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)

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

Value of Water in Industry

Water Values based on Gross Value
Added

Value of Water in Industry

Water 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

Mining and quarrying
Man. Chemicals
Man. non-metallic mineral

Net Value Added Per M3

Man. of food & beverages

Gross value added Per M3

Man. Medical & optical instruments,

Gross Output per M3

Electricity, gas, & Steam
Man. Paper & Paper products
Man. basic metals
Man. wearing apparel
Tanning of leather
Man. textiles
Man. Rubber & Plastics
Publishing & printing
Man. Wood & Ccork products
Man. Furniture
Man. fabricated metal products
Man. machinery and equipment
Man. transport equipment
Man. motor vehicles
Man. electrical machinery
Man. tobacco products
Man. Coke & refined petroleum
Ext. Petroleum and natural gas

1,000

2,000
3,000
JD per M3

4,000

5,000

Value of Water in Agriculture

Agricultural Export (Million JD)n

Year

Total
% of
Domest Vegetab
Food &
ic
le to
beverag Export
Total
es,
Export

Live
animal
s

Vegetable
products

fats &
oils

2006

83

179

62

126

2,929

6.1

2007

19

293

16

162

3,184

9.2

2008

54

320

18

211

4,431

7.2

2009

57

320

200

3,579

8.9
7

Value Added (JD/M3)

Others Veg
Hot pepper
Radish
Squash
Onion dry
Snake cucumber
Onion green
Spinach
Potato
Jew's mallow
Eggplants
Cabbage
Cauliflower
Turnip
Broad beans
Lettuce
Tomatoes
Parsley
Peas
Carrot
Sweet melon
Cow-peas
Water melon
Okra
Sweet pepper
String beans
Cucumber
0.0

1.0

2.0

3.0

4.0
JD/ M3

5.0

6.0

7.0

The Economic Value of Domestic

Water in Jordan

10

Domestic Water Sector in Jordan (3)

11

Domestic Water Sector in Jordan (4)

Residential water tariff volumetric

12

No residential water tariff is fixed rate at 1 JD/m3

Value of Water for Domestic Sector (1)

Component I: Cost of Water

13

Value of Water for Domestic Sector (2)

Component II: opportunity cost
Residential water bill
revenues (Million JD)
Residential billed water
(MCM)
Average water price for
residential users (JD/m3)
Non-residential water price
(JD/m3)
Opportunity Cost (JD/m3)

Amman

North
region

Aqaba

Rest of
Jordan

Total
(Jordan)

38.61

9.26

1.26

11.33

60.47

75.35

32.74

3.31

40.08

151.49

0.51

0.28

0.38

0.28

0.40

0.49

0.72

0.62

0.72

0.60
14

Value of Water for Domestic Sector (3)

Opportunity Cost (JD/m3)

0.49

North
region
0.72

Total cost (JD/m3 billed)

0.87

0.89

0.80

1.20

0.89

Water value (JD/m3)

Total water value (M JD)

1.36
102.30

1.61
52.76

1.42
4.69

1.91
76.65

1.49
225.73

Amman

0.62

Rest of
Jordan
0.72

Total
(Jordan)
0.60

Aqaba

15

CONCLUSIONS AND POLICY IMPLICATIONS (1)

The domestic water values for the different
regions of Jordan range from 1.36 to 1.91 JD/m3
with 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
16
water treatment.

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.
17

Thank You
18