Benefit (Cost) Sharing In the context of the Okavango

Why talk about benefit sharing? as long the uses are non-rival there is no problem! The need for allocation and management occurs when the uses become rival and trade-offs emerge then we have two options reallocating the water or the benefits of the water use, investing in ways to conserve, store or reuse water fundamentally the concept of benefit sharing becomes a good idea when the strategically selected and placed investments planned at a basin level is more profitable than when done at a country level. This allows the basin to exploit the comparative advantages of the individual countries. Who and what use can generate the most benefit per unit of water? (more benefit per drop)

Therefore focusing on allocating water between the countries for new consumptive water uses will neither allow the countries nor the basin to exploit comparative advantages. Under such a scheme one country may forgo water for a less productive use in another country. In such a situation the benefit of the water to the overall basin would not be maximized.

The Okavango Case water use in Angola and Namibia is minimal! Then most of the water ends in Botswana where it is “used” for tourism. this is not going to remain so, there are development needs in the basin and all three will increase use for basic needs and for development expect demand for diversions (i.e. agriculture or inter basin transfers), storage (resulting changes in flow regimes) or even landuse change that can affect the quality and quantity of the flow regime There will be gains and losses. The TDA shows the gains will be upstream and the losses will be downstream. over 99% of the mean annual flow of the Okavango reaches, and is consumed in, the Okavango Delta.

The OKACOM TDA methodology an analysis that linked water resource uses to river flows and ecological impacts, and then translated those impacts into economic terms. De facto current and potential future allocations of the water resource were explored through three water use alternatives. The current economic value of the use of the water resource was estimated in each country based on conservative and optimistic projections of the potential value of the different activities. the analysis of changes to the flow regime (IFA) under each projection was used to assess how existing water uses and new water supply, hydropower and irrigation uses would lead to increases or decreases in economic value derived from the river. Can we estimate what the impacts would be? The TDA Who will gain who will lose and how much? In this fashion the economic tradeoffs for each country of different levels of water withdrawals are made explicit. 6

What was found! within the scope of the analysis (irrigation. HEP and WatSan) difficult to increase the net benefits generated by the river. Benefits to share or compensation based on a resource allocation agreement? all the alternatives and projections investigated in the TDA would fail to create net benefits, leaving in question whether there would really be any benefits that could be shared. In other words, what the analysis demonstrates is the need for a more economic attractive set of alternatives.

However, the prospect of large increases in the human diversion and storage of water from the river implies at least the future prospect that the River may become a congestible resource, one that is rival in consumption – i.e. that the use of water by an upstream riparian country will affect the downstream uses and values.

Under optimistic assumptions the picture improves somewhat as net returns to irrigation, particularly in Angola improve. But even still the net returns to the basin remain negative under the low (-$260 million) and medium (-$1 billion) alternatives. In other words the loss to ecosystem goods and services exceeds that of the benefits from water supply, hydropower and irrigation (see Figure 4b). Again, for these alternatives no country has benefits to share from these alternatives. Only, with the full implementation of the large Cuchi irrigation scheme in Angola under the high water withdrawal alternative (and under the optimistic projection) do net returns to the basin move into positive territory (approximately $215 million). Under this scenario, Angola generates positive net returns on the order of $1.2 billion (see Figure 1b). Botswana experiences losses of $1.2 billion and gains of about $50 million for a net loss of $1.15 billion (see Figure 3b). It would seem there are net gains to be had under the optimistic portrayal of the high water withdrawal alternative.

shows that the projects investigated represent a net present cost of around $2 billion. To generate a range of net returns from a loss of $2.9 billion (conservative) to a gain of $250 million (optimistic) from such a sizeable investment in a relatively underdeveloped region makes little economic sense.

Alternative? Is there a more sensible alternatives to water resources development? What is the basin comparative advantage? Which uses can generate the most benefit per unit of water? (more benefit per drop) invest in a low water withdrawal future? one that involves maintaining the health and functioning of the Ecosystem, while investing in WatSAN, low cost run-of-river hydropower schemes, and only the most economically promising irrigation schemes? liberate large amounts of investment capital for use in other productive activities in the basin?

Conclusions? current state of the river creates a comparative advantage for the region in the tourism and wildlife sector. In the short term, the relative comparative advantage lies in the tourism sector in Botswana and Namibia (this can change) a comprehensive settlement that both acknowledges equitable access by countries to the water resource and provides for using water in a productive manner and sharing of the resulting benefits would allow countries to gain the most then you can have benefit sharing

BUT!!

Issues! but how much to share and who? Does Botswana pay because they were historically “using” the water? Does Angola, which is still to generate value from the river, share their benefit downstream? Is that fair? Problem 1: if you show large benefits then you can use more of the water! Problem 2: if you show large benefits then you have to share those benefits! Problem: 1 if you show large benefits then you can use more of the water!- create employment etc Problem 2: if you show large benefits then you have to share those benefits! – is that politically feasible? Can OKACOM sell that?

A Solution? Set aside water for basic human needs including WatSan, some irrigation, power and ecosystem services Use the rest of the water to develop joint Muti-Sectoral Investments where the countries share the benefits and the costs of the most productive investments selected at a basin level within an agreed basin development framework

Watch this space for exciting new developments!

Watch this space for exciting new developments! The Okavango Strategic Action Program Starring: the people of the Okavango Produced and directed by: OKACOM

Thank you!