Industry Spotlight: Water Management

By Elliot Plaut, Research Associate

Like other countries in the region, Iran faces a severe water crisis due to climate change and poor water management. One of the most visible reminders of this ongoing problem is Lake Urmia. Located in the northwestern corner of Iran, Lake Urmia’s watershed serves an agricultural region with a population of 6.4 million people.  Previously one of the largest salt lakes in the world, Lake Urmia was also once a popular tourist destination. However, the last 20 years of environmental conditions and damming of tributary rivers for irrigation have shrunk Lake Urmia’s surface area by 70% and its water volume by 95%.

Water stress has had a serious effect on the Iranian economy. According to the World Bank, the annual cost of Iran’s environmental degradation amounts to 5%-10% of GDP.  Despite calls for change from Iran’s leadership (e.g., President Hassan Rouhani said Iran is seeking “modern methods and solutions” to mitigate the detrimental effects of consumption in a recent 2016 interview), government agencies in charge of the water supply are themselves partially to blame for the depletion of groundwater stores, through the subsidization of utilities. Government subsidies allow free groundwater for well owners, and users pay far less than the actual energy costs of pumping water. While the ancient system of qanats still provides water in Iran, the government’s preference for digging wells, diverting water and creating dams has overextended the demand on underground aquifers and rivers for water.

Public overuse threatens to exhaust the reserves of underground aquifers in twelve of Iran’s thirty-one provinces. The average Iranian uses 66 gallons of water each day, twice the world standard. Reasons for this include infrastructural failures, with cities reporting losses of nearly one-third of their water supplies from leaky pipes. Further, agricultural consumption (which dwarfs public usage and accounts for more than 92% of the country’s water use) is inefficient in Iran. Many farmers grow water-demanding crops, and given the low productivity of water (ratio of yield per unit of water) on irrigated lands, it is difficult to implement water-restrictive policies when agriculture is a major component of the Iranian economy. The Ministry of Power announced that the previously provided 85 to 90 billion cubic meters of water would be downgraded to 50 billion cubic meters as inefficiency had driven agricultural water usage to unjustifiable levels.

In part as a result of the water crisis, Iran is now the world’s third leading country in dam construction. Investment in dam construction only follows that of gas and oil. Dams provide much needed drinking water and irrigation, and power hydroelectric plants in Iran. Approximately 20 dams were built per year in the last three decades.  And, while dam construction has slowed slightly under President Rouhani, dam deals are now increasingly being signed with foreign companies. One example is a recent agreement between South Korea and Iran for cooperation on the Karoun-2 dam on the Karoun River. Starting in the Bakhtiari Mountains and winding southwest for 515 miles, the Karoun River (also spelled Karun) is a tributary of the Shatt al-Arab and is home to 5 hydroelectric dams.  

Other water-related areas in which Iran has sought to garner investment are desalination and water transfer projects. In 2012, Iran designed a $1.5 billion project to desalinate and transfer water from the Caspian Sea to Iran. Though shelved in 2013, the Caspian Sea Project was reportedly back on track again in 2016, along with a $400 million budget for a project to transfer desalinated water from the Persian Gulf and the Sea of Oman. Last year, Doosan Heavy Industries and Construction Company signed a deal with Iran-based Sazeh Sazan Co. to build a plant to desalinate around 200,000 tons of water a day, the market for which is expected to reach $2 billion by 2018.

Despite the problematic nature of dwindling water resources in Iran, the industry for technological improvement in addressing the water crisis in Iran is growing.  Contracts with foreign firms, notably water consumption management agreements with Swedish and French firms, bodes well for the vitality of the industry. Deputy Energy Minister Alireza Daemi announced that companies from Austria, Germany, France and Italy have also shown an interest in electricity, water and water management projects in Iran.

Below is information about an upcoming conference in Tehran, Iran that showcases aspects of Iran’s water industry, including water management, treatment and environmental protection. 

The 13th Iran International Water & Wastewater Exhibition
Tehran International Permanent Fairground – Tehran, Iran
October 16th-19th, 2017

Additional Details: 
More information on the event, such as exhibitor manuals, fact sheets and catalogues, can be found here.