In Troubled Waters

2007 / Jordan Business

Considered one of the most water-scarce countries in the world, Jordan has long had its share of water troubles. Yet, with today's rapid economic growth and expanding population, those troubles are set to multiply substantially in the years ahead. In a comprehensive report, Jordan Business investigates the alarming situation, while talking to key experts in the field, including former minister of water and irrigation, HE Hazem Nasser.

The year is 2038 and what was once a foreseeable future has now transpired. At ten million people, Jordan's population has nearly doubled in the span of 30 years. Skyscrapers conquer the urban skyline of the Kingdom's major cities, now home to roughly four million non-residents, most of whom are immigrants from yet another displacement-inducing, regional conflict. Industry is thirsty, as are the people. The realities of global warming too have taken their toll on the desert Kingdom; nearly every year is a drought year. Agriculture has been rendered a sector of withered vegetation, and we are no longer able to feed ourselves. Food and water imports add to economic woes. Over 50 dams, scattered across the country, have remained mostly empty for the better half of a decade and have become man-made craters that accommodate nothing more than miniature ponds of coffee-colored water.

The Dead Sea is dying; investors have long abandoned their plans for the area, as has the outside world, which, by doing so, has turned its back on an international heritage site. Ground-water wells have dried up and our neighbors, who have their own water problems, are even less generous with supplies these days. The year is 2038 and it is not an alarmist future but merely an inevitable one. A future for the fourth most, water-scarce nation in the world that is destined to unfold unless today's variables change, and in the face of insurmountable facts, changing they are.

In the present, the facts are self-evident. The average Jordanian consumes 170 cubic meters of water annually; a stark contrast to the 1,000 cubic meters consumed by the average citizen of a water-rich nation. Roughly 92% of the Kingdom is considered desert, and the water supply that provides for nearly six million people, industries, farms, towns and cities - to say nothing of the recent Iraqi influx - comes directly from rain and various underground- water resources. According to leading experts in the field, Jordan's water networks are quickly aging and leaking, with sources at the ministry of water claiming it would require at least $1.2 billion to revamp the Kingdom's entire network - one that has often been the conveyer of water-borne illnesses as a result of the constant pumping. Indeed, last year alone saw thousands of Jordanians being hospitalized from contaminated water.

Couple that with the lack of social awareness and evident water theft, and the total amount of water wasted nationwide stands at a staggering 51%. Meanwhile, the Dead Sea's water surface area has dropped by nearly one third, as the water level continues to decline by roughly one meter every single year.
While the sirens may not be sounding, these facts alone have forced Jordan into a crisis situation and mobilized many stakeholders, including policymakers, the private sector and international-donor organizations, to invest a great deal of time and energy in dissecting the major sources of problems while attempting to unravel their subsequent solutions. This past July, experts from the millennium challenge corporation (MCC) authored a revealing report that pointed to major distortions in water-sector allocations, and the limitations of bulk-water supply were at the heart of Jordan's water woes, posing a threat to the country's economic growth. Without a doubt, mismanagement and wastage have been at the center of national debate in recent times as they have caused many to wonder how a country with so little water can afford to be so wasteful of its precious and limited resources.

Bearing Fruit

According to commonly-quoted experts, agriculture has become a sector representative of water wastage. It is a sector that consumes 65% of available water while its contribution to the gross domestic product (GDP) has not exceeded 3%. In contrast, the industrial sector receives around 3% of available water and contributes at least 40% to Jordan's GDP, as confirmed by the MCC report. It is a fact that seems to resonate loudly in economic- and policymaking-circles, forcing two schools of thought to develop. The first believes that agriculture is a sector that requires the continued support and economic subsidization of the government, as it provides income for thousands of Jordanians. By contrast, the second advocates the view that it is time to phase-out agriculture, at least partially, to comply with more economically-sound, free-market principals. In between the polarities are more critically moderate voices. Some have pointed to the lack of economic sustainability in a sector that employs too many foreign laborers, while others have tended to highlight specific troublesome crops, such as watermelon, beets and even barley, and categorize them as water-inefficient, especially when harvested in the more desert-prone regions of the Kingdom.

In truth, it will take a lot more than macroeconomic theory to sufficiently comprehend the complexities of this particular sector, for agriculture is an industry that is dominated by socioeconomics, culture and tradition - three elements that even most economists would agree are inherently difficult to dissect, let alone alter. From the desert Badia borders of the east to the borders of the Jordan Valley in the west, for many Jordanians, agriculture, be it in the form of sheep herding or plant production, is more than just a livelihood, it is a way of life.

