Does MUS pay back?
22
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
-
Upload
clarke-stephenson -
Category
Documents
-
view
24 -
download
1
description
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. = single use = multiple use = incremental. - PowerPoint PPT Presentation
Transcript of Does MUS pay back?
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, 12th 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
Water use, costs and benefits at household level
Water use
Costs 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 cost Household level System level Service 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 unitCommunal 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 costs indirect 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
Costs of different uses of a type of system
Do
me
stic
Do
me
stic+
de
fa
cto
Do
me
stic+
de
sig
ne
d
Mu
ltip
le
use
Irri
ga
tio
n+
de
sig
ne
d
Irri
ga
tio
n+
de
fa
cto
Irri
ga
tio
n
CapIn Opex Total incremental
Costs per unit water
Do
me
stic
Do
me
stic+
de
fa
cto
Do
me
stic+
de
sig
ne
d
Mu
ltip
le
use
Irri
ga
tio
n+
de
sig
ne
d
Irri
ga
tio
n+
de
fa
cto
Irri
ga
tio
n
CapIn per unit water Opex per unit water Incremental per extra unit water
Incremental per extra unit water
Dom
estic
Dom
estic+
desig
ned
Multip
le
use
Irrigation+
desig
ned
Irrigation
Incremental per extra unit water
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
Costs household level per capita per year
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
Dom
estic
use
Mul
tiple
use
Incr
emen
tal
Dom
estic
use
Mul
tiple
use
Incr
emen
tal
Dom
estic
use
Mul
tiple
use
Incr
emen
tal
Dom
estic
use
Mul
tiple
use
Incr
emen
tal
Rope pump (Zim) Comm. man. pipedsystem SMUS (Nep)
Comm. Man. Piped system,Callacaba (Bol)
Piped w ater system, Tres Puertas(Col)
CapIn (US$/cap/year) Opex (US$/cap/year)
Costs household level per m3
0.0000.0500.1000.1500.2000.2500.3000.3500.400
Dom
estic
use
Mul
tiple
use
Incr
emen
tal
Dom
estic
use
Mul
tiple
use
Incr
emen
tal
Dom
estic
use
Mul
tiple
use
Incr
emen
tal
Dom
estic
use
Mul
tiple
use
Incr
emen
tal
Rope pump (Zim) Comm. man. pipedsystem SMUS (Nep)
Comm. Man. Piped system,Callacaba (Bol)
Piped w ater system, TresPuertas (Col)
CapIn (US$/m3) Opex (US$/m3)
Comparing between systems
0200400600800
10001200140016001800
communalstandpost
yard tank (lowpressure)
roof tank(medium
pressure)
Piped w ater andhouse
connection
Co
sts
per
ho
use
ho
ld (
US
$)
0
100
200
300
400
500
600
700
Use
(l/h
h/d
ay)
CapIn Opex Typical household water use
Incremental costs (US$ / m3)
00.20.40.60.8
11.21.4
communalstandpost
yard tank(low
pressure)
roof tank(mediumpressure)
Piped waterand houseconnection
Incre
men
tal co
sts
(U
S$/m
3)
• Only possible when context is constant
• Incremental costs is combination of incremental CapIn and Opex
Availability of data
Scattered information, often difficult to compare, complete data sets are rare
- Either info on household level or on system level- Either info on CapIn or Opex
Hardly / no data on: – Capital maintenance costs and costs of capital – CapIn and Opex costs in kind (materials contributed
by users, labour, land etc) – Support costs => Underestimation of costs
Benefits
Benefits of water use will depend on
• Context factors (e.g. access to markets, other production resources etc)
• The use of the water – Type of activity (quality and quantity water
needed)
Benefits related to quantity of water available
0
20
40
60
80
100
120
140
0 50 100 150 200 250
Water use (lpcd)
Ben
efits
(U
S$/
year
/cap
ita)
Productiveuse 2Productiveuse 1domesticw ater useAmenities
Data available: Optimal benefits per m3 of extra water
Benefits (in US$ / m3)
Activity Global1 South Africa2 India3
Domestic use 2.9
Ice-block making 161.90
beer brewing 100.00
hair salons 80.00
Building 28.57
livestock rearing 2.38 6.59
fruit trees 1.90
Vegetable gardens
1.24
Brick making 9.41
Pot making 2.82
Blacksmithing 74.35
Toddy tapping 294.12
1. 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 of different uses within a
system
CallacabaCosts, Benefits, Water use at household level per capita per year
0
20
40
60
80
100Water use (m3/year/cap)
Costs *10 (US$/year/cap)Benefits (US$/year/cap)
Multiple use
Productive use (=incremental)
Domestic use
Costs and benefits between systems
0
50
100
150water use (m3/year)
costs (US$ / year) *10benefits from prod use (US$/year)
With ropepump
Incremental
Without ropepump
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?
