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“Economics of water demand management” Workshop held in Amman and Dead Sea, Jordan From December 1 to 3, 2011 Under the auspices of the Jordanian Ministry of Water and Irrigation, and supported by the French Agency for Development, the CMI and the Plan Bleu “To share visions of the water demand management issues”

“Our water situation is a strategic challenge which can not be ignored, and we have to make balance between the domestic, industrial and agricultural needs, while keeping the domestic water issue the fundamental and most important” - King Abdullah II Ibn Al-Hussein –

Due to its geographical situation, and to its long history in water management, Jordan has invested intensively in 3 major sectors for demand management, and has developed innovative approaches. In the field of irrigation, projects in the Jordan valley or in the Highlands have led to develop participatory processes to find the best use of water and to share it efficiently In the field of municipal management, projects are meant to address coherently the many various aspects of the problem, from network maintenance to supplying households with means to save water, thus achieving a win-win outcome : reducing the water bill, and saving an indispensable resource for the production forces of the country In the field of water re-use, Jordan seeks to achieve an efficient utilization of its scarce resources. Led by AFD/CEFEB with the active partnership of Plan Bleu and the support of Ecowhat, this workshop was intended to support Jordan’s efforts to design a sound decision-making process. For this, the workshop relied on the recent and ongoing studies on water demand. The workshop gathered more than 32 participants with various backgrouds: Ministries (industry, agriculture, water & irrigation, tourism), independent experts, Jordan water authority, Municipalities, public water utilities, donors (GIZ, USAID, JICA) :They were water-management related but not limited to water specialists, and with a good understanding or willingness to get more familiar with economic language as a communication tool. It should be noted that dates selected by Jordanian authorities for this workshop included a weekend. Despite this, involvement was outstanding and the interest proven. The targeted outputs were : - Participants familiarize themselves with economic concepts and tools for water development management (WDM), through illustrations of WDM approaches and how they are backed and supported by economic analysis - Participants make use of economic concepts and tools to discuss results and preliminary findings of recent and ongoing WDM studies in Jordan and discuss the follow-ups and action plans that may stem for these. - Participants develop optimised set of water demand management measures using economic analysis.

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The 3 days of seminars were frame as follows : 1st day : Best practices and case studies The opening session was chaired by Mrs Corinne Breuzé, French ambassador and Eng Mousa Amani, Minister of Water & irrigation (MWI). This day was devoted to good practises and case studies on the Mediterranean-rim and recall of concepts of production cost, full cost, water value and price, and different tools presented for their calculation. Good practises in Spain (addressing water allocation issues with economic tools in the Guadalquivir region), in Morocco (Tensif basin) and through a panorama of economic instruments for water policy in Mediterranean by Plan Bleu. During this 1st day, the main fact findings were the followings: - Many Mediterranean countries faced the same constraints and shared the same need for improved water demand management (WDM) - An efficient way to work : the participation concern was fundamental in setting WDM tools in the Guadalquivir basin - Regulation/enforcement of the law is highly necessary to address the water scarcity . 2nd day : Taking stock of knowledge and existing water management and economic studies in Jordan This day was the day of “the What to do”: what can we do ? Which should be the major measures for improvement of WDM? AFD, The Water Resources Group and USAID have provided 3 economic approaches to water demand management : - The “Jordan water demand management case study” made by AATEC / QUASIR, funded by AFD, through the CMI program “Thinking outside the waterbox/WDM” (EW2) - “Accelerating Water Sector Transformation in Jordan”, made by McKinsey and funded by the Water Resources Group And an economic water demand management study : “Water valuation as a tool for economic policy”, made by Ecoconsult and funded by US AID. Those 3 studies are proposing innovative approaches to water demand management. They provide the country with extensive economic analyses of the options that are available for water demand management. This second day of the workshop had to achieve a specific purpose: allow the Jordanian authorities and stakeholders, who were represented here, to take stock of those data and analyses, to discuss them and to share a common vision of what should be done now. After having shared and understood theses studies, with help from experts, participants were split over 4 fictive “governments” and invited to play a simulation game, by designing a 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 system 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) - promotion of agricultural/industrial products using reclaimed water - 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, … That were discussed with high representatives of the Ministry of Water & Irrigation (WMI): Eng. Maysson Zoubi (SG of MWI) and Eng. Ali Subah (Director of MWI)

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3rd day : Discussing options for the future Lessons learnt, orientations and favorable conditions to be developed to implement WDM This day was the Day of the “How to do�: How can we implement the measures ? The discussion focused on overcoming institutional constraints and transaction costs. The various existing water demand management measures in place in Jordan were scrutinised, and important remaining issues highlighted: - How to enforce groundwater by-laws in the Highlands in order to stop over abstraction? - How to insure that the Jordan Valley irrigation commanded distribution will allow substituting surface fresh water by treated waste water to the benefit of domestic demand? - How to boost water utility performance and reduce non revenue water to the national objective of 25%? - How to invest on low consuming equipment at household level and gain additional 10% of existing water use? Implementing this WDM program means overcoming a series of obstacles. The 3rd 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 : - 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 for 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 existe, 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 need to invest more un 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. Based on inputs from speakers and from floor discussions, it was proposed to summarize ideas and approaches to meet WDM challenges as follows. WDM 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).

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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. Economic analysis and instruments for water demand management were finally perceived as : - Acommon language bringing stakeholders together and provide cross-sectoral criteria for discussing and choosing options, as was seen during the program design simulation exercise - a more appropriate way to raise new critical 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… Once the recommendations arising from this workshop were widely shared and discussed, this 3 days-workshop has been closed by Mr. Ali Subah Director of MWI. The Jordan case under consideration during this seminar and decision makers from MWI will be further mobilised for elaborating solutions for the water demand management and for sharing at regional level under the corresponding target of the regional process of World Water Forum (this seminar is expected to receive the label of the WWF) This seminar should be replicated in other countries (French module)

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