With this in mind, shifting the cultural paradigms has bordered on the impossible. Experts estimate some 2,000 water wells in the Kingdom are overexploited to the point of depletion, with at least half that number being constructed illegally by locals. Meanwhile, this past year, attempts by public officials to crack down on water theft in the Jordan Valley saw armed locals standing in opposition with army personnel eventually being called in to guarantee the safety of ministry employees. For most of these farmers, what water they do consume is still not enough to provide them with a healthy income. Nevertheless, one thing is certain: there are many elements at play when considering the situation of water losses in the agriculture sector, and they all transcend basic economic theory.

Helping Hands

International donors have been at the heart of Jordan's water strategies for well over a decade now. From studies, reports and financial aid to providing technical know-how and expert skills, the international community's role in the Kingdom's water legacy is not to be underestimated. USAID, for example, has been heavily involved in waste-water treatment over the years, especially on the community-level. Various projects such as the Zarqa-Ma'in water treatment plant and another in Amman are currently underway and will look to serve nearly 2.6 million people in the country.

"If you can get more uses out of every drop of water, that's a key way to economize and conserve on the use of the water," said Jay Knott, mission director of USAID in Jordan, during an exclusive interview with Jordan Business. "If you go down to Wadi Musa, you can see the use of [treated] waste water from Petra that's now being used to grow fields and to water landscaping installations. You can see the same thing in Aqaba, Irbid and Zarqa," he explained.

According to Knott, USAID's role is largely centered on working with the government, communities, individuals and the private sector, in order to improve pertinent issues such as the distribution, treatment and pumping of water. With experts pointing to mismanagement and lacking social awareness as root problems of water wastage in Jordan, Knott told Jordan Business that USAID has invested a great deal of time and money in enhancing management skills, as well as in engaging the private sector and the general public to increase awareness of just how scarce water in Jordan is. According to Knott, USAID's water-based projects total around $50 million every year, most of which goes towards infrastructure and technical assistance. More recently, according to Knott, USAID donated another $1.5 million towards the feasibility study of Jordan's proposed water mega-project, the Red-Dead Canal.

Foreign assistance to Jordan dedicated to the water and waste-water treatment sector totaled $575 million between 2003 and 2007, representing roughly 18% of foreign assistance allocated to Jordan during those same years. Data from the ministry of planning and international cooperation indicates that this grand total consists of $379 million in grants and $194 million in soft loans, with major overall funding originating from USAID, Germany and Japan. Indeed, while donors such as USAID are playing a contributive role today, their role, along with that of the international community at large, is destined to increase in years to come, especially when it comes to the two primary mega-projects that are looking to alleviate the country's water issues: the Disi aquifer project and the Red-Dead Canal. Marketed in the local media as potential saviors to the water problem in Jordan, the feasibility of both projects has been highly contested by various critics.

The Expert Lens

Having spent an entire career dedicated to research and policymaking that centers on Jordan's water situation, there is perhaps no better water expert in the field today than the former minister of water and irrigation, HE Hazem Nasser. Throughout the 1990s and during his time at the ministry, Nasser spent a great deal of time founding what would become the Disi project and has also dedicated time and resources on the Red-Dead Canal initiative. With this in mind, Jordan Business sat down to talk to Nasser about these specific mega-projects, while taking the opportunity to tackle various water-related issues that include wastage, agricultural production and his take on the necessary, multi-layered solutions required to steer Jordan through the murky waters ahead.

JB: The most pressing issue regarding Jordan's water problem appears to be that of wastage, with reports of over 50% of water going to waste. What are the major challenges that cause such a water-scarce country to become this wasteful?

HN: I hate to call it water "wastage" as I feel the more accurate term is water "loss." Such losses are typically divided into two components: the physical and technical losses and the administrative losses. Physical and technical losses are those associated with the aging water networks throughout the Kingdom, some of which are as old as 30 years, and contribute to around 25% of total losses. In order to addresses these specific losses, we would need billions of dollars to rehabilitate and renew our network. However, more important, in my opinion, are the administrative losses or water theft.

We have, over the years, faced great challenges in going into areas to try and prohibit illegal use of water. During my tenure as minister, my employees would be kicked out or even fired upon by the locals, resulting in several incidents that involved injuries.

We need to find ways to ease the process of going into areas where water is being used illegally and I think this is a task that requires cooperation between various ministries, especially those of water and the interior.

