Second Regional Workshop on “Safe Use of Wastewater in Agriculture,” 16-18 May, New Delhi, India

1. Economic challenges ofwastewater treatment anduse in agricultureBharat Sharma, IWMI,Javier Mateo-Sagasta, FAO; Pay Drechsel, IWMI Second Regional Workshop on “Safe Use of Wastewater in Agriculture,” 16-18 May, New Delhi, India

2. Outline • Financial and economic perspectives of assessing the feasibility of wastewater irrigation 2. Cost-effectiveness of wastewater use and options to safeguard the food chain • How to make wastewater reuse projects and treatment in general viable and sustainable?  Sharing of experiences in the working groups

3. 1. Financial and economic perspectives for assessing the feasibility (costs and benefits) of wastewater irrigation

5. Benefits of wastewater irrigation • Saves freshwater which is expensive in dry regions and in particular in peri-urban and urban areas (environmental benefits). • Constitutes a reliable year-round source of water with high nutrient value (savings in fertilizer). • Saves on groundwater pumping costs. • Generates livelihood opportunities for poverty alleviation and contributes to food production and security. • Feeds poor urban consumers at affordable prices, due to proximity of consumers and farmers (health benefits). • It provides low-cost land treatment (savings in treatment). • ……  Can be quantified in economic terms

6. Costs of wastewater irrigation a) If untreated: • Health costs along the food-chain. • Environmental costs (water and soil contamination). (often hidden costs, ignored long-turn risk factor) b) If treated: • WWTP capital and M&O costs; irrigation systems costs; residual environmental costs (larger investments often only follow epidemics)

7. Cost-benefit analysis  Benefit/Cost ratio Example from China showing the common difference in financial and economic assessments. (Source http://repub.eur.nl/res/pub/19590/cbaWST_10_105.pdf)

8. Guidelines for economic assessments: FAO Water Report 35, IWMI WP 26, 37 Page 8

9. Guidelines for economic assessments: FAO Report 35, IWMI WP 26, 37

10. 2. Cost-effectiveness of wastewater use and options to safeguard the food chain Is wastewater treatment the most cost-effective approach for adding safe irrigation water or are there alternatives source or safety measures? • Cost-effectiveness analysis • WWTP: 0.1-0.2 US$/m3; often sold at US$ 0.01-0.02/m3 (irrigation) • Desalination: 0.3-0.5 US$/m3; sold at US$ 1-2 per litre (bottled water) • RWH….. • Water transfer ….

11. How many USD does it take to gain a healthy life year? 1100 214

12. More information on non-treatment options (on-farm, post-harvest) www.who.int/water_sanitation_health/wastewater/gsuww/en/index.html www.idrc.ca/EN/Resources/Publications/Pages/IDRCBookDetails.aspx?PublicationID=93

13. Conventional treatment is not the most cost-effective option if we only look at human health benefits, but when we also consider environmental health. City Agriculture Environment

14. 3. How to make wastewater reuse projects and treatment in general viable and sustainable? • Wastewater reuse business models are difficult to find. • The sector speaks at best about cost recovery, but hardly about <business>. • However, Reuse and Resource Recovery open large doors for better economics and operational sustainability.

15. Four-point cost-saving strategy: • Plan for reuse as otherwise service charges are the only source of revenue • Cost recovery (O&M) from wastewater reuse in irrigation ranges between 20-70% (MENA). • Further revenue options are treated sludge as fertilizer or energy source, duckweeds from treatment ponds as fish feed, etc. Market analysis and willingness-to-pay have to be analyzed to know how much to charge for reuse. Alternative finance options (e.g. carbon credits) should be explored.

16. Keep energy requirements low as this is a major cost factor or generate your own energy: • Location which allows gravity flow instead of pumping; low-energy plants or pond-based systems (aeration accounts for about 50% of the overall energy costs). • Energy optimization (20% energy recovery). • Energy generation from anaerobic sludge digestion can cover 40- >80% energy demand! • Fit for purpose: Treat only to the level the reuse requires to keep costs low (e.g. nutrient removal costs much energy). Some countries demand wastewater treatment only to a level better than that of the receiving water body.

17. Partner with private sector for O&M unless effective incentives are in place. PPP can also facilitate innovative win-win models (example: aquaculture, Ghana).

18. Invest in multiple barriers (not only conventional treatment): less risky, less costly and more cost-effective for health risk reduction.

19. Summary • Economic appraisal of reuse projects is an essential component for water planning and allocation strategies within IWRM. • Smart planning and new technologies allow high levels of cost recovery. • The FAO water report 35 provides a sound methodology for the economic appraisal of reuse projects. • IWMI Working Paper 26 provides a useful framework and Working Paper 37 a related literature review. All reports are on the UN-Water tool kit CD

20. Are there success stories to share to learn from each other?Which business models are known to make wastewater treatment for reuse less costly and more sustainable?How to increase cost recovery rates ? Working groups

21. b.sharma@cgiar.org Page 21