Servicing new residential areas has been a major problem in the context of rapid urban expansion. While public expenditure has traditionally played a major role in infrastructure financing, finding and establishing new methods of financing have recently been an important issue. Iran has found the user-pays system to be an efficient financing method. The first part of this paper analyses the nature, significance and process of urban infrastructure provision. The second part looks at the new policy of urban land development in Iran during 1985-90. It goes on to examine the effectiveness of the user-pays system in Iran and the impacts of various factors on the system such as city size and the scales of projects.
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