Reaching the poor in Mashhad City: From subsidising water to providing cash transfers in Iran

In 2011, the Iranian Government started paying cash transfers to compensate for higher prices of basic commodities and public services. The first phase of this reform is analysed. The effects of the reform with regard to domestic water consumption within the country and more specifically in the city of Mashhad, located in North West of Iran, have been examined. To do a policy impact study, we investigated the water bills of poor people residing in suburbs of Mashhad, and carried out a household survey. The overall water consumption has decreased in the entire city, but the decline was more significant in the suburbs which are predominately populated by poor residents. Paying the rebate directly to the consumers has been effective in terms of water demand management. This new approach has increased equity among consumers. However, macro-economic conditions have changed drastically and cash transfers are no longer substantial, given inflation and tariff increases.

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