Assessing the full cost Assessing the full cost and value of water in Morocco and value of water in Morocco ––

AFD/SCP study resultsAFD/SCP study results

Dominique Rojat

Hashemite Kingdom of Jordan – Ministry of Water and Irrigation

Agence Française de

Développement –

French Agency

for Development

Marseille Center

for Mediterranean IntegrationEnvironment and

Development of the

Mediterranean

Presentation from an AFDPresentation from an AFD--SCP study SCP study conducted in Morocco, Sept. 2007conducted in Morocco, Sept. 2007

-- Water Water DemandDemand Management Management --

Assessing full cost and value of water for:Assessing full cost and value of water for:

-- Prioritizing water supply optionsPrioritizing water supply options

-- Discussing water allocationDiscussing water allocation

Agence FranAgence Fran ççaise de Daise de D ééveloppement veloppement -- AFDAFD Page 3

Water Resource Water Resource Management Issues Management Issues in the Tensift Basinin the Tensift Basin

((Marrakech region)Marrakech region)

Study AreaStudy Area

Agence FranAgence Fran ççaise de Daise de D ééveloppement veloppement -- AFDAFD Page 4

The Tensift BasinThe Tensift Basin

O. Lakhdar

O. N’Fis

O. Ourika

O. Zat O. Rdat

Moulay Youssef

O. Tessaout

Hassan 1er

Sidi Driss

Lalla Takerkoust

WirganeTaskourt

Al Massira

O. Lakhdar

O. N’Fis

O. Ourika

O. Zat O. Rdat

Moulay Youssef

O. Tessaout

Hassan 1er

Sidi Driss

Lalla Takerkoust

Wirgane

O. Lakhdar

O. N’Fis

O. Ourika

O. Zat O. Rdat

Moulay Youssef

O. Tessaout

Hassan 1er

Sidi Driss

Lalla Takerkoust

Wirgane

O. Lakhdar

O. N’Fis

O. Ourika

O. Zat O. Rdat

Moulay Youssef

O. Tessaout

Hassan 1er

Sidi Driss

Lalla Takerkoust

WirganeTaskourt

Al Massira

Water Water resourcesresources and infrastructureand infrastructure

Agence FranAgence Fran ççaise de Daise de D ééveloppement veloppement -- AFDAFD Page 5

� Haouz Groundwater Table heavily overexploited (150%, -2m/year)� Dams: “off the limits”

� Reduced capacity due to siltation (Lalla Takerkoust: only 30% of nominal capacity)

� New investments hampered by increasing marginal costs� Rocade transfer Canal (from the neighboring Oum er Rbia basin):

� Actual flow (125Mm3) less than half ‘Paper’ resource planning (350Mm3)� Domestic water uses now 60Mm3 vs. 40Mm3 planned (to the detriment of

irrigation)� Recently: extra allocation of 20Mm3 for golf greens� Irrigation = adjustment variable:

� got only 36% of the 310Mm3 ‘paper’ allocation over 1993-2005� In bad years, uses only 50% of water available

� Trend: OK for five years owing to Wirgane dam and Wastewater Reuse� More 100 to 600Mm3 needed by 2020 if tourism is to meet planned development�� => What are the options?=> What are the options?

Water scarcity and future needsWater scarcity and future needs

Agence FranAgence Fran ççaise de Daise de D ééveloppement veloppement -- AFDAFD Page 6

Cost assessment of different water Cost assessment of different water supply solutions (1)supply solutions (1)

Comparaison des solutions d'approvisionnement en ea u sur la base des différentes composantes du coût total (DH/ m3)

0

2

4

6

8

10

12

14

16

AEP

REU

TIrr

igat

ion

IL in

f.

IL s

up.

Mas

sira

inf.

Mas

sira

sup.

Wirg

ane

Des

sale

men

t inf

.

Des

sale

men

t sup

.

Externalités

Coûts d'opportunité

Fonctionnement

Investissement

Comparison of water supply options based on tentati ve evaluation of the full cost of water (DH/m3 – 10 DH = 1 Euro)

Externalities

Opportunity costs

O & M

Investment

Agence FranAgence Fran ççaise de Daise de D ééveloppement veloppement -- AFDAFD Page 7

� Even operating and maintenance costs were not alwaysassessed or estimated for lack of data

� Only in a few cases was it possible to estimate opportunity costs and externalities

� Still, ranking of water supply solutions based on cost/m3 is highly sensitive to those costs

� The most costly solutions are found to be: transfer from Massira and desalination

� The most cost-effective solutions are the WDM ones, i.e. water savings on existing infrastructure and networks

� The cost-effectiveness of the WW Re-use solution is dependent on accounting for the informal sector opportunity costs i.e. farmers making illegal use of used water for irrigation

Cost assessment of different water Cost assessment of different water supply solutions (2)supply solutions (2)

Agence FranAgence Fran ççaise de Daise de D ééveloppement veloppement -- AFDAFD Page 8

� Findings to be weighted considering funding sources associated to different solutions:� Dams to be State-funded

� Transfer from Massira will be at ONEP’s expense as far as treated water is concerned

� Irrigation water saving investments are subsidized at a 80% rate

� Domestic water saving costs may not be fully born by users due to limits set to tariffs

� WW Re-use and desalination offer PPP opportunities

� => shifting from full cost to public expenditure requirement may be appropriate from a public decision-making perspective

� Other/new options still to be explored/developed: groundwater recharge, use of flooding water, conservation agriculture, law enforcement on water pumping, incentives to water saving, taxes on tourism activities, river/groundwater contracts, ITQs?

Water supply solutions matched with Water supply solutions matched with funding sourcesfunding sources

Agence FranAgence Fran ççaise de Daise de D ééveloppement veloppement -- AFDAFD Page 9

Average value added by m3: agriculture vs. tourismAverage value added by m3: agriculture vs. tourism

Occupation du sol des périmètresalimentés par l'ORMVAH

Cultures maraîchères

Fourrages

Céréales (blé dur, blé tendre, orge)

Arboriculture

Divers

AgrumesAbricotiers

Oliviers

Agriculture (Central Haouz irrigated areas):1,1 to 9,4 DH/m3

- Private sector achieves a far better value for water -

Tourism : 40 to 50 EUR/m3

=> Ratio of 1 to 100

Assessing Value of Water Assessing Value of Water in different usesin different uses

Agence FranAgence Fran ççaise de Daise de D ééveloppement veloppement -- AFDAFD Page 10

� Average VA (reflects current situation) instead of marginal VA (appropriate criterion for allocation choice) was used for comparison

� Tourism and (esp. smallholder) agriculture issues are not homogenous in nature-comparison is imbalanced, “unfair” from a social viewpoint

� Reverse thinking: what does the VA/m3 indicator not say?� Agriculture: indirect values (livestock rearing, processing of

agricultural products…), groundwater recharge, drainage, social value (employment), environmental amenities with impact on tourism

� Tourism: price rise => loss in purchasing power for local consumers, GHG emissions

Water valuation and allocation Water valuation and allocation choiceschoices

Interest and limits of the VA/m3 approach

Agence FranAgence Fran ççaise de Daise de D ééveloppement veloppement -- AFDAFD Page 11

Thank you for your attentionThank you for your attention