In Jordan's water sector, the problem is simple: demand exceeds supply. Our national supply is around 800 million cubic meters every year, while our demand for this year and the next is roughly 1.5 billion cubic meters. In other words, the water that is being supplied today satisfies only half of the demand for sectors that include, inter alia, demand from tourism, industry and agriculture, but to name a few examples. Agriculture today suffers from the biggest deficit with regards to water demand and supply, currently estimated at 60%. In the domestic and municipal sectors, the deficit is around 35%, while in industry it is at around 15%.

JB: In Jordan, there tends to be two schools of thought with regards to water use and the agricultural sector. Some believe that agriculture contributes too little to the GDP in order to justify the amount of water it consumes, while others believe this water is a must in order for Jordan to remain competitive in agriculture. What is your position on this issue?

HN: I think politicians and economists alike tend to be very confused about this issue. As an expert in the field, I can safely say that agriculture in Jordan is very important. However, it is a sector that is divided into many components. A glance at the sector indicates that around 55% consists of animal production, while 45% originates from plant production. Around 25% of plant production is considered rain-fed agriculture, which produces things like grapes, olives and figs, and is completely sustainable.

What remains of the agricultural sector is around 25%, half of which is based on irrigated-agriculture in the Jordan Valley, which is also sustainable as it uses marginal, surface water and yields high returns based on competitive and comparative advantages. The other half is based on irrigated agriculture in the highland areas, such as Disi, south Amman and Mafraq. In my opinion, this is where our major fault lies as this type of agriculture uses precious groundwater resources that is not sustainable while production is not economically viable. For instance, wheat and barley is commonly planted in the Disi farms to the south. However, in order to produce one ton of wheat or barley from the desert we require around 2,000 cubic meters of water. The opportunity cost of one cubic meter of water is at least one dollar, if not more. In other words, 2,000 cubic meters of water will push the cost of a ton of wheat or barley to $2,000. With wheat and barely being sold for around $400 to $500 a ton, it is actually cheaper to import these goods.

In Jordan, 80% of our drinking supply comes from underground water wells that have been filled over hundreds of years. Yet, this same supply is being used in large quantities in these areas to grow unsustainable crops. How will we be able to supply the people of Zarqa or Mafraq with drinking water if their primary resource is depleted in 10 or 20 years?

JB: How can this problematic area of the agricultural sector be resolved? Does it require regulation or can it be phased out over time?

HN: While minister, I issued a new and unique bylaw in 2002 to regulate underground water in Jordan by using price as a management tool. Farmers were given a maximum amount of water to consume and anyone wanting to use more would have to pay for it. This resulted in a series of conflicts between me and various stakeholders such as farmers, the agricultural Union and well-owners. Having initially started the process in 2001, I managed to get the union on board with price controls in 2002. However, certain influential people in the country, who own farms in the south, did not wish to abide by the new bylaw. This resulted in a supreme-court case that we, the ministry of water, eventually won, which, in turn, meant that these farm-owners had to pay for water they consumed over the regulated limit.

The rational behind this bylaw was to increase efficiency. Insofar as you receive water free of charge, you have no real incentive to use it wisely. These farms in the south are critical to the problem, as every year they use over 60 million cubic meters of water, which is equivalent to roughly 30% of our domestic-water consumption nationwide.

JB: Everyday, we hear of new large-scale, real-estate development plans that have led many to wonder whether or not the ministry of planning and international cooperation is considering the constraints of our water resources before sanctioning such mega-projects. What is your take on this general perception?

HN: I don't think the ministry of planning is doing any serious planning in the water sector. In fact, I am not sure it is actually convinced of the water sector's importance, with water ranking low on its priority list.

The water issue in Jordan is a multi-dimensional problem that spans across various sectors, where the non-water element is actually the dominant factor. In my opinion, the role of the ministry of water in resolving the water problems in Jordan is no more than 50%. Planning, education, environment and culture are just some of the many non-water elements that come into play. The ministry of water will tend to focus merely on demand and supply, but the issue of water in Jordan is a multi-faceted one that requires various government entities to work together.

We need to talk to kids in schools to educate them, and to the ministry of public works to create new construction codes for equipment that does not consume a lot of water. We also have to talk to the customs department to prohibit the importation of water-consuming, heavy machinery. This coordination should be helmed by the ministry of planning; the government's primary arm for planning. When it comes to integration planning and development of the water sector, I don't think they are doing what they can.

Water is a major element when it comes to economic growth in Jordan and without a sustainable water sector, our economy will not be sustainable.

B: With water being a multi-dimensional problem, what, in your opinion, are some of the more diverse projects that the government can work on to help alleviate the problem?

