JORDAN WATER DEMAND MANAGEMENT STUDY

Water Demand Management in Mediterranean Countries: Thinking Outside the Water Box!

Jordan case study

Determining the Economic Value of Water in Jordan

1-3 December 2011

Prepared for French Agency of Development (AFD) 1

Objectives The main objective of Task 7 in TOR was to

update pervious Studies on Water Value. The New Objective is to set value of water by

suggest appropriate methodology to evaluate the economic value of water for Municipal, Industry and Agriculture using recent available data

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Value of Water in IndustryWater Values based on Gross Value

Added

Value of Water in IndustryWater Values based on Gross Value Added

Jordans industries consumed approximately 45.6 MCM of freshwater according to an estimation based on water bills for DOS

The gross value added (GVA) by industries, i.e. their monetary output minus intermediate consumption, during the same year amounted to about 4.1 billion JD.

This yielded a ratio of about 86 JD in GVA per m of water consumed

Water Value in Jordans industrial sector based on three indicators

0 1,000 2,000 3,000 4,000 5,000

Ext. Petroleum and natural gas

Man. Coke & refined petroleum

Man. tobacco products

Man. electrical machinery

Man. motor vehicles

Man. transport equipment

Man. machinery and equipment

Man. fabricated metal products

Man. Furniture

Man. Wood & Ccork products

Publishing & printing

Man. Rubber & Plastics

Man. textiles

Tanning of leather

Man. wearing apparel

Man. basic metals

Man. Paper & Paper products

Electricity, gas, & Steam

Man. Medical & optical instruments,

Man. of food & beverages

Man. non-metallic mineral

Man. Chemicals

Mining and quarrying

JD per M3

Net Value Added Per M3

Gross value added Per M3

Gross Output per M3

Value of Water in Agriculture

Agricultural Export (Million JD)n

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% of Vegetable to Total Export

Total Domest

ic Export

Food & beverag

es,fats & oils

Vegetable products

Live animal

s

Year

6.12,92912662179832006

9.23,18416216293192007

7.24,43121118320542008

8.93,5792006320572009

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0

Cucumber

String beans

Sweet pepper

Okra

Water melon

Cow-peas

Sweet melon

Carrot

Peas

Parsley

Tomatoes

Lettuce

Broad beans

Turnip

Cauliflower

Cabbage

Eggplants

Jew's mallow

Potato

Spinach

Onion green

Snake cucumber

Onion dry

Squash

Radish

Hot pepper

Others Veg

JD/ M3

Value Added (JD/M3)

The Economic Value of Domestic Water in Jordan

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Domestic Water Sector in Jordan (3)

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Domestic Water Sector in Jordan (4) Residential water tariff volumetric

No residential water tariff is fixed rate at 1 JD/m312

Value of Water for Domestic Sector (1) Component I: Cost of Water

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Value of Water for Domestic Sector (2) Component II: opportunity cost

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Amman North region Aqaba

Rest of Jordan

Total (Jordan)

Residential water bill revenues (Million JD) 38.61 9.26 1.26 11.33 60.47Residential billed water (MCM) 75.35 32.74 3.31 40.08 151.49Average water price for residential users (JD/m3) 0.51 0.28 0.38 0.28 0.40Non-residential water price (JD/m3) 1 1 1 1 1Opportunity Cost (JD/m3) 0.49 0.72 0.62 0.72 0.60

Value of Water for Domestic Sector (3)

Amman North region Aqaba

Rest of Jordan

Total (Jordan)

Opportunity Cost (JD/m3) 0.49 0.72 0.62 0.72 0.60Total cost (JD/m3 billed) 0.87 0.89 0.80 1.20 0.89Water value (JD/m3) 1.36 1.61 1.42 1.91 1.49Total water value (M JD) 102.30 52.76 4.69 76.65 225.73

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CONCLUSIONS AND POLICY IMPLICATIONS (1) The domestic water values for the different

regions of Jordan range from 1.36 to 1.91 JD/m3with an average of 1.49 JD/m3

The actual domestic water value is much higher as a result of not accounting for Underestimation of the capital investment Indirect subsidy to other cost items specifically energy Environmental cost resulted from over utilization of the

renewable water resources Water quality deterioration that increases the cost of

water treatment. 16

CONCLUSIONS AND POLICY IMPLICATIONS (2) Recognizing the actual value of the domestic

water should assist decision makers to set appropriate domestic water tariff in Jordan.

Comparison of the cross sectorial water value against the sectorial water tariff will also help in deciding on the optimized water tariff for the whole economy.

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Thank You

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