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Accelerating water sector transformation in Jordan

Presentation to Workshop on Economics of Water Demand Management in Jordan 30 March 2011


Objectives and key principles of the project Objectives

Key principles

Key question: How can Jordan effectively ensure adequate water for a high-value economy that can support National Agenda aspirations? Objectives – Understand Jordan's future supply demand for water – Identify and prioritize the technical solutions on the demand and supply side that can address the future water requirement – Identify economic choices open to Jordan faces that can impact future demand – Quantify the impact on National Agenda objectives – Outline the implementation road map to accelerate the transformation

▪ ▪

▪ ▪ ▪

Focus on fact-based analysis to support decision makers – working through scenarios to highlight trade-offs Build on excellent existing fact bases from ministries, multilaterals and other external sources Constantly align all data, assumptions, and conclusions with relevant experts and decision makers on the provider and user side Iterate analytical process to ensure constant prioritization and focus on the most critical questions Elevate the water challenge to one of supporting Jordan’s economic objectives Ensure clear implementation road map and accountabilities for outcomes

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To understand the options that Jordan has to ensure water-enabled growth, we looked across the economy

ILLUSTRATIVE Focus of project

Jordan's water economy Demand Levers for transformation Economic choices

Technical solutions

Better implementation

Supply

Jordan Valley

Industry/ Highlands energy

Cities

Shift economy towards outputs that generate higher economic and social value per unit of water input Invest in supply and demand solutions increasing availability and efficiency of water resources used; implications on infrastructure plan Ensure choices are implemented effectively through planning and enablers such as policy, institution and capability

SOURCE: Team analysis 2


Jordan has aggressive plans for economic development especially across industry and energy Plans for strong industrial growth

Plans for energy expansion

Sector output based on National Agenda Targets, JDbn

Primary energy demand, TOE, thousands

+8% p.a.

16

20

+7% p.a.

24 15,000

11

7,700

6 2010

2015

2020

2025

2010

2030

2020

Limited agricultural growth

Population growth

Crop production, thousand metric tons

Projected population growth across Jordan, million inhabitants +1.7% p.a. +2.4% p.a. 9.1 8.5 7.7 7.0 6.0

+2% p.a. 2,634

2,898

3,161

2009

2015

2020

2009

2015

2020

2025

2030

SOURCE: Jordan Department of Statistics; Ministry of Agriculture interviews; National Agenda; IHS Global Insight; National Energy Strategy 3


These growth plans represent a demand by 2030 that Jordan has decided to manage to ~ 1,550 MCM through allocations policies Allocation policy decisions

Agriculture

Water allocation need MCM, bulk water allocation need

– Focus on the use of treated waste water

– Limit supply to current water consumption by driving efficiency and crop mix changes

1,547 Tourism need (13 MCM in 2010) part of commercial and industry

Domestic supply 866 36 20 0 30

– Limit to target assumption for the future net of NRW losses ▫ 120 l/p/d in Amman ▫ 100 l/p/d in other cities ▫ 80 l/p/d in rural areas

Municipal

270

1,005 74 14 38 24 344

151

1,155 49 101 47 27 422

1,321 84 123 29 57

Further investigation required

150 31 69

Potentially unreported irrigation Energy1

517

636

Industry Public2 Commercial2 Domestic2 Irrigation

510

510

510

510

510

2009

15

20

25

2030

1 Water demand for nuclear generation assumed at 30 MCM/year per GW; Solar CSP plants currently under consideration 2 Municipal demand projected for 2030 assuming constant growth rate for 2015, 2020, 2025 SOURCE: MWI, PMU Allocation Plan, IDARA, WAJ, JVA, DOS; Ministry of Industry, Natural Resources Authority, JAEC, team analysis 4


Jordan currently has ~ 900 MCM of committed accessible safe supply including currently financed projects Current and financed supply MCM Potential additional unreported irrigation supply of 100 - 200 MCM; needs further investigation Unconventional sources1 Non-renewable ground water – abstraction Groundwater overabstraction Groundwater abstraction up to safe yield

