The Forum for Partners in Iran's Marketplace

October 2019, No. 92

Special Report

Water Basin Development

New Approaches and the China Experience

The China Heihe River Basin programme approach to integrated investment is an example of a solution to the climate change issue.

Mohammad Ali Farzin, Development Economist 1

The General Problem

Climate change problems (global warming, carbon dioxide excess) cause drought, floods, weather change, etc. – also affecting the land that we produce our food on, the quality of our food, and the formation of our eating and consuming habits. Unless something is done about all this – and our food production and consumption habits in particular are changed significantly – people are going to suffer more. The recent report by the Inter-Governmental Panel on Climate Change is significant: it clearly sets out the problem as being our conventional trade-industry-resource based growth model, complemented by high rates of consumption and inappropriate consumption patterns (especially in the upper end of the market) – now causing significant damage all round, endangering our children’s future. The report is critical of conventional development approaches and the need to change it and to invest more, invest better and invest differently – if we are to sustain against climate adversity and live peacefully with nature.

The report suggests that food production practices and techniques are part of the production-consumption solution: through integrated policy approaches. Integrated programme approaches are required to land use, local farmer community-based organization, type of crops/animals/foods produced (e.g. for efficient water usage) and consumed, quality of foods (e.g. either organic or industrial based), care for the soil, care for the quality of water used, the water harvesting linkage, rehabilitation of range and forest, and the type/quality of hard infrastructure (e.g. dams, water control systems, etc). This would make a difference2. A programme that is based on small-scale, green, local type investment packages

that could be linked together in grids and networks would be very helpful (rather than top-down sole
engineering – and sole growth solutions)3.

The recommendations that came out of the global High Level Panel on Water - Water Infrastructure and Investment a number of years ago were also convincing. It suggested we improve the enabling environment for investment in sustainable water-related infrastructure and services and to double investment levels. Governments are encouraged to improve the enabling environment for investment in sustainable water-related infrastructure, so as to: create a comprehensive case for water-related investments; plan and sequence investments better; increase benefits from inter-linkages across sectors; promote the preparation of high impact projects; raise available finance by mobilizing domestic finance, blending public and commercial finance and do public-private-community partnerships; and invest at least one-third of international climate finance in water-related projects that improve climate adaptation and strengthen climate mitigation.

The recent flooding in Iran is an example of climate change problem. The large Karkheh River Basin suffered significantly. The China Heihe River Basin programme approach to integrated investment is an example of a solution to the climate change issue. Both the Sustainable Development Goals (especially, in this regard, SDG 12 – responsible production/consumption frameworks) and the Sendai Frameworks Building Back Better approach to disaster risk reduction are indicative of the type of solutions required: changes in techniques and practices towards integrated, small-scale sustainable solutions (with low overhead capital costs and more local funds circulation). They facilitate sustainable development, cope with resource curse problems, and minimize ad-hoc and reductionist approaches.

Iran’s development approach has conventionally also been based on economic led growth and, given oil, with an international trade orientation – along with a top-down social welfare system. New investment possibilities (foreign and domestic; economic and development type) have become limited following sanctions. These events have constrained development objectives and funding frameworks leading to serious thinking on changes in general orientation: including for natural resources related problems and solutions; and towards domestic led socio-economic growth through domestic investment, trade and employment generation processes. The resilient economy approach is indicative; as is the 2019 annual budget’s increased nominal allocations to domestic-led fiscal stimulus4. 

Iran Flood Impact Severity and Need for New Programme Approaches

Climate change makes weather more variable: droughts, extreme temperatures and flooding becoming regular; rainfall becoming increasingly irregular, with unpredictable change in scale; and significant socio-economic welfare losses following. In March 2019, three waves of rain and floods impacted Iran. Its impact severity being due to: intensity of weather/rainfall conditions (some areas received 70% of annual rainfall in a single day); inappropriate utilisation of river embankments and reduction of river flow possibilities (inappropriate substitution due to human activity); lack of sufficient river sweeping and mud cleaning; and dam water capacity stress; etc.

