Pitch
By capturing water values of energy planning in water-scarce places, economics can guide sustainable and pro-poor water and energy policies
Description
Summary
Jordan is a water and energy poor country that consumes 20% of its total energy to provide only a minimum water allocation for health and hygiene, but generally below World Health Organization standards at that. Sustainable water resources only meet 16% of its domestic and agricultural needs. The Multi-Year Water Allocation Systems (MYWAS) project developed a hydro-economic optimization model for water resource allocation for Jordan. The model simulates environmental, engineering and social constraints to maximize system-wide net benefits by optimizing social welfare and reducing energy costs. MYWAS can be used to evaluate a broad range of analysis scales, starting from alternative water allocation policies, through potential mega-projects, and down to various proposed infrastructure improvement plans and pricing policies.
Our project applies economic theory to examine the value of water both spatially and temporally and to understand the tradeoffs and opportunities implicit in different water allocation schemes. MYWAS models infrastructure, pricing schedules, demand, supply and potential supply variability and uses economic principles to calculate resource values to consumers, which correspond to availability. MYWAS applies these changing values and the known costs of the distribution network to maximize net benefits of water allocation. The model ensures water delivery to the consumers who most value the water and balances demand and supply by reconciling scarcity, water value, and net benefits within the water allocation framework. In additional to free market economics, MYWAS can incorporate policies in the form of tariffs and/or subsidies for consumers whose private value is not completely captured from a social perspective (for example basic water supply to the very poor or certain farmers).
What actions do you propose?
Sustainable water resource availability in Jordan is estimated to be 2,120 MCM per year (Haddadin 2006), with a current population of 7.8 million including the Syrian refugees. Therefore, the per capita sustainable water resource availability is 272 m3/capita/yr, The most widely used measure of water stress, the Falkenmark Index (Falkenmark, 1989) notes that values above 1700 m3/capita/year as no stress, values below 500 m3/capita/year represent absolute scarcity. Jordan is at approximately half that value. Thus current sustainable water resource availability can only meet 16% of the need, which reveals the severe level of water scarcity in Jordan.
The MYWAS project will complete the construction a hydro economic model for water distribution in the Kingdom of Jordan. Currently the model has been developed for the North of Jordan, with the highest influx of Syrian refugees. The model will enable water providers to better serve water demands. In Jordan, water scarcity permeates through all levels of society. Domestic water users in the cities receive water intermittently, while the northern food producers must cope with diminishing groundwater supply. The influx of 1.4 million refugees from the Syrian civil war has exacerbated an already precarious situation.
There is room for improvement in water allocation decision making. In Jordan, some consumers pay very little for water they do not highly value, while others must pay high amounts for the smallest quantities they need to survive. However, no matter how scarce the water supply becomes, economics stipulates that the cost of water has an upper bound: the cost to desalinate and transport water to the respective consumers . The more remote the users, the more expensive this hypothetical source becomes, but the upper bound remains, and can be calculated for any region (Fisher and Huber-Lee, 2011).
The cost to desalinate water is $0.6 per meter cube, which is cheaper than many Jordanian communities are already paying. The very poor pay more than $10 per cubic meter that they buy from tanker trucks out of necessity. Consumer demand is a moving target, since it changes with price and purpose. It can be predicted using price elasticity, which relates the value of water to consumers to the quantity they can access. Jordanian users have demonstrated themselves to be willing to pay desalinated prices for water. It is thus rational and financially feasible to provide even expensive desalinated water so long as the consumers value the water they receive more than the money they pay for it. Beyond a certain quantity, value will equal cost, and users will not demand more water at this price. Examining the problem through an economic lens demonstrates that demand and supply can be balanced with accurate planning and an understanding of the system dynamics. Economics provides an alternative structuring of questions and solutions, and with it decisions can be optimized to ensure benefits are shared, and maximized amongst all the consumers involved, modified by social values as appropriate in the local context.
Our project seeks to modify both decision-makers and consumers behaviors but demonstrating how much more benefit the people of Jordan could gain if the value of water is reflected in allocations and pricing. Consumer willingness to pay indicates the intrinsic value of the benefit that a consumer derives from that quantity of water. MYWAS can calculate the benefits derived from water using demand curves for different sectors like agriculture, domestic supply and industry. These benefits change spatially, temporally, and according to scarcity conditions. Similarly, the cost of water supply changes spatially, temporally, and according to scarcity conditions that can impact groundwater withdrawals or surface water availability. Thus, the process to optimize benefits becomes extremely complex over large regions, and requires a comprehensive model that can capture and incorporate all the changing variables that represent the demands that drive the system.
The MYWAS uses a sophisticated understanding of the water systems of Jordan, complete with demand sites, supply sources, transmission links, waste generation and other components. By representing the water distribution system, MYWAS provides a new format to compare and contrast potential decisions for water allocation. In any system, there are political constraints, environmental constraints, and uncertainties about the future. MYWAS can model scenarios of different policies, infrastructure construction, or water availability to indicate the payoff of potential investments or to study the manifestation of various risks on the Jordanian system.
Ultimately, MYWAS can empower decision makers to frame questions about their future. Within the model, they can study the impact of interventions that could make the water distribution system more robust, even under planning uncertainty like climate change, population growth, or additional refugee influx.
