Transitioning to a sustainable municipal revenue system in Tehran: A framework based on revenue diversification and positive feedback loops

Shokouhibidhendi, Mohammadsaleh; Alizadeh, Reza; Motahar, Reza

doi:10.22034/uep.2026.577760.1854

Transitioning to a sustainable municipal revenue system in Tehran: A framework based on revenue diversification and positive feedback loops

Document Type : Original Article

Authors

Mohammadsaleh Shokouhibidhendi ¹

Reza Alizadeh ²

Reza Motahar ³

¹ Assistant Professor, Department of Urban Planning, Faculty of Architecture and Urban Planning, Iran University of Science and Technology, Tehran, Iran

² PhD Candidate, Department of Urban Planning, Faculty of Architecture and Urban Planning, University of Art, Isfahan, Isfahan, Iran

³ PhD in Urban Planning, Faculty of Architecture and Urban Planning, Iran University of Science and Technology, Tehran, Iran

10.22034/uep.2026.577760.1854

Abstract

The financing structure of Iranian municipalities has become increasingly reliant on revenues from construction activities, land-use changes, and density selling in recent decades, a trend that has had various consequences for urban development and municipal governance. This study aims to identify and prioritize revenue diversification options for the Tehran Municipality and to propose a framework for the gradual transition from unsustainable to sustainable revenue sources. The research is exploratory and employs a mixed-methods approach. In the qualitative phase, we analyzed 14 laws, one policy document (1907–2025), and one theoretical framework using document analysis, identifying 56 legal capacities. In addition, 11 semi-structured interviews with experts in urban management and municipal finance yielded 47 proposed options. Integrating findings from these two phases produced 84 options, which were then clustered into 25 final policy alternatives. In the quantitative phase, the evaluation criteria were weighted using the Best-Worst Method (BWM), and the alternatives were prioritized through the Additive Ratio Assessment (ARAS) method based on six criteria: revenue sustainability, revenue-generation capacity, ease of implementation, social acceptability, institutional requirements, and equity. The results indicate that options related to intelligent revenue diversification, integration of land-based instruments, financial transparency, and reform of revenue collection systems received the highest priorities. The findings suggest that improving municipal revenue systems depends less on creating new revenue sources and more on enhancing transparency, collection efficiency, and the effective utilization of existing capacities. This study’s novelty lies in integrating legal capacities with expert perspectives, systematically prioritizing policy alternatives, and proposing a policy framework for the gradual reform of municipal revenue systems.

Keywords

ARAS method

multi-criteria decision-making

municipal financial sustainability

municipal revenue diversification

Tehran municipality

urban financial sustainability

urban financing

Subjects

Urban Economy

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