Agriculture was especially affected: guesstimated that half a million hectares of agricultural land were affected in 26 provinces – possibly affecting one million tons of crop and significant loss to GDP and capital infrastructure (up to circa 15 Trillion Rials). The Ministry of Jihad Agriculture (MOJA) recently indicated a 24 Trillion Rials loss, related to farms (50% of total loss), horticulture (23%), water infrastructure and delivery networks (17%) and livestock and fish (10%). Households with subsistence and small-scale farming are especially affected - possible circa 2 million persons from about 23 million such rural persons in Iran –and rural poverty traps are therefore compounded.

Flooding will become more frequent. Factors for flood impact damage include: i) those beyond control – such as climate variability, storms, distribution of rainfall, local topography, steep slopes and soil conditions; and ii) those due to human activity - inappropriate and non-sustainable use of natural resources (e.g. on river embankment) and misuse of water-resources / water-ways, insufficient investment and resource allocation in sustainable approaches, and adverse lifestyles and socio-economic activities on flood-prone land.

The severity in flood damage has prompted discussion on further large-scale, engineering based dam building: requiring significant resources. Given Iran’s natural topography (mountain ranges and river-basins in the north and west) and energy requirements, the engineering, contracting and dam building groups are proposing linear engineering solutions which are logical in terms of efficiency. Essentially that more concrete and earth dams be built to raise water holding capacity, for increasing water supply and for linking them into the energy grid system. The suggestion is (in order of weight): hard infrastructure building (dam, check dam, water transport); integrated management of the hard infrastructure - dams, dykes, and groundwater aquifers, which then feed into some form of regional water grid; small reservoirs and catchments – and their required infrastructures – for water harvesting via rainfed activities ; wastewater treatment and reuse for use and irrigation; and desalination of seawater and brackish groundwater (for various purposes).

HRB has three types of economic activity: grazing livestock in the upper mountainous areas, small-scale intensive agriculture in the middle valley areas and large-scale extensive agriculture in lower oases.

Iran’s historical development policy emphasis has also been on economic growth through capital intensive (e.g. hard infrastructure) development, including for hard water infrastructure development. The water storage and transport projects undertaken since the 1950’s have greatly expanded Iran’s water supply, along with irrigation and large increase in cultivated land (and harvests) in a semi-arid region. Iran now has circa 170 large dams with a water storage capacity of 70 billion cubic meters. The proposals suggest we raise the number significantly.

However, the emphasis and weight put on hard infrastructure to the opportunity loss of not integrating this with soft methods, such as community-based development, has had significant side effects. These include: the mining of non-renewable aquifers (and with over 800,000 wells existing, of which circa 60% have license) and insufficient investment in rain water harvesting has actually helped lead to a steady decline in available water resources, also prompted salinity problems and raised flow and turbidity levels in river water. The Karkheh River Basin experience is an example: well indicative of such problems and approaches; hard approaches having had high capital and maintenance costs, and also adverse sustainability outcomes. The recent flood damage estimates are significant – suggested as possibly ranging up to $5 Billion in two Zagross water basins alone (the Karkheh and Karun basins). Resource curse and opportunistic rent seeking issues perhaps also play a part in preventing linkages between hard and soft approaches.

The consequences of such severe flood damage, partially due to inappropriate integrated “water basin” and “upstream” development, planning and management type mechanisms has, however, now also resulted in proposals on inclusion of system-wide approaches for linkages between water basin infrastructure development and softer community-based development in Iran. The need for a more comprehensive water supply policy approach in a water basin encompassing and integrating both hard and soft water related infrastructure approaches, and in a programmed manner to ensure sustainability. And beyond just linear engineering.

This could include methods involving hard infrastructure development in complement with local rainwater harvesting and possibly combined with social development instruments: that is public schemes that combine hard engineering with prompting of local organization for communities to undertake softer rain-water harvesting (i.e. where the rain actually falls) along with required conditional cash transfers, small grants, credits and skills training for related and necessary activities.

Multi-dimensional programmes in a water basin also require: changing general national production and consumption patterns (including for crops); improving water use efficiency; changes and refinements in crop patterns, and changes to more water efficient crops (e.g. virtual water calculations); investment in combined upstream-downstream natural infrastructure for retention of water, such as lakes, wetlands and forests (water holding for long periods); water storage dams and reservoirs; rainwater harvesting; underground aquifer storage and recovery activities; more efficient irrigation methods (e.g. drip irrigation); enhancing top soil water retention (agriculture needing less irrigation water); using saline water techniques for irrigation purposes; etc.

