Benefit (Cost) Sharing

Benefit (Cost) Sharing

In the context of the Okavango

• 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)

Why talk about benefit sharing?Why talk about benefit sharing?

Basin Level Planning

Country A

Country B

Country C

Country Level Planning

Country A

Country B

Country C

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.

Water Withdrawals Withdrawals as % of Total Water(all figures in million m3 of water, except HEP is GWh)

Country Botswana Namibia Angola Namibia AngolaSectorEcosystem Uses 10,225 99.2%

Total Water 10,311 Direct Human Use (million m3)

Hydropower - - - Irrigation - 29 17 0.3% 0.2%Water Supply 25 3 11 0.2% 0.0% 0.1%

Change from reference caseLow Development Scenario (million m3)

Country Namibia Angola Namibia Angola Namibia AngolaSectorEcosystem Uses 9,800 (425) 95.1%

Direct Human UseHydropower - - 228 - - 228 Irrigation - 36 431 - 6 414 0.3% 4.2%Water Supply 26 4 13 1 1 2 0.3% 0.0% 0.1%

Country Namibia Angola Namibia Angola Botswana Namibia AngolaSectorEcosystem Uses 9,116 (1,109) 88.4%

Direct Human UseHydropower - - 257 - - 257 Irrigation - 112 1,017 - 83 1,000 1.1% 9.9%Water Supply 30 21 14 5 18 3 0.3% 0.2% 0.1%


Direct Human UseHydropower - 97 367 - 97 367 0.9%Irrigation - 210 3,296 - 181 3,279 2.0% 32.0%Water Supply 37 104 18 12 102 7 0.4% 1.0% 0.2%


Country Botswana Namibia Angola Botswana Namibia AngolaSectorEcosystem Uses 10,225 99.2%

































Country Botswana Namibia Angola Botswana Namibia AngolaSectorEcosystem Uses 10,225 99.2%





















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.

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?

BASIN - Conservative Projection (by water withdrawals)

-1600

-1400

-1200

-1000

-800

-600

-400

-200

0

200

0 500 1000 1500 2000 2500 3000 3500 4000

'000 cubic meters of withdrawals

$ m

illio

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(cu

mu

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enef

its

or

loss

es)

Water Supply

Hydropower

Irrigation

Ecosystem Goods & Services

Low Water Use

Medium Water Use High Water Use

BASIN - Optimistic Projection (by water withdrawals)

-2000

-1500

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0

500

1000

1500

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0 500 1000 1500 2000 2500 3000 3500 4000

'000 cubic meters of withdrawals

$ m

illi

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s (c

um

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ben

efit

s o

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)

Water Supply

Hydropower

Irrigation

Ecosystem Goods & Services

Low Water Use

Medium Water Use

High Water Use

BASIN - Optimistic Projection (by investment costs)

-2000

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-1000

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0

500

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1500

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$- $500 $1,000 $1,500 $2,000 $2,500

$ million of investment costs

$ m

illi

on

s (c

um

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tive

ben

efit

s o

r lo

sses

)

Water SupplyHydropowerIrrigationEcosystem Goods & Services

Low Water Use

Medium Water Use High Water Use

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

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!

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!

Benefit (Cost) Sharing

Documents

Transcript of Benefit (Cost) Sharing