Does MUS pay back? Developing a framework for the analysis of costs and benefits of multiple use of water Based on paper by Adank, M; Fonseca, C and Butterworth, J. Delft, 12 th February 2007

Introduction Little known on –costs and benefits of multiple use of water versus single use –Incremental costs -> incremental amount of water -> incremental benefits = single use = multiple use = incremental => Framework for analyzing costs and benefits => Use framework to analyze (incremental) costs and benefits from multiple use of water

Categorizing costs 5 types of costs: Capital investment costs in assets (CapIn) Operating and minor maintenance expenditure (Opex) Capital maintenance expenditure (Capex) Costs of capital (CoCap) Indirect support costs

3 Levels Household level System level Service level

Costs at different levels Type of costHousehold levelSystem levelService level Capital investment costs in assets (CapIn) Self supply: Design and construction of the system (in cash and kind, including labor, materials, land) Communal systems: Household contribution to the capital costs (in cash and kind, including labor, materials, land) or connection costs (in cash and kind) Total costs op design and construction of the system, in cash and kind (including unpaid labor, materials and land) As at service level Operating and minor maintenance expenditure (Opex) Self supply: Including power costs, labor costs, time spent on fetching water, etc within a time unit Communal systems: -Water fees (can be different for different uses) * Amount of water used for different activities -Household contribution to O&M -O&M at account of household at own account (e.g. small repairs not covered by water tariffs and time spending on fetching water) Total costs of O&M, including power costs (where applicable), labor costs, costs of materials for minor repairs, time spent on fetching water, etc As at service level Indirect support costsindirect support costs going beyond a single system, e.g. institutional capacity building and skills training at local and national government, developing and maintaining IWRM plans, development and maintaining monitoring and information systems, setting up a private sector and / or supply chain, promotion etc.

Costs depend on: Context (costs of materials, labor, skills, etc) Use of water –Amount used, and how it relates to amount designed for Type of system –Type of infrastructure –Type of management

Use of water Different uses could be grouped in the following categories: domestic use de facto domestic+ (unintentional additional uses) domestic+ (additional uses according to design) multiple use (domestic and productive use to full potential) Irrigation+ (additional uses according to design) de facto irrigation+ (unintentional additional uses) irrigation. Incremental costs: additional costs of going from one type of use to another type of use

Type of systems / technological option A possible categorization: rain water harvesting system manually operated point source mechanized point source community managed piped system utility managed piped system open canal system (open to suggestions)

Use of water and type of system Incremental costs domestic use de facto domestic+ domestic+ according to design multiple use Irrigation+ according to design de facto irrigation+ irrigation rain water harvesting system mechanized point source manually operated point source community managed piped system utility managed piped system open canal system Incremental costs

However Shape of graphs depends on context Shape of graphs depends to large extent on type of system In reality, “type of use” and “type of system” are not independent from each other Possible to look at incremental costs of different uses –within a specific system –similar type systems within same context (e.g. ranges of upgrades of a system, leading to increased availability of water and change in the use of the water)

Comparing between households Difference in context make it impossible to compare between cases No incremental CapIn Incremental Opex determined by tariff structure

Comparing between systems Only possible when context is constant Incremental costs is combination of incremental CapIn and Opex

Availability of data Scattered information, often difficult to compare, complete data sets are rare -Either info on household level or on system level -Either info on CapIn or Opex Hardly / no data on: –Capital maintenance costs and costs of capital –CapIn and Opex costs in kind (materials contributed by users, labour, land etc) –Support costs => Underestimation of costs

Benefits Benefits of water use will depend on Context factors (e.g. access to markets, other production resources etc) The use of the water –Type of activity (quality and quantity water needed)

Use of water Domestic use –consumption (drinking and cooking) –hygiene (bathing, washing and cleaning) Productive uses (watering livestock, irrigation, industrial use and use for supporting services (like water use in a hairdressing salon) Amenities (watering lawns, car- washing and other non-essential tasks) Multiple use

Benefits related to quantity of water available

Data available: Optimal benefits per m 3 of extra water Benefits (in US$ / m 3 ) ActivityGlobal 1 South Africa 2 India 3 Domestic use2.9 Ice-block making beer brewing hair salons80.00 Building28.57 livestock rearing fruit trees1.90 Vegetable gardens 1.24 Brick making9.41 Pot making2.82 Blacksmithing74.35 Toddy tapping Adapted from Hutton, G. and Haller, L. (2004). 2. Juan Carlos Pérez de Mendiguren and Mpatametse Mabelane (2001) 3. A. J. James (2004) Context is important factor

Benefits are easily overestimated Often not optimal use of extra water => actual benefits will be below potential benefits. How do people use extra available water? Often no linear relationship between amount of water used and benefits Important to look at case specific actual benefits. (but data on this is generally lacking)

Costs and benefits within a system (not accurate because of lack of data)

Costs and benefits of different uses within a system

Costs and benefits between systems

Conclusions Is it possible and useful to determine incremental costs and benefits of multiple use versus single use? –Difficult to determine incremental costs of types of use. Easier to determine incremental costs of types of systems –Incremental costs are very context specific => generalization is difficult –Many systems are over designed => incremental costs of increased use of water negligible How to determine incremental support costs? Does MUS pay back? –At first sight, yes. However, costs are easily underestimated and benefits overestimated. Need for more research in actual costs and benefits.

Thank you Questions?