HN: First, there needs to be a focus from the ministry of education, as it is absolutely necessary to teach our kids at the elementary level that we are a water-scarce country. Higher education in terms of capacity-building is vital too, as I do not personally want to see 10,000 unemployed agricultural engineers in Jordan. Meanwhile, we do not have engineers who are specialized in water-supply management, sanitation or water-quality, as well as drilling engineers and hydrologists.

The ministry of energy must also play a role when it comes to companies in the minerals sector, such as potash, phosphate and fertilizers, as they do not have any recycling process. They are all making money and do not care about water recycling.

Meanwhile, the ministry of tourism can be active in its sector by encouraging hotels and resorts to be more water-conscience, even at the level of having a small reminder in every room encouraging guests to save water, as is often seen in countries such as Germany and the UK.

Moreover, we have thousands of non-governmental organizations (NGOs) in Jordan yet, only two are dealing directly with water, concentrating mostly on education and public awareness.

Also, the majority of the population still has access to relatively cheap water that is heavily subsidized. These subsidies, specifically those governing the consumption of the wealthier people, need to be lifted while maintaining the subsidy on the poorer percentage of the population.

JB: These types of comprehensive and multi-dimensional remedies require a great deal of coordination. Are you in favor of a central authority to carry out the task of intra-governmental water-related efforts?

HN: According to recent World Bank reports, centralization is very important in water-scarce countries, specifically of the resource allocation and not the resource management. This is what has been happening in Jordan. Keeping this type of management in the hands of the ministry of water is vital. However, it is the resource allocation that poses the problem, and thus we require a strong regulator. In many sectors in Jordan, such as telecoms, electricity and transport, we see that the companies have become stronger than their respective regulator.

In my opinion, the regulator should be under the ministry of water's wing for a certain amount of time in order to ensure that the institution is strong enough to regulate.

strong>JB: What is your take on the two mega-projects in the water sector today: the Disi and the Red-Dead Canal, especially in light of projections that there will still be a deficit in the water supply even with their implementation?

HN: We developed an investment program as part of a long-term strategy that contained roughly 65 different projects, all of which were important but differed with regards to their respective timeframes. Unfortunately, last year saw this strategy and these efforts being reduced to simply two projects: the Disi and the Red-Dead Canal. This is a major mistake, as it drives us to a place where we are raising the public's expectations based on these two projects while not being sure about their implementation.

When it comes to the Disi project, I think we have transcended the era of feasibility. The bottom line is that we have to get this water, regardless. When I started with the implementation of this project in 2001, I requested $650 million from the government to finance it. However, our borrowing capacity at the time did not permit us to secure such funds and so the government insisted on the project being implemented under a build, operate, transform (BOT) basis, offering to contribute some money to make the cost of the cubic meter more affordable for the people. We began receiving bids in 2003 and, with the war on Iraq driving up prices and demand, the quoted price we received was roughly $1.3 per cubic meter, totaling to around $2 per cubic meter when distribution and other costs are factored in. With Jordanians currently paying nearly $0.6 per cubic meter on average, someone has to cover the difference. In total, when factoring the capacity of the project, this represented an annual $140 million subsidy, which the government rejected.

By 2004, circumstances had changed as Jordan had just graduated from reliance on IMF borrowing. Upon reviving the issue with the then ministers of planning and finance, we agreed that there was room to issue local bonds for the Disi project in order to fund it in a ‘conventional' manner that would reduce the cost by JD0.89 to JD0.5, which is a significant difference.

However I left the cabinet and was surprised to see that the new Bakhit government decided to float the tender again on a BOT basis. In my opinion, the BOT is complicated due to technical issues that cannot be outsourced to the private sector, as well as to various political considerations.

JB: What about the Red-Dead Canal?

HN: The Red-Dead Canal is not a water project but an environmental project. After all, the major objective of the plan is to save the Dead Sea. I labeled it as an environmental project during my tenure as it was a way of convincing donors who are more willing to get on board if the goal revolves around the environment and regional cooperation.

If you tell donors the goal of the project is to bring water to Jordanians and supply skyscrapers in Amman, no one will be interested. In two and a half years, I managed to secure donor support for the project. However, it was HM King Abdullah II was the catalyst behind the development of this project, as he gave it his full support and talked to the potential stakeholders about the importance of the Red-Dead Canal. Initially, the Israelis rejected the idea of having the Palestinian side involved in the project, but at the insistence and encouragement of King Abdullah, the Palestinians were brought to the table.

