Outlining a transition from cost-effective to productive rural water service improvements

October 21st, 2012

Adam Abramson, Ben Gurion University of the Negev, Israel

Although global trends indicate that the Millennium Development Goals for drinking water have been met, many developing countries still lag behind. Rural Sub-Saharan Africa (SSA) is particularly off-track.1 Despite a gradually emerging shift in policy from rights-based to market-based water development, along with the goal of achieving full cost recovery of water improvements from users, market forces have remained sidelined from the rural water sector in SSA.2-5

Instead, soft financing arrangements predominate, ranging from charity to, at most, user payment of operation and maintenance costs, with capital costs being met by donor funding or subsidies.6 As a result, the goal of minimizing water costs to maximize aid effectiveness has been deeply entrenched in the sector, limiting the use of water technologies to only a few of all technologically feasible options for these areas.

According to the criteria of cost-effectiveness, most remote water interventions use the cheapest available means for providing improved water services. In many areas, this is the ubiquitous handpump-operated borehole  the most common water source in rural areas, with almost 1 billion rural users worldwide.1 Hand-powered pumping is cheap, but limits the supply of water for exclusively domestic uses. Higher yielding water sources are common in many parts of Africa, suggesting that there is a widespread potential for small-scale productive or multiple use groundwater sources.7 Yet higher yielding pumps are seldom considered, much less seen, in remote areas of SSA.

For communities with grid electricity, pumping costs may be drastically reduced through submersible pumps. For off-grid communities, solar power is particularly suitable, both for productive irrigation and domestic uses, as its output aligns with crop water needs, it may provide excess or ‘free’ electricity to off-grid communities, and has minimal operation and maintenance costs.8 Diesel-powered pumping may be less sustainable and subject to volatile price fluctuations, but is one of the few alternatives for off-grid communities.

Figure 1 presents a cost comparison between handpumps and these other higher-yielding approaches for a new borehole typical of rural Sub-Saharan Africa: grid-, solar- and diesel-powered submersible pumps.

Handpumps are certainly the lowest cost, and for meeting minimal water supply standards, represent the most cost-effective approach. Only a small proportion (2%) of household income would be required to fully finance the investment (although this is rarely done). The cost of transitioning from a hand pump to a higher yielding submersible pump depends heavily on the source of power available, and the various prices of solar and diesel inputs. If grid electricity is available, there is only a marginal increase (between 3 to 4% of income) in total cost across all yields investigated. If not, users would need to pay between 4% and 12% of their income for diesel-powered improvements, or between 5% and 13% for solar-powered improvements over 15 years. Certainly, expanding per capita water supply is costly, but a closer look reveals some interesting trends.

Figure 2 presents the cost of water under these alternatives.

While handpumps provide the lowest total cost per replication, a steady decrease in marginal water costs with yield exists for alternative pumping approaches. Thus, the requirement of cost-effectiveness only holds for minimum yields (up to 20-30 m3/day per borehole, or 200-300 L pcpd for a village of 20 households). At higher yields, handpumps are the least cost-effective alternative. In other words, the effectiveness of every dollar spent pumping water increases with the amount of water pumped. This suggests that water-related productive activities would provide increasing returns on investment, at least within these parameter ranges and assuming water is a limiting production factor.

Handpumps are so ubiquitous in rural areas primarily because low density populations have low yield requirements for meeting domestic water service standards. Under cost-effective criteria, alternative pumping approaches are excluded since additional water only creates additional cost. But if small-scale productive water uses could be coupled to project costs, additional revenue could be generated.

To demonstrate the impact of this policy shift in a realistic, field-based context, I investigate a potential market-based ‘water-for-work’ program, as outlined in a previous study (see Changing the paradigm for financing of rural water improvements).10 For the same typical village, a multiple-use borehole and gardening project could be organized for converting community labor into cash for returning investments over two years (Figure 3).

Under the alternative policy of incorporating water-based revenue, optimal technology outcomes and pumping schemes are drastically changed. Because hand pumps are the lowest yielding alternative and inhibit any significant productive use, they provide no return on investment. Grid-powered pumps provide significant net revenue, while the costs of solar and diesel- powered improvements could both be recovered fully under alternative pump outputs. For context, even these expanded outputs require labor commitments less than what has been stated and revealed from a recent field study in rural Zambia, suggesting that demand for such a program would be sufficiently high.14

These results suggest that in seeking to minimize costs of rural water improvements, a strategic opportunity for rural community development is being overlooked. Certainly, other models may exist for expanding water service provision. Microfinance, for instance, is already being implemented in the rural water sector, and may provide a suitable platform for scaling this policy shift.

The author of this article was awarded third prize in the 2012 Global Water Forum Emerging Scholars Award. The other finalists’ entries and details regarding the Award can be found here.

Footnote 1:

Cost comparison of a new community borehole across various pumping methods and yields for a village of 20 households living at the rural poverty line of $1.25 pcpd. A value of 20 meters total pumping head is used as an estimate of regional average groundwater depth for Sub-Saharan Africa.7 A financing timeframe of 15 years is considered at a discount rate of 10 percent. A range of costs for diesel ($1, $2 and $3 per L), solar PV arrays ($3, $6 and $9 per Watt-peak) and grid electricity ($.02, $.05 and $.10 per kWh) are compared. Grundfos WebCAPS® software was used to determine appropriate pump sizing, with local prices and meterological data for Livingstone, Zambia.9 Borehole construction was assumed to cost $5,000.

