrementally warmer summers increase the rate of evaporation. Further, it could raise the question of whether Iran even has the right to draw the Caspian’s water. Territorial disputes over the Caspian have existed since the fall of the Soviet Union. Up to that point, Iran and the Soviet Union had treated the Caspian like a lake, with rights to it split between the two. But three new states were born on its shores, each claiming rights to the sea and its hydrocarbon resources. Iran must now contend with Russia, Azerbaijan, Turkmenistan and Kazakhstan for rights to the Caspian.

At the core of the dispute is whether the Caspian is legally a sea or a lake. If it’s a lake, resources would have to be split evenly between its littoral states. If it’s a sea, then in theory, it would be subject to the jurisdiction of the U.N. Convention on the Law of the Sea and would be divided roughly based on the length of each country’s shoreline. In August 2018, the Caspian’s five littoral states reached an agreement that solved, after nearly three decades, some of these disputes. For example, they agreed to treat the surface water of the Caspian as a sea. But the accord did not establish how the seabed and subsoil should be divided. Subsoil boundaries, in particular, are central in determining which country controls the hydrocarbon reserves.

So, if Iran were to begin draining the Caspian, other littoral states may take issue. Since most of the Caspian’s freshwater inflows come from the Volga River, it’s easy to imagine Russia objecting and redirecting the Volga (as it did with the rivers that fed the Aral Sea) to limit the amount of water Iran would have to draw from. This would also increase the Caspian’s salinity, requiring a more intensive desalination process. Iran’s use of the water could also set a precedent, encouraging other states on the Caspian to begin transferring water for their own use.

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Increase investment in different types of water infrastructure; liberalize water and energy prices

Lastly, Iran could attempt to implement a number of far-reaching policies that environmental scientists and ecologists from Iran and abroad have advocated.

Some examples include limiting urban growth rates, modernizing agricultural methods to increase water use efficiency, and lifting water and energy subsidies. Of course, modernizing an entire industry is not easy or cheap, and Iran is cash-strapped. And if Iran were to lift subsidies on water and fuel without providing a commensurate offset that allows farmers to produce at similar levels with fewer inputs, then the country would risk following Syria down its deleterious path.

Between Iran’s persistent drought, decades of poor water management and the continuation of extreme weather patterns – not to mention the challenges it is facing on the international front and the effects of sanctions – Iran has shrinking resources available to deal with its mounting water problem. And financial constraints are just one of the consequences carried by any of the possible solutions to the water crisis. The compounding effects are making not only the regime but the entire country vulnerable to any new pressures, external and internal, that may arise. The outlook for Iran’s water supplies – and its accompanying economic and political fallout – is looking bleak.

Posted on Geopolitical Futures June 2019.

Xander Snyder

Xander Snyder is an analyst at Geopolitical Futures. He has a diverse theoretical and practical background in economics, finance and entrepreneurship. As an investment banker, Mr. Snyder worked in corporate debt origination and later in a consumer-retail industry group at Guggenheim Securities, participating in transactions ranging from mergers and acquisitions, equity and debt capital raises, spin-offs and split-offs to principal investing and fairness opinions. He has worked on more than $4 billion worth of transactions. He subsequently co-founded and served as CFO for Persistent Efficiency, an energy efficiency company that used cutting-edge technology to create a new type of electricity sensor for circuit breakers and related data services. In his role, he was responsible for raising more than $1.5 million in seed capital and presented to some 70 venture capital and angel investors in the process. He also signed four Fortune 500 companies as customers, managed all aspects of company accounting, budgeting and cash flow, investor relations, and supply chain and inventory management. In addition to setting corporate strategy, he helped grow the company from two people to a 12-person team. As an independent financial consultant, Mr. Snyder wrote an economics publication for a financial firm that went out to more than 10,000 individuals and assisted in deal sourcing for a real estate private equity fund. He is an active real estate investor and an occasional angel investor. Mr. Snyder received his bachelor’s degree, summa cum laude, in economics and classical music composition from Cornell University.

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