Who gains from saving nature
Ledger 1 : 33 — For each dollar financing nature-based solutions in 2023, about $33 financed activities harmful to nature. (UNEP)
Cases / Water use · Iran · 2014–2024

Electricity and diesel for groundwater pumping in Iran: subsidies and payments

Nature's voice · report
Half of the water withdrawn for irrigation comes from me, leading to overexploitation and depletion, according to the World Bank (2023).
Did nature suffer? Yes. Harm is on record.
Recorded
  • Heavily subsidized energy and water keep agricultural use of my aquifers high, according to Noori et al. (2021). PNAS 118(25) (Noori et al.)
What the record lacks: 5 none on record · 1 not disclosed · 1 not measured See the gaps

The IMF estimated Iran's explicit energy subsidies at US$58.7 billion in 2019, almost 10% of GDP, according to the World Bank. Programmes to electrify diesel-powered agricultural wells were estimated at US$1.2 billion in 2019, and in 2024 the state utility Tavanir began paying farmers to cut pumping at peak hours.

US$58.7bn estimateExplicit energy subsidies in Iran, 2019 (IMF estimate via World Bank)
Almost 10% of GDP. No figure for the share attributable to groundwater pumping is on record.

Status As of June 2024: Tavanir was paying farmers about 2,500 toman per kWh saved at peak hours; no quantified subsidy for groundwater pumping, court case or insurance is on record.

What?
Iran subsidised electricity and diesel for agricultural wells and, from 2019, funded programmes to electrify diesel wells and later to pay farmers to cut peak-hour pumping; the World Bank and a peer-reviewed study link subsidised energy to groundwater over-extraction. World Bank
Where?
Agricultural wells nationwide. EghtesadOnline
When?
Smart metering from 2014; subsidy figures for 2017 and 2019; electrification agreement October 2019; Majlis funding order 2021; peak-hour payments June 2024. EghtesadOnline
Who?
Gained
  • Farmers operating agricultural wells — Subsidised electricity and diesel; payments of about 8–10 million toman per typical well under the 2024 scheme Ecoiran
  • Iran Fuel Conservation Company and Tavanir — Parties to the October 2019 agreement to electrify 75,000 diesel wells at an estimated US$1.2 billion EghtesadOnline
Lost
  • Public budget and utilities — Explicit energy subsidies of US$58.7 billion in 2019, almost 10% of GDP World Bank
Harmed
  • Iran's aquifers — Half of irrigation withdrawals come from groundwater, leading to overexploitation and depletion (World Bank, 2023) World Bank
Why?
Subsidised energy and water keep agricultural use high (Noori et al., 2021); the electrification programme was justified as a diesel saving and the 2024 scheme as load management. PNAS 118(25) (Noori et al.)
How?
Underpriced electricity and diesel, electrification of diesel wells, smart meters, and payments of about 2,500 toman per kWh saved at peak hours. Ecoiran
6 of 6 questions answered from the record

What happened

The record, in order.

The World Bank's Iran poverty diagnostic (Poverty Global Practice, Middle East and North Africa, November 2023) stated: "The IMF estimated that explicit energy subsidies amounted to US$58.7 billion in 2019, almost 10 percent of GDP." It reported that irrigation accounts for "as much as 92 percent of water withdrawals" and that "Half of these withdrawals come from groundwater, leading to overexploitation and depletion". It cited Taheripour et al. (2020) for the finding that a 20% cut in water supply could reduce GDP by up to 7.2% against 2016.

EghtesadOnline, citing International Energy Agency data on 5 October 2019, reported that Iran paid about US$45 billion in energy subsidies in 2017, of which US$12.3 billion for electricity and US$16.5 billion for oil products. Noori et al. (PNAS, 2021) stated that "heavily subsidized energy and water" keep agricultural use high.

In October 2019 Tavanir and the Iran Fuel Conservation Company agreed to electrify 75,000 diesel-powered farming wells at an estimated cost of US$1.2 billion, with a claimed saving of 750 million litres of diesel a year; Deputy Energy Minister Homayoun Haeri said the saved diesel could be exported at 30 cents per litre. The article reported smart meters on 100,000 agricultural wells by 2018. In March 2021 EghtesadOnline reported that the Majlis had ordered the Central Bank to provide US$80 million, via commercial banks, to Tavanir for electrifying agricultural wells.

In June 2024 Tavanir's chief executive, Mostafa Rajabi Mashhadi, described a scheme under which farmers who cut power during five summer peak hours receive free electricity for the other 19 hours, and Tavanir buys the saved electricity at about 2,500 toman per kWh, described as four times the supply cost; each typical well could receive about 8–10 million toman. Wells with 80% solar supply were exempt from load management (Ecoiran, 17 June 2024).

  1. 2014Smart metering phase 1 on agricultural wells begins
  2. 2017Iran pays about US$45 billion in energy subsidies, per IEA data cited in 2019
  3. 2018Smart meters reported on 100,000 agricultural wells
  4. 2019IMF estimate of US$58.7 billion explicit energy subsidies; Tavanir–Iran Fuel Conservation Company agreement to electrify 75,000 diesel wells (Oct)
  5. 2021Majlis orders the Central Bank to provide US$80 million to Tavanir for electrifying agricultural wells (6 Mar)
  6. 2024Tavanir scheme paying farmers to cut pumping at peak hours (17 Jun)

What was said

Claims, in the words of those who made them.

“The IMF estimated that explicit energy subsidies amounted to US$58.7 billion in 2019, almost 10 percent of GDP.”