The project began with assistance from the World Bank. However, I think the ministry of planning and international cooperation committed a mistake by handing over the project to the World Bank to handle, including the terms of reference as well as the implementation of the feasibility study. This worries me as the World Bank might be inclined to listen to other countries over Jordan, even though the importance of this project to Jordanians is ten times more than to other countries.

According to preliminary studies we conducted, our projections showed that by taking 1.8 billion cubic meters of water every year, the Dead Sea level, which stands at -420, would recover in 30 years, reaching -395. For Jordan, there is at least $1 billion in project investments that needs to be preserved. However, for the world, there needs to be a realization that the Dead Sea is a heritage site that requires all the support of the international community. Moreover, the project will also be benefiting all the areas that run alongside the corridor, which means it is not simply about transferring water from one place to another. Many things can be developed along the route, helping boost economic development along the Jordan Rift Valley.

JB: As an expert in the field, what is the likelihood of the Red-Dead Canal project being implemented?

HN: It depends on the Jordanians because it is all about how we market our story. If we link this to the Arab-Israeli conflict, the refugee crisis as well as the environmental-mitigation plan for preserving the Dead Sea basin - one of the largest such plans in the world - donors will help. I am not happy about the efforts these days, which I feel are not enough. The study has been handed over to the World Bank and now we are simply waiting for their results, with a good chance that they might be influenced by the interests of other countries.

JB: There have been rumors in the regional press that Israel has quietly declared its intentions to implement the project on its own if need be. How accurate are these rumors in your opinion?

HN: I have to be honest and say that I am not sure of Israel's intentions when it comes to the Red-Dead Canal project, so we have to be cautious. Their interests always come first, and while they have other options and can put off such a project for years, we do not have such luxury.

JB: Without a doubt, water is an issue that is closely tied to the geopolitics of the region, as you have just mentioned. With this in mind, is Jordan getting its fair share of water from neighboring countries?

HN: While many people link the water problem in Jordan with the restoration of our water rights from neighboring countries, it should be noted that the weight of this issue with regards to Syria is different when it comes to Israel. In 1994, we had an agreement with Israel where we articulated the rights of Jordan that span from the Yarmouk to the Jordan River. As of today, we are receiving a good amount of the water promised in the agreement. However, there have been certain water rights that Jordan has not been able to recover due to the need for infrastructure projects. For instance, one of the articles in the agreements requests a desalination plant between Jordan and Israel and yet, this is not happening because of prohibitive financial costs.

Another article requires the building of dams in the Jordan River to restore and harvest floods during the winter, and this has not taken place either. Nevertheless, some projects have been implemented, such as the conveyor from Lake Tiberius to the King Abdullah Canal, as well as a small damn on the Yarmouk River. As a result, some of the water from the Yarmouk that used to go to Israel has now returned to Jordan.

With Syria there are violations from the Syrians when it comes to digging underground wells and building more dams than agreed upon on the Yarmouk River. They built an additional ten dams with a capacity of roughly 200 cubic meters of water that were not articulated in the agreements between our two countries. However, the Syrian-Jordanian Wehda dam that was completed last year is one positive project.

JB: A major criticism of these dam-based projects is that upon being constructed they remain largely empty due to droughts. Do you believe this throws the feasibility of such projects into question?

HN: It is true that we do not have enough water going into these dams. Last year, for instance, we only had 55% of average precipitation in the Kingdom. However, the feasibility of dams is much simpler because if you fill them once, you recover your costs.

The Mujeb Dam, for example, was inaugurated in 2004 and has since been filled three times, retrieving a total of around 90 million cubic meters. The opportunity cost of this amount of water is roughly JD56 million, while the cost of the project was only JD43 million. In other words, we recovered the costs in three years.

Expanding Dimensions

Without a doubt, Jordan's journey toward water salvation will require a more multi-dimensional approach than what is currently being pursued. While mega-projects such as the Disi plant and the Red-Dead Canal will undoubtedly serve to alleviate current pressures on the country's limited water supplies, they will continue to be only one dimension to the greater problem. Maysoon Zoubi, a senior policy analyst and water expert at the Royal Hashemite Court, argues that both mega-projects will not close the gap on the Kingdom's water deficit, but rather simply help to decrease that gap. Essentially, Zoubi agrees with Hazem Nasser when it comes to the need for cultivating a social conscience, arguing that relatively low, subsidized prices have meant that the majority of Jordanians have not evolved to a stage where they are fully aware of water wastage. When it comes to securing Jordan's water future raising such awareness, even through the use of economic instruments such as price controls, along with the strict implementation of laws to combat water theft, may be key in securing the Kingdom's future and retaining that staggering 51% that has gone down the drain.