Footnote 2:

Water costs ($ / m3) across the same alternatives and scenario investigated in Fig. 1, with a 15-year lifetime and 10 percent discount rate. The dotted line represents the price of water at any number of hand-operated borehole replications. Almost all higher yielding alternatives provide water at a lower cost per volume than handpumps. For shallower groundwater depths than 20 m, these trends would be sharpened, and vice versa.

Footnote 3:

Net revenue generated under a multiple-use, new community borehole and pump coupled to community drip irrigation of high value, off-season produce. Where net revenue is above zero, full cost recovery is feasible within two years. While hand-powered pumps incur a relatively small amount of debt, the 15-year costs of higher output water supplies could be amortized with a small community work commitment in grid-connected areas, and with a larger, but still reasonable, community work investment for off-grid areas. The same scenarios described in Figure 1 are applied here, where each household is allowed 500 liters per day of domestic water. This comparison assumes that all excess water beyond that amount is used for drip irrigation of tomatoes over two seasons as part of a water-for-work approach as described by Abramson, et al, 2011, who also describe the agronomic costs.10 A price of $1 / kg and a maximum yield of 50 tons / ha are assumed. The Hydrus® 1-D Soil-Plant modeling software was used to model transpiration under 8 mm of PET, groundwater salinity of 0.5 dS / m, and a growing season of 120 days.11 The relative yield to relative transpiration relationship for tomatoes was taken from Ben-Gal, et al, and used to determine actual tomato yield.12 Weekly work requirements for drip irrigation are taken from Woltering, et al.13

References:

1. UNICEF and WHO (2012), ‘Progress on Drinking Water and Sanitation: 2012 Update,’ available online at: http://www.who.int/water_sanitation_health/publications/2012/jmp_report/en/

2. United Nations Conference on Sustainable Development (2012), ‘Water for the World’ http://www.un.org/en/sustainablefuture/water.shtml#facts

3. United Nations (2002) Report of the World Summit on Sustainable Development, Johannesburg, South Africa, 26 August – 4 September.

4. United Nations (1992) United Nations Conference on Environment and Development, Rio de Janeiro, Brazil, 3-14 June.

5. Fonseca, C. (2003) Cost Recovery: Taking into account the poorest and systems sustainability, AWRA International Congress June 29 – July 2 http://www.irc.nl/page/14956

6. Harvey, P. (2007) Cost determination and sustainable financing for rural water services in sub-Saharan Africa. Water Policy 9: 373-391.

7. MacDonald, A. M., Bonsor, H. C., Dochartaigh, B.E.O., and R. G. Taylor (2012), ‘Quantitative maps of groundwater resources in Africa’, Environmental Research Letters, 7, pp. 1-7.

8. Burney J, Woltering L, Burke M., Naylor R., Pasternak D. (2009) Solar-powered drip irrigation enhances food security in the Sudano-Sahel. Proceedings of the National Academy of Sciences, U.S.A. 107, pp. 1848-1853.

9. Grundfos WebCAPS Software, available online at: http://net.grundfos.com/Appl/WebCAPS/custom?userid=GMAinternal

10. Abramson, A., Becker, N., Garb, Y., Lazarovitch, N. (2011), ‘Willingness to pay, borrow and work for water service improvements in developing countries’, Water Resources Research, 47, 12 pp.

11. Hydrus 1-D Modeling Software, available online at: http://www.pc-progress.com/en/Default.aspx?hydrus-1d

12. Ben-Gal, A., Karlberg, L., Jansen, P. and U. Shani (2003), ‘Temporal robustness of linear relationships between production and transpiration’, Plant and Soil 251(2), pp. 211-218.

13. Woltering, L., Ibrahim, A., Pasternak, D. and J. Ndjeunga. (2011), ‘The economics of low pressure drip irrigation and hand watering for vegetable production in the Sahel’, Agricultural Water Management, (99) pp. 67-73.

14. Abramson, A. (2012) Unpublished fieldwork results.

Adam Abramson is currently a PhD Candidate at the Blaustein Institutes for Desert Research, Zuckerberg Institute for Water Research, Ben Gurion University of the Negev, Israel. His research focuses on financing rural water improvements. His thesis title is “Decision Support System (DSS) for assessing the feasibility of cost recovery of rural water improvements in Africa.” This article is based upon his work in developing a DSS, and his field experience in rural Zambia. He would like to thank the Grace & Hope Charitable Trust, USA for the support for this research. He can be contacted at cometothewaters@gmail.com and his website is www.outoftheground.org.

The views expressed in this article belong to the individual authors and do not represent the views of the Global Water Forum, the UNESCO Chair in Water Economics and Transboundary Water Governance, UNESCO, the Australian National University, or any of the institutions to which the authors are associated. Please see the Global Water Forum terms and conditions here.