1. The problem of water in the Middle East and North Africa (MENA)

1. 1. The problem of water in the Middle East and North Africa (MENA)

2. Aus/NZ LAC N-America ECA SSA EAP W-Europe SAR MENA 0 5 10 15 20 25 30 35 1000 m^3 / year MENA is most water-scarce region, and demand is growing Available renewable water resources have fallen from 4,000 m3 per person per year in 1950 to 1,000 today and will fall to 550 by 2050

3. Important to recognize the region’s progress -- technical & institutional innovations • Major investment in infrastructure • Water storage • Huge expansion of services – 80% WSS coverage projected to achieve MDGs • Technical innovation (desalination, wastewater re-use) • Institutional innovation • Improving efficiency of utilities • Demand management • Devolving responsibility for managing local systems to communities • River basin / groundwater management

4. Use already exceeds renewable supplies Local level conflicts are frequent But major management challenges remain

5. Countries rely on non-renewable water and trade to fill the gaps

6. Climate variability is projected to exacerbate aridity in the future

7. Many countries using both public money and water inefficiently Lots of water stored But not all used well Share of freshwater resources stored in dams

8. 2. Why are water reforms not high in the political agenda?

9. Accounting has not adequately captured the costs of degradation

10. Environmental degradation is composed of many factors

11. Over-extraction of groundwater reduces a country’s savings Groundwater not being converted Into other forms of capital in equal amounts

12. Intermittent supply of urban water has imposed costs to society • Intermittent supplies at different times of the year in Jordan, Yemen, West Bank, Gaza, Algeria, Saudi Arabia • Done because of deferred maintenance, and as a rationing tool • Costs of coping with intermittent supply for households ≈150% monthly utility bill • Increase O&M costs for the utility by 40-50%

13. 3. The potential solution?

14. MNA countries now need to move to a new paradigm of flexible allocation Overall demand management More value per drop Allocative efficiency More use per drop Water services End-use efficiency Services More water Supply management Engineering

15. Allocation can be by price or by quantity • Price does not work well to reduce overall water demand • Studies indicate that to affect consumption, the price of irrigation water (85% of consumption) would have to rise by more than 5 times cost of providing service – politically impossible • Price does regulate domestic water consumption but this is more a financial issue for the utility • Therefore, some sort of quantity restriction is necessary • If the allocations are done through water rights, those rights can be traded between users

16. To achieve flexible allocation, countries have to address three types of scarcity 1) Scarcity of resources Storing, diverting and transferring water, expanding water services. Primarily a technical challenge 2) Scarcity of organizational capacity Strong organizations established to plan water management and deliver services to people in the 1970s and 1980s. Viewed as a management challenge 3) Scarcity of external accountability Rules to ensure that service providers are accountable to their users and government agencies to their constituents. Primarily a governance challenge requiring transparency and inclusivity

17. Government Citizens Mechanisms of public accountability form a bridge between citizens and government information voice justice

18. Countries with better accountability deliver better services • Increased participation provides information necessary for making good decisions and providing good services • Government and service providers must see consequences of actions • Populations must be able to evaluate where public money is spent

19. Other sector implications Natural Resources Intangible Capital • Difference between total wealth and the produced and other produced and natural stock – Human Capital, institutions and governance • How to measure policies and institutions for natural resource management? The Challenge for Water Accounting Produced capital

21. Public good concerns Common pool concerns Budget rules Laws, norms Access to information VoiceAccess Cost recovery to Justice Intangible capital is facilitated by external accountability mechanisms • External accountability has two challenges for accounting: • How can structure of laws, conventions and financing rules be measured? • How can information uncertainty be captured as a cost? Indicators of External Accountability

22. Summing Up: Measuring external accountability the new frontier

23. Trade, fiscal crisis Political Economy Economic Forces Social & Cultural Forces Environmental Forces Droughts, floods Institutions Technical Options Desal costs Interest Groups Policy-Makers Migration, increased education Political drivers of water reform are changing – accounting innovations help Water Outcomes