Investments in more sustainable water basin and water infrastructure approaches generate local economic activity, jobs, income, protect water sources and waterways, improve public health, and reduce costs of resource use and maintenance. Local, community-based water solutions are more sustainable and less costly: but requires a comprehensive water basin planning and management approach that takes into account all the development indicators within an area based initiative covering a water basin.

Such comprehensive programmes that must encompass local and community-based water use (including water harvesting methods) within water basins in conjunct with hard water infrastructure are new and relatively small in scale of usage in Iran (in terms of budgetary allocations – despite institutionalisation in the FRWO and some entities in MOJA).

The international approach (e.g. the Sustainable Development Goals; the High Level Panel on Water) takes a more global perspective: stress being on managing and reducing demand. For example, through demand management in agriculture, which is the largest water user (globally accounts for 66% of water demand and in Iran stands at 92%), and for more retention of water through local water harvesting methods. This is a more non-linear, multi-dimensional approach: requiring an integrated programme approach with specific measures and targets (both physical and monetary); one that links and integrates together water development, rural development, economic growth and the natural resources base. This approach includes integrated natural resource management INRM and rainwater harvesting.

Of course, this is more complicated than a simple linear approach – but eventually the fiscal investments costs are also significantly lower, the empowerment more, and sustainability higher. A new concept for us in Iran – and perhaps difficult to encompass. Nevertheless, renewing debate on strategic water policy approaches: between taking a hard infrastructure (more dam building) approach or a more softer and integrated approach (e.g. water harvesting or INRM); and in their possible combinations. Once programmed appropriately, and given the positive externalities involved in network/integrated programming the internal rate of return (IRR) on such wide programme approaches can also be higher (through an appropriate socio-economic-environment cost benefit analysis process).

Given that criteria of sustainability are at issue, the need to raise debate and consultation processes to show strategies/best-practices going beyond efficiency is now paramount. Otherwise further non-sustainability concerns will arise, especially given annual water availability in Iran is now less than 1,500 cubic meters (cum) per capita – as the Falkenmark indicator sets 1,000 cum/cap as a “minimum” annual water stress level and 500 cum/cap as “absolute scarcity” level.

Managing Water Resources – China’s Heihe River Basin (HRB)

The Chinese have adopted programme based integrated approaches to resolve above mentioned type issues – and Iran can learn significantly. The Heihe River Basin (HRB) Programme in northwestern China, with 130,000 square kilometers (the second largest inland river basin in northwest China) is an example of good practice techniques. Human activities had significantly changed the distribution and allocation of limited water resources in HRB – the most crucial problem in an inland river basin being water-use competition between the upper, middle and lower reaches of the river. The HRB faced water shortages caused by rapid population growth and the development of irrigated agriculture, resulting in the drying up of tributaries and terminal lakes, the shrinking of natural oases, biodiversity loss, salinization of soils and desertification. Because of greatly differing economic structure and water-use practices, the three provinces of the basin face serious water conflicts and the benefit sharing is complex.

HRB has three zones: upper (between 2,000 and 5,000 meters above sea level) with rainfall between 250 and 500 millimeters per year; middle (between 1,000 and 2,000 meters above sea level – valleys) with 100 and 250 millimeters of rainfall per year; lower, in the north oases, with low rainfall (less than 50 millimeters per year) and with evaporation and seepage of surface water. The catchment is the Qilian mountains, or run-off-producing areas while the basins, which receive less frequent precipitation, are run-off-absorbing areas. HRB has three types of economic activity: grazing livestock in the upper mountainous areas, small-scale intensive agriculture in the middle valley areas and large-scale extensive agriculture in lower oases. The upper zone faces management challenges including the reduction of forest cover and rangeland degradation. The middle zone is a major grain-producing region: 90% of the irrigated farmland and more than 85% of the total population of the river basin are located in this zone; accounting for 68% of the total water demand of the basin; so it has major water demand/supply competition conflict. The lower zone faces ecological degradation and desertification.

