Autocratic Regime Maintenance and Phasing Out Irrigation Water Subsidies in Iran

Abstract This study examines subsidy retrenchment in Iran, focusing on irrigation water subsidies, the political origins of Iran’s water crisis, and the political economy of reforms. Despite significant subsidy reductions in 2010, we argue that agricultural subsidies remained due to a subsidy coalition spearheaded by constituency-embedded rural elites that leveraged electoral competition to resist cuts. Analyzing parliamentary behavior, we highlight that MPs’ decisions were swayed by agricultural elites, especially in competitive districts. These dynamics entrench underpriced irrigation inputs, lock in groundwater over-extraction, and raise the political cost of reform. This study reveals how regime maintenance, prioritizing political stability over economic efficiency, can shape policy outcomes that amplify environmental degradation.