Such a methodology will require data acquisition for entry into the model and updating of the model as necessary. It will also require capacity building so Jordanian personnel can learn to employ the model as new challenges and questions arise. For example, MYWAS can incorporate the estimated costs of environmental externalities, or the services and values associated with protecting natural ecosystems. MYWAS also allows policy control in the form of subsidies, for instance, for a poor community to enable them to afford more water even if their willingness to pay is less than a nearby wealthier community.
The project has collected economic and infrastructure data and constructed a model of existing conditions in the northern portion of Jordan. We have simulated limited scenarios to respond to urgent and specific questions asked by the Jordanian government. By combining demand curves, infrastructure constraints, sustainability limits and social and environmental policies, the project suggests water allocation alternatives that maximize social welfare and reduce energy use.
Upon implementation in Jordan and the Middle East, the project could demonstrate the actionable combination of engineering and economics in regions of water scarcity and conflicting users. The approach could be applied globally because the tool uses a flexible watershed modeling software capable of capturing any region under examination. In particular, the MYWAS model for Jordan can be integrated with parallel efforts in Israel and the West Bank, enabling not only national water allocation optimization, but regional optimization even in the context of conflict. MYWAS reduces the problem to costs and benefits, allows users to implement subsidies to prioritize certain supplies, and then lets the system characteristics determine water allocation that benefits everyone better than the system currently in place.
Who will take these actions?
Constructing the MYWAS model will require a joint effort from several institutions. The Stockholm Environment Institute (SEI) has designed and programmed the MYWAS model as well as its schematic interface for data entry, the Water Evaluation and Planning (WEAP) platform. SEI would guide the model construction as well as direct the data gathering to populate the components of the model’s optimization equation. As part of this work, SEI will work with Jordanian national and American-trained water engineer Ayman Halaseh of CDM Smith.
Also crucial to the project implementation will be the participation of the Jordanian government. In addition to their crucial role collecting accurate data to characterize Jordon’s temporal and spatial water costs and values, they will articulate possible futures that can be explored in the model to direct decision making. Ultimately, the Jordan MYWAS will be a tool for the Jordan government, so capacity building in model operation will be the only guarantee of the model’s improvement and implementation over the long term.
Where will these actions be taken?
The actions will take place primarily in Jordan, but with technical support from the US. Using funding from Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), SEI has already constructed a detailed MYWAS model for the North of Jordan. This project would support a model for the whole of Jordan, to incorporate important demand sites like Amman and Aqaba and supplies like the Disi Aquifer and the Red-Dead Canal currently under agreement.
The situation in Jordan is urgent due to the constrained supply, high value of water that is not currently available (called shadow value) and the ongoing crisis of the Syrian refugees. The benefits of realizing the MYWAS project in Jordan will span all the water demand sectors and, by design, those currently paying the most for water and receiving the smallest amounts. There are many vulnerable actors in this system, but economic theory with MYWAS provides a methodology for maximizing the benefits.
How will these actions have a high impact in addressing climate change?
Water activities consume more than 20% of the Jordan’s generated power so any increase in efficiency in the water sector will have a significant impact on energy production. Currently almost all of Jordan’s energy is supplied via fossil fuels. One of MYWAS’ main objectives is to proposed alternative water allocations which will reduce the energy consumption. This will lead to reduce in greenhouse gas emissions.
The MYWAS tool could would be the most suitable tool to evaluate the feasibility of utilizing solar power and other green energy sources to feed water production and transporting activities in addition to sea water desalination as a new source of water for Jordan and the region.
What are other key benefits?
MYWAS-WEAP creates a powerful tool to reveal future pathways for resolving long outstanding water allocation issues, whether within the confines of a single government or a broader multi-faceted political context. MYWAS thus provides an innovative water management strategy designed to preempt not only water war, but the much more pernicious occurrence of water conflicts. In addressing them, MYWAS can benefit all levels of water consumes by ensuring a more beneficial system.
This tool has been demonstrating that cooperation in the Middle East is the Key to find sustainable solution, for water, energy, food and eco system. Therefore this tool is has an outstanding capability to measure the benefits of applying policies or potential project of different sectors and entities, and doesn’t leave it for the powerful party to dictate policies to maximize their benefits.
What are the proposal’s costs?
Time line
The first phase of this project in the near future is building, calibrating and validating the model for Jordan and then demonstrate the tool benefits to the decision maker. However to fully utilize the tool and get more beneficial client interaction, capacity building and training within the government body is required within the coming 5 years.
MYWAS is expected to be the main decision support tool in the ministry of water and irrigation within the coming 5 to 10 years and therefore continually be developed and refined.
Related proposals
References
Falkenmark. "The massive water scarcity threatening Africa-why isn't it being addressed." Ambio 18, no. 2 (1989): 112-118.
Fisher, F. and Huber-Lee, A., et al. 2005. Liquid Assets: An Economic Approach for Water Management and Conflict Resolution in the Middle East and Beyond. Resources for the Future.
Fisher, F. and Huber-Lee, A. 2006. Economics, Water Management, and Conflict Resolution in the Middle East and Beyond. Environment: Science and Policy for Sustainable Development, Vol. 48, No. 3, pp 26-41.
Fisher, F. and Huber-Lee, A. 2011. Sustainability, Efficient Management and Conflict Resolution in Water. The Whitehead Journal of Diplomacy and International Relations, Vol XII (1), 2011, pp 63-78.
Fisher, F. and Huber-Lee, A. 2011.The value of water: Optimizing models for sustainable management, infrastructure planning and conflict resolution. Desalination and Water Treatment, 31:1-3, 1-24.
By:
SEI