World Bank, Iran poverty diagnostic · November 2023 · World Bank

“Half of these withdrawals come from groundwater, leading to overexploitation and depletion.”

World Bank, Iran poverty diagnostic · November 2023 · World Bank

“heavily subsidized energy and water”

How it looked

What was shown, beside what was recorded.

Shown

  • Electrifying 75,000 diesel wells was presented as saving 750 million litres of diesel a year, which could be exported at 30 cents per litre.
    Deputy Energy Minister Homayoun Haeri (EghtesadOnline, 5 October 2019) · EghtesadOnline
  • The peak-hour payment scheme was presented as load management, with saved electricity bought at about four times the supply cost.
    Tavanir CEO Mostafa Rajabi Mashhadi (Ecoiran, 17 June 2024) · Ecoiran

Recorded

  • Explicit energy subsidies of US$58.7 billion in 2019, almost 10% of GDP (IMF estimate via World Bank).
    World Bank
  • Irrigation accounts for as much as 92% of water withdrawals, half of them from groundwater.
    World Bank
  • About US$45 billion in energy subsidies in 2017: US$12.3 billion for electricity and US$16.5 billion for oil products (IEA data via EghtesadOnline).
    EghtesadOnline
  • Agreement to electrify 75,000 diesel farming wells at an estimated US$1.2 billion; US$80 million ordered from the Central Bank to Tavanir in 2021.
    EghtesadOnline
  • Tavanir buys saved electricity at about 2,500 toman per kWh; about 8–10 million toman per typical well.
    Ecoiran

Who gained

Money that reached nature, beside money that stayed elsewhere.

Reached nature or the ground

Not published
Subsidy attributable to groundwater pumping—
Not measured: no World Bank or IMF estimate of the subsidy attributable to groundwater pumping in Iran.

Gained elsewhere

Not totalled
Explicit energy subsidies, 2019 (IMF estimate via World Bank)$58.7bn
Window: 2019
Almost 10% of GDP.
Energy subsidies, 2017 (IEA data via EghtesadOnline)≈ $45bn
Window: 2017
Of which US$12.3 billion for electricity and US$16.5 billion for oil products.
Estimated cost of electrifying 75,000 diesel farming wells$1.2bn
Window: 2019
Tavanir–Iran Fuel Conservation Company agreement, October 2019.
Central Bank funding ordered for Tavanir to electrify agricultural wells$80m
Window: 2021
Provided via commercial banks.
Currency: USD · Window: Mixed — see each line. Figures cover different periods and are not compared as a ratio. * Estimate built from cited figures.

Responses on record

  • Tavanir (17 June 2024): Its chief executive presented the peak-hour payment scheme as load management. · Ecoiran
  • Ministry of Energy (October 2019): Deputy Energy Minister Homayoun Haeri presented electrification of diesel wells as a diesel saving that could be exported at 30 cents per litre. · EghtesadOnline

In court and with insurers

Every proceeding and every insurer decision on record.

Lawsuits and rulings

No court case on record. No court has ruled on this case.

Insurers

No insurer decision on record.

What nature saw

Outcomes measured on the ground, and nature's note.

Nature's report opens this page. Below: further outcomes measured on the ground.

Explicit energy subsidies, 2019
US$58.7bn
Almost 10% of GDP (IMF via World Bank)
Irrigation share of withdrawals
up to 92%
Half of them from groundwater
Diesel wells to electrify
75,000
Estimated cost US$1.2 billion

What we don't know

Undisclosed, unproven, untried: recorded as data.
No court caseKey earnings undisclosed

Money

  • None on record Subsidy attributable to groundwater pumping — Not measured: no World Bank or IMF estimate of the subsidy attributable to groundwater pumping in Iran.

Court

Record

  • Not measured Not measured: the extra groundwater pumped because of subsidised electricity and diesel; sources link subsidised pumping to over-extraction without quantifying it.
  • None on record None on record: an official figure for the cost price versus the tariff of agricultural electricity, or for the total pumping subsidy in rials.
  • Not disclosed Not disclosed: the domestic diesel price or subsidy figure in the 2019 Tavanir–Iran Fuel Conservation Company agreement.
  • None on record None on record: a World Bank or IMF estimate of the subsidy attributable to groundwater pumping in Iran.
  • None on record None on record: court proceedings or insurance relating to the pumping subsidies.

Did the harm stop?

None on record. The most recent measure on record is the June 2024 Tavanir scheme paying farmers to cut power at peak hours.

Who paid?

Public budgets and utilities carry the subsidies; the aquifers carry the over-extraction that the World Bank and Noori et al. link to them. No figure splits the subsidy between groundwater pumping and other uses.

Sources

Voices on record: — Company or project— Government and regulators— Courts✓ Press and investigations— Communities and civil society✓ Researchers✓ International bodies

Press and investigations

  2. Smart Water Use Remains a Priority
    EghtesadOnline · 2021-03-06

Researchers

  1. Anthropogenic depletion of Iran's aquifers
    PNAS 118(25) (Noori et al.) · 2021-06-14

International bodies

Connected cases

Related matters, and cases linked to this one through the same organisations, with the role each played in both.
Terms used on this page

Science and environment

Groundwater
Water held underground in soil and rock, drawn through wells.

Bonds and banking

Arranger
The bank that structures and sells a bond or loan deal, usually for a fee.

Law and courts

Land titling
Formal legal recognition of ownership of land.
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