The absence of any coordinated management of these areas had led to the degradation of grassland areas in the mountains caused by over-grazing; poor returns for farmers in the valley areas; and high water consumption in the oases. Only if these issues are studied on a basin-wide scale, beginning with an integrated river-basin management system and coordinating the relationships between water availability, ecology and economy, can there be sustainable development. To resolve, China implemented integrated river-basin management strategies. The HRB Master Plan is an example of an integrated system at the river-basin scale that takes into account the whole system from mountain to valley to oasis. The overall development of the strategy involves different management regimes in the different zones. The key strategies were to employ the mountain-valley-oasis system in the entire basin, to reduce agricultural water consumption in the middle basin, and to demonstrate new income alternatives and maintain an adequate flow of water to sustain the environment of the lower basin. In order to integrate regional resources and maximize economic benefit, the system includes coupling the production of grazing livestock in the mountainous areas, fodder production and stall-feeding in the valley areas, and production and processing of high-quality fodder (alfalfa) in the oases.

The benefits have been many – especially the improving of water productivity (increasing the economic return per cubic meter of water used). This requires integrated and complex processes, and is broader in scope than simply the use of agronomic and biological solutions, and must be considered on an irrigation district, watershed or river-basin scale level. Benefits include: I) change from flood irrigation to water-saving technologies; II) secondary water-use rights to clarify water entitlement; III) development strategies shifted from State-controlled management of irrigation districts towards greater participation by local government or non-governmental organizations or water users associations (WUAs).

The HRB programme has had good accomplishments for water saving, community participation, increased income and ecological rehabilitation. The innovative experiences sustained beyond the lifetime of the programme because of close collaboration between local governments and local communities; increasing the income while environmental interventions were implemented; and emphasis was placed on building the capacity of local agencies and communities to take advantage of alternative income-generating practices. The policy implication has been the adoption of the principles of integrated water basin management - essential for solving problems of water competition in the different regions of a river basin. Therefore, the lessons learned from the successes of the HRB have been fed into sustainable development strategies.

Iran’s Karkheh River Basin (KRB)

Flooding damage in the Karkheh River Basin (KRB) caused significant damage – following severe rainfall and very high water flow rates and over spillage from dams and water control structures – from the top to the bottom of KRB. The Karkheh Dam had reached 4.8 billion cum (91% of water capacity).

The KRB is a huge river/water basin covering six of Iran’s western provinces: large parts of Kermanshah, all of Lorestan, large parts of Hamedan and parts of Elam, Kordestan and north-west Khuzestan. With an estimated population of circa 7 million people (spread through about 40 local Districts), some main towns include, Malayer, Nahavand, Tuyserkan, Kangavar, Songor, Kamyaran, Kermanshah, Karand, Dorood, Khorammabad, Mamulan, Pol-Dokhtar, Susangerd, Bostan and Hamideiyeh. This major river system of western Iran – of 51,400 km2 – has unique topographic, agricultural and hydrological aspects; elevation goes up to 3500 meters in the mountain range; the southern part of basin precipitation is 250mm per annum and northern part is 700mm – generally a dry climate in the lower ranges. Northern part goes into following river basins: Sirvan; Sefid rood; Gharechai. West side of the Zagross mountain range makes up the eastern flank of Iraq. The east meets the Dez and Karoon basins. On the west it meets the Hoor ol Azim swamp. 59% is in mountainous area (north and south/south-east) and 41% range and plain. Within the basin there are the river sub-basins of Gamasyab, Gharesu, Kashkan, Simreh, smaller Karkheh. One major dam (Karkheh – down river) and a number of smaller dams upstream. KRB is also one of most productive agricultural areas in Iran – circa 10% of irrigated land and producing over 10% of Iran’s wheat requirements.

There are also challenges: rural poverty; land degradation; low water and agricultural productivity; and growing upstream-downstream competition for water. Insufficient to meet crop water requirements – hence real need for improved irrigation and water management systems. Changes in land use patterns in recent decades, especially overgrazing and conversion of natural pastures into rainfed cropping, have taken a heavy toll. Regretably, nearly 80% of the upper watershed’s rangelands and 60% of its forests are probably degraded. At the same time, excessive use of fertilizers and pesticides is affecting groundwater. Surface waters, too, reflect the excesses of inappropriate farming practices.