~ 20% of today's supply is coming from unsustainable sources

866 113 71 158 251

274

158

As Samra extension + WWTPs currently under construction

708 113 71 251

274

5

181 762 100

889 188

1713 Disi-Amman conveyor Kufranja dam

251

279

Surface water Water supply 2009

Stopping Existing over-abstraction sustainable supply

Financed additional supply

Financed accessible safe yield supply

1 Includes desalination, treated waste water and transfers between governorates 2 45 MCM from As Samra plant extension and 30.5 MCM from WWTPs currently under construction 3 Includes 40 MCM above safe abstraction rate for Disi; requires decision regarding agricultural supply in Ma’an Note: Numbers subject to rounding SOURCE: MWI; WAJ; JVA; team analysis 5


Jordan faces an additional requirement of ~ 650 MCM by 2030 compared to today's committed supply capacity Water requirement (2009 - 30) MCM, bulk water supply and allocation need

Additional requirement to meet allocation need

Actions assumed by 2015: - Stopped 50% of groundwater abstraction (-79 MCM) - Implemented Disi-Amman conveyor (100 MCM) - Implemented Kufranja dam (5 MCM)

Financed accessible safe yield supply

1,547 1,321

1,155 866

2009

658 432

1,005 113

266

892

889

889

889

15

20

25

2030

Current and financed accessible safe yield supply

SOURCE: Team analysis 6


Current plans to provide additional supply will sharply increase the average cost of water from ~ 0.35 JD/m3 today Current water supply

Cost of bulk water supply JD/m³

TBD

Planned supply infrastructure

Outside-in estimate

0.82 >0.84 0.71

5

Phase I 210 MCM

Phase II 160 MCM

0.59

0.29

Cost3 for current supply (incl. energy subsidy4) 0.35

0.35

0.15

0

150 Highlands Agriculture

300

450

600

Jordan Valley Other uses1 Agriculture

750

900

1,050

1,200

1,350

Municipal2 Jordan Red Sea Project (JRSP) Kufranja dam Disi-Amman conveyor Bulk water As Samra extension supply + WWTPs under construction MCM

1 Includes industry and livestock, which have not been analyzed in detail; assumed average costs of current supply in other sectors 2 Cost of tap water supply: 1.33 JD/m³ 3 Weighted average cost 4 Assumed that water sector share of energy demand (15%) also applies to share of subsidy provided to energy sector of JD 100m – therefore included a subsidy of JD 15m on 866 MCM of supply translating to 0.02 JD/m³ 5 0.84 JD/m³ based on BOT price excl. potential subsidy from GoJ equity holding and energy cost SOURCE: MWI; WAJ; JVA; team analysis 7


We used the Water Cost Curve to economically prioritise technical solutions Net marginal cost in 2030 USD/m3 Specified deficit between supply and implied demand in 2030 Lever width quantifies net impact on water availability Lever height quantifies unit cost

Incremental water availability Billion m3/year Measures with a negative cost, representing a net financial gain

SOURCE: 2030 Water Resources Group

Measures with a positive cost, representing a net financial cost for the decision maker

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We also explored economic scenarios that impact National Agenda objectives with implications with water use Decision-making tool to help governments recognise their economic choices and corresponding trade-offs Evaluation criteria for scenarios

Assessment of economic scenarios Employmentoriented

Valueoriented

Value added

Agricultural employment Capital requirement Groundwater overabstraction SOURCE: WRG 2 – Jordan project team 9


To ensure water security and flexibility, Jordan needs to implement an aggressive programme across three dimensions Implementation dimensions High

A

Share of resource captured

Horizon beyond which supplydemand gap is closed sustainably

Increase efficiency and productivity of water use as priority

Gain flexibility through economic choices in agriculture

Ensure water security through supply side mega-projects

B Current state

C Low Low

High Productivity of water use

Example modules

▪ ▪

Accelerating municipal efficiency Ensuring industrial efficiency Efficiency in energy and mining Jordan Valley productivity delivery Highlands productivity delivery

Supply-side capital efficiency Mega-projects implementation

SOURCE: 2030 Water Resources Group 10


Current demand side efficiency and productivity initiatives need to be accelerated to slow down demand growth FOR DISCUSSION BAU1 cost curve of potential demand-side solutions2 Main ongoing demand management efforts

IDARA – Building institutional water demand management capabilities and demonstration selected initiatives Water Demand Management Unit – Leading water efficiency initiatives in municipalities Highlands Water Forum – Developing agricultural water policies jointly with farming community Jordan Business Alliance on Water – Focusing on water management issues in commerce and industry sectors

