Behind Tehran’s official denial of water shortages lies a stark inequality: construction continues, benefiting luxury developments while poorer neighborhoods are left with dry taps and sinking ground. The municipality’s reliance on extra building permits—selling additional rights to build beyond the city plan in order to fund its budget—channels scarce water to upscale projects and deepens the city’s housing divide. In Tehran, the water crisis has become a question of social justice.
Tehran’s water crisis is among the most pressing environmental and social challenges of recent years. Drought, shrinking rainfall, and rapid population growth have pushed it to the point where denial is no longer credible. Yet denial persists. Mayor Alireza Zakani insists the capital faces no shortage—because admitting otherwise would threaten the lucrative business of construction, fuelled by the municipality’s practice of selling extra building permits [Tarakom-forooshi] for cash.
Speaking at a session of parliament’s urban development committee, Zakani argued that water shortages should not stand in the way of new construction. The real issue, he claimed, lies in poor management both before and after consumption:
“Tehran has about 9.5 million permanent residents. Each day, another 3.5 to 4 million people commute into the city for work and return home at night. If you add their water use—at roughly half the consumption of permanent residents—the number of people drawing on Tehran’s supply comes to around 11.5 million a day.”
According to Zakani, Tehran is allocated 1.2 billion cubic meters of water each year. At what he called an “optimal” rate of 130 litres per person per day, he argued this would be enough to serve about 24 million people—more than twice the city’s actual population. He went on: “With this capacity, the problem is not a lack of water but poor management—both in supply and in use.”
He blamed the crisis on excessive household use, wasteful practices, and devices such as evaporative coolers, while also pointing to weak distribution infrastructure. With a shift in consumption habits and improvements to the network, Zakani argued, the problem could be solved—without stopping construction “under the pretext” of water shortage.
Denial of crisis, or a hard reality?
To see the logic behind Zakani’s claims, it helps to look at remarks by Saeed Jalili, a senior conservative politician and former nuclear negotiator. Speaking at an August conference on “Islamic Political Wisdom in the Qur’an,” which focused on water, Jalili, too, argued that the real issue was not water scarcity but mismanagement, and presented what he called a 12-point plan for integrated water use.
That argument did not go unanswered. On a trip to Ardabil, President Masoud Pezeshkian—without naming Jalili—shot back:
“We have a water problem right now. Some say we don’t. If anyone claims there’s no problem, here’s the challenge: solve it, and we would be grateful. Come and fix it with your solution. There’s no water behind the dams. We’ve drained the groundwater beneath our feet. And now someone says a lot will come from the sky. Where is it? Come help us solve people’s problems.”
In short, two factions within the regime face off over the water crisis. One refuses to give up the profits of extra building permits and the rents that come with channeling water toward favored projects. The other, tasked with securing water for the public, cannot simply look to the sky. Even if we set aside those interests and focus only on water, the clash reflects a familiar policy divide in the Islamic Republic: “optimization” versus “resource limits.” Neither side is entirely right or entirely wrong; the truth lies somewhere in between. But can economic interests and rents really be bracketed out?
Extra building permits: the municipality’s fiscal addiction
In Tehran, extra building permits refers to the municipality’s practice of selling permits that allow construction beyond the official limits set in the city plan—usually 120% of lot size. Owners apply to the Article-5 Commission (a special municipal body that approves changes to zoning and land use), and if approved, pay fees of around 2.5% of the property’s value or more in exchange for a permit. Introduced in the late 1980s to offset budget shortfalls, the practice now provides 40–45% of the municipality’s urban-planning revenue. Critics argue it overloads infrastructure and worsens traffic.
The sums involved are staggering. In 2024, revenue from extra building permits is estimated at 30–40 trillion tomans (roughly $300–400 million at the current rate). For 2025, the city budget projects 40–50 trillion tomans ($400–500 million) from extra building permits out of a total 100.8 trillion tomans in construction-related fees. With construction costs at around 15 million tomans per square meter and roughly 10 million m² permitted each year, these figures show just how dependent the municipality has become on this source of income.
The municipality’s dependence on these permit fees explains why the water crisis is brushed aside. With more than 40% of city revenue tied to extra building permits, the practice has become a fiscal addiction. Stopping construction would blow a hole in the budget, delay salaries, and stall projects. For the mayor, the incentive is obvious: keep the cycle alive—even if it means denying or downplaying an environmental emergency.
Conflicts of interest and policy duality
A wide network of developers, speculators, banks, and powerful institutions profits from the cycle of construction and extra building permits. Together they form a strong economic–political bloc—currently aligned with the Jalili–Zakani camp—with every incentive to preserve the status quo.
Even from a purely environmental perspective, Zakani’s “optimization” argument rests on shaky math and two overly optimistic assumptions. First, the so-called “optimal” consumption of 130 liters per person per day is unrealistic in a semi-arid megacity like Tehran, with its dense urban form and widespread use of evaporative coolers that drive summer demand. Actual consumption is far higher. Second, the city’s annual allocation of 1.2 billion cubic meters is treated as if it were guaranteed, when in fact Tehran’s five dams and its groundwater reserves depend heavily on rainfall. Falling dam levels and the overuse of groundwater—which is causing the ground to sink—are real physical limits that cannot be solved with words or promises of “better management.”
At root, Tehran faces a governance crisis built into structural conflicts of interest. The municipality is both the “issuer of extra building permits” and the “city manager” responsible for providing infrastructure—including water—for a growing population. These roles are fundamentally at odds.
Citizens, too, carry both responsibilities and rights: to manage their own consumption, but also to hold officials to account. Tehran’s water crisis is a public-safety threat, and it should be treated with that level of urgency.
What the crisis means: from inequality to catastrophe
If Tehran’s water crisis continues, housing prices may not simply fall. Instead, the market could shift in ways that make housing even more unequal.
A worsening shortage could deepen the divide between rich and poor districts. Property values would likely soar in areas with better access to water—through privileged connections or dedicated pipelines—or in neighborhoods less exposed to the risk of the ground sinking. Meanwhile, low-income areas facing chronic shortages and the threat of the ground sinking could see stagnation or even falling prices. The result would be not just sharper inequalities, but a further polarization of Tehran’s social and economic fabric.
Quality of life would also erode. Families might have to pay extra for water—buying bottled supplies or relying on tanker deliveries—pushing up the real cost of living even if housing prices remain flat. In a worst-case scenario, a sudden shock—such as weeks-long water outages or ground-sinking disasters like ruptured mains or building collapses—could spark capital flight and send property prices in some areas into a freefall. That kind of crash would be catastrophic and unpredictable, not a planned correction.