The issue is critical in the KRB, as the vulnerable make up a significant number of the 7 million people or so living in the basin and are whom concentrated in rural areas. Many are small-scale farmers who rely on semi-subsistence agriculture and don’t have fully developed irrigation systems for their crops, leaving them especially vulnerable to droughts. The future of KRB and its people’s livelihoods requires improved integrated natural resources management (INRM) including: holistic, basin-wide management and monitoring of natural resources—water, soil, vegetation and livestock – alongside special purpose programmes and schemes that can reduce vulnerability and improve local inclusive growth5.

The specific nature of the KRB food and water problems include:

  •  Development of the KRB water resources has contributed to Iran’s food security and underpinned the livelihoods of both basin farmers and urban consumers;

  •  Linkages between poverty and agricultural water use in the basin are weak – requiring water user association (WUA) approaches;

  •  Future water policy will need to increasingly focus on management and allocation of existing resources rather than development of new sources of supply;

  •  Management focus should aim at increasing water productivity to meet existing national priorities; on improvements in physical water productivity, primarily the quantity of grain output per unit of water input so as to improve the use scarce water resources for national food security priorities;

  •  Poverty is still an issue and targeted water interventions may assist in poverty reduction and livelihoods improvement.

The China HRB experience and good practice may be utilized for this purpose. 

The Cost-Benefit Aspects

The technical best practice and optimal policy approach to be adopted would include the above mentioned component parts, which also inherently factor in new technical standards. However, the creation of infrastructure requires significant capital (unavailable at the local level). It is also natural for infrastructure to age and for capital needs and costs to escalate. As example, depending on size and technology/approach used, reservoirs with a capacity of 0.5 to 2 million cubic meters may take anything between 1 and 2 years to build and can cost $1 million to $5 million. This median provides a scale - and the heavy costs for large dams and related grids (and secondary and tertiary water ways) can be imagined. In terms of employment and economic impact, globally on average every $ 1 million in capital investment in water structures (on basis of current capital intensive technical standards approaches) requires at least 15 direct labour (jobs) and probably creates a similar number of indirect jobs through ripple effects and multipliers. That is, for every direct labour (manpower) utilized in such a production process there will be an overhead cost of $67,000 to establish one unit of employment.

Nevertheless, the basic principle in sustainability is to attempt community-based approaches that have less capital intensive technical standards which can reverse such high capital-to-labour ratios – and bring overhead costs down, and improve local funds flow. Sustainable development technical standards and best practices (e.g. for Sendai Framework BBB) combine both hard infrastructure and soft (community-based) infrastructure development together; for example, an x million cubic meter water dam built ought be accompanied by z hectare of INRM upstream undertaken by local communities (rather than contractors). The reversing of rent-type high overheads (in our above example, down to a third and possibly to $22,000) at the same time ensures more cheaper operation and maintenance cost and more local participation. They also enable local PPP collaboration and partnerships across public and private sectors, including with the local communities.

Recent global experience (see various UN publications on best practices) increasingly indicate that targeted and conditional cash transfer programmes are being understood as possibly being able to support both capital-to-labour ratio reversal and area based development (and apart from their micro-economic effects – e.g. as cash to individuals). They may be used to complement as an effective approach to: reducing operation and maintenance costs; and for protecting against financial repercussion of severe shock and change (improving resilience).

Complementary cash-based transfer related approaches may create both incentive and help households protect themselves against shocks, becoming more resilient. In agricultural, for example, capacity adaptation (resilience) options include: improved irrigation practice, adoption of drought resistant varieties, changes in cropping practices, conditional cash transfers, food-for-work programs, public works, small grants, conditional training programs and guaranteed procurement schemes. They may easily complement hard water infrastructure development – and help in investment and local resource mobilization initiatives. They are also effective methods to help farm households develop non-agricultural businesses, enabling better management of weather shock: and helping develop adaptive capacity, coping strategies and other income-generating businesses.

1) The views in this article are the sole opinion of the author and in no way construe the position of institutions that the author works with.

2) See this author: Iran International Magazine “Developing Capacity of Small Farmer Households”, and “Water Harvesting Solutions for Iran” 2018.

3) See this author: 2017 mimeo “A Complementary Sustainable Growth Programme to Conventional Sole Economic Growth Oriented Policy in Iran”.

4) See this author: Iran International Magazine “The 1398 Budget – Development Impact”

5) See this author: Iran International Magazine “Developing Capacity of Small Farmer Households”, and “Water Harvesting Solutions for Iran” 2018


Subscribe to

  October 2019
No. 92