1 Business as Usual SOURCE: MWI; USAID; team analysis

Cost of additional water supply JD/m³

Energy

Agriculture

Industry

Municipal

10.0

1.0 0.5 0 -0.5

0

50 100 150 200 250 300 350 400 450 500 550 600 650

Incremental water availability MCM

-6.0 Leakage repair Replace showers Wastewater reuse (industry) Pressure control Improved seeds (irrigated) New domestic toilet Pest control (irrigated) Replace domestic toilet Sprinkler irrigation Drip irrigation Pest control (rain-fed) Seed engineering (rain-fed)

2 Solutions with volume potential <15 MCM are not labelled 11


In combination with economic choices in agriculture, there is flexibility on difficult options to close the gap Economic scenarios

Availability gap, MCM -648

BAU a agriculture

Remaining Additional options for flexigap, MCM bility vs. big supply projects3

â&#x20AC;&#x153;Must doâ&#x20AC;? initiatives2 414 MCM

363 MCM

1,547 234

899

100

200

300

400

500 100

-688 b

High-value agriculture

436 MCM

1,587

200

300

400

500 100

Basic water reduction

406 MCM

1,487

200

300

400

400

500

397 MCM -538

300

182

100

Low water agriculture

200

366 MCM

899 100

d

400

252 100

c

300

384 MCM

899

-588

200

200

300

400

300

400

360 MCM

1,437

141

899 100

Supply1

2030 allocation4 1 Financed, accessible, safe-yield supply in 2030 2 Low challenge solutions below current water cost SOURCE: Team analysis

200

300

400

500 100

200

3 Solutions that are difficult to implement but can provide flexibility regarding timing of supply mega-projects, e.g. JRSP 4 Based on demand projections and allocation policy (Pg8)

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A comprehensive implementation roadmap will require a coordinated focus across all workstreams Water secure future Demand Demand Levers for transformation Economic choices

Jordan Valley

Highlands

I Jordan Valley agricultural productivity

II Highlands agricultural productivity

Cities  AcceleIII rating municipal efficiency

Industry/ energy  Mandating IV industrial efficiency V Efficiency in energy and mining

Supply  Supply-side VI capital efficiency  MegaVII project implementation

Technical solutions

Better implementation

VIII  Cross-ministerial delivery unit IX  Implementation roadmap PMO X Financing  Data management and decision making XI  Pricing and tariffs optimisation XII

SOURCE: Team analysis 13


Implementing new programmes and accelerating existing initiative requires a complex multiyear transformation process Policy-making and legislative process 3 months

3 months

Phase 1: Diagnostic and scoping A▪ Analysis – Develop the fact base on supply and demand across sectors based on economic plans – Analyse solution options and economic choices based on water potential and economics C▪ Convening – align stakeholders around the fact base and solution options through workshops and interviews T▪ Transforming – define parameters of the implementation plan – Elements of the vision – Prioritisation criteria – Key work packages – Governance and monitoring mechanisms

Define vision and sector priorities – Develop sector focus areas based fact base – Prioritise solutions based on defined criteria Design specific implementation work packages (e.g., supply projects, rehabilitation initiatives, efficiency programmes, regulatory design, institution building) Sequence work packages into implementation plan with clear timelines and responsibilities

Completed phase

9 months

3–5 years

Phase 3: Setup and launch

Phase 2: Programme design

▪ ▪

▪ ▪

Ensure funding for long-term implementation plan Ensure relevant legislative and policy actions (Acts, regulation, etc.) Set up programme management office and work stream teams Ensure adequate institutional capacity and capability for implementation plan Implement monitoring and governance processes

INDICATIVE

Multi-year implementation

▪ ▪

▪ ▪ ▪ ▪

Agriculture – implement changes to crop patterns, efficiency measures and supply-side interventions Industry – implement programmes for greater efficiency and reuse Municipalities – implement measures for ensuring service quality, NRW reduction and use efficiency Regulation/policy – ensure implementation of enacted regulation and policies Strengthen institutional capacity and capability Develop new technologies Implement new funding models

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EW2_wk1_D2-3  

http://cmimarseille.org/_src/EW2_wk1/EW2_wk1_D2-3.pdf

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