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Water exhibits various politico-economic dynamic. Water scarcity can lead to conflicts, and it lies at the core of Iran's environmental crises. The literature on Iran's water crisis indicates the effects of this issue in terms of multidimensional environmental degradation, community disintegration, and state-society and intercommunal conflict. Approximately 28 million of Iran's 85 million residents reside in water-stressed areas, a situation identified as 'water bankruptcy'. The water shortage is experienced differently across the country. The plateau's central regions, home to Iran's major industries, are where the worst water deficit is occurring. However, regions with abundant water resources have also been impacted. These regions – known as 'donor basins' – due to intensive and disproportional inter-basin water transfer and other engineering interventions deployed by the Government to deal with the water shortage of the central regions, suffer from a different form of water crisis. A condition of asymmetrical and conflictual power relations between the state and subaltern communities in Iran's peripheral regions has been created. This paper argues that this constitutes environmental racism, characterised by multilayered impoverishment and unsustainable development among communities in the donor regions. [ABSTRACT FROM AUTHOR]