Page 1

Economics of Water Demand Management. Workshop held in Amman, and Dead Sea, Jordan. Under the auspices of the Jordanian Ministry of Water and Irrigation, and supported by the French Agency for Development, the Marseille Center for Mediterranean Integration, and the Plan Bleu, in December 1 to 3, 2011.

Synthesis of workshop findings A rich combination of initiatives already on the field The workshop made clear that Jordan is rich with combined initiatives in water demand management: sectoral water savings strategies, Idara project, Water Demand Management Unit, Jordan Valley Authorities irrigation efficiency projects, Highland Water Forum participative project, output-based agreements in water utilities, and waste water re-use.

A simulated “governmental WDM programme” Participants were invited to play a simulation game, by designing a Water Demand Management (WDM) Program. First, by designing sectoral WDM measures, and then by selecting 5 of them, based on a cost-efficiency criterion. The most often selected measures are: • •

• • •

Control agricultural over-pumping from the aquifers Increase efficiency in delivering systems, and by enforcing on-farm measures (in the Jordan Valley, more than 15 MJD will result in 7 MCM annual savings, with a cost-effectiveness ratio of 0.27 JD/m3). Design and implementation of a re-use policy aiming at reducing groundwater abstraction by the farmers in the Highlands. Develop water saving devices in urban areas Achieve water loss reduction through leakage control and measure management.

A list of obstacles to address However, implementing this WDM program means overcoming a series of obstacles. The third day of the workshop addressed the obstacles to a better implementation of such WDM programs, and proposed a list of most important obstacles to address: • • • • 1

For WDM in agriculture, a need to better enforce actions against over-abstraction, notably as regards new allowances for pumping in the Jordan valley. For urban WDM, there is still a need of substantial investments for business and households. Sometimes, the payback periods of investments are rather long. Reaching the 25% of non-revenue water in 2025 is still a difficult task and an ambitious objective. Water and sanitation standards exist, but they are not yet sufficiently enforced.

• •

The workshop, or the studies conducted in the past, did not much touch upon WDM in industry. There is a need to invest more in expertise and data collection, especially in the field of energy, which will be highly water-demanding in the future. Reaching the target of 62% of connection to wastewater system will need important investments, due to the habitat dispersion. The instability of supply does not encourage water saving behaviors: when supply is not guaranteed, the tendency is to capture as much as possible during the distribution periods, to be able to face shortages. The ongoing deterioration of water quality is likely to hinder WDM.

Organizing WDM program Based on inputs from speakers, and from floor discussions, it was proposed to summarize ideas and approaches to meet WDM challenges as follows. Water demand management is achieved through 2 complementary approaches, each using different and combined tools. On the one hand, it aims at changing behaviors, with help of technological upgrade, stakeholders participation and training, and regulation backed with economic instruments. On the other hand, it aims at achieving some technological changes, by ways of monitoring, data management, quantification, and of investment programs (see figure 1).

Figure 1. Organization of existing approaches to WDM in Jordan.

Each of these means and objectives need, for a proper implementation, a number of conditions. They rely on different kinds of methods and approaches, and on different types of resources. This was exemplified throughout the workshop, as the table below summarizes it.


Action considered

Conditions to meet

Available methods and approaches to address obstacles

Resources to use

Examples mentioned during the workshop

Investment programs in more efficient equipment

Efficiency gains are not compensated by expanding and increasing use over fixed limits

Development of Monitoring Clarification of responsibilities in implementation

• • •

Institutional support Political involvement Coordination and cooperation among agencies


Technological support, upgrade of technologies

Continued development of expertise

Analysis of available best practices Sharing of experience Development of field projects

• •

Flexibility of action, Decentralization, organization of action through a dedicated organization (water demand « agency? »)

Idara, Aqaba, JVA, expanding reuse to non-food industries

Stakeholders participation and training

Sufficient support Availability of expertise and staff

Joint financial mechanism

Experience from development projects


Law enforcement, penalties, control

Further clarification of priorities Complementar ity of organizations Reduce « opportunist agriculture »

Design equitable law enforcement based on stakeholders participation Careful typology of users and pilot studies

Field experience from existing projects

HWF and related data

Law enforcement Understanding and awareness

Tariff-setting and other economic instruments

• •

Participation to engage stakeholders, « attraction by itself »

Table 1. Summary of demonstrated approaches to WDM



What are Economics useful for, in the prospect of Water Demand Management? •


To foster WDM, economics appeared as common language that was able to bring people together and provide cross-sectoral criteria for discussing and choosing options, as was seen during the program design simulation exercise (day 2). Economics were also able to suggest new ways of asking questions with respect to water management priorities. Among others, the principle of a “cost curve”, and the related “implementation difficulty”, were seen as efficient tools to organize discussion over policy options. However, economics are more a necessary than a sufficient condition: calculating a ratio is certainly not “the end of the story”, as it does not grab all policy-making relevant criteria. For instance, the cost curve made clear that the “least costly” measures are not the simplest measures to implement; law enforcement, especially, appears by far as the most cost-effective way to reduce water demand, however experience shows that it is not easily obtained. Economic analysis also made clear that increasing the efficiency of water use does not necessarily mean relying on water savings, but means achieving a higher “productivity of water”. Economic approaches provide also interesting instruments, as those designed to optimize leakage reduction in municipalities (defining the point above which increasing leakage reduction is no more profitable, and thus the economically-defined reduction target). Last, many issues are yet to be addressed, such as addressing the “tragedy of the commons”, when access to water resources are not managed, the environmental costs, or comprehensive sectoral value chain analyses…