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SPECIAL REPORT

Water sustainability a major challenge for GCC

Dubai, May 15, 2014

For policymakers in the GCC countries, water sustainability is a major challenge. On a per capita basis, the Gulf countries consume considerably more water than the world average, despite the fact that most of these countries get little rain and have low levels of groundwater, said a study.

The imbalance between supply and demand is not helped by policies that keep these countries’ citizens from being aware of, let alone having to pay for, any wasteful water consumption habits.

To maintain their water supplies, GCC countries have become the world’s biggest consumers of desalinated water, according to the study by Strategy&.

This technological feat of generating tens of millions of cubic meters of potable water each day out of seawater has come at a heavy environmental and economic cost.

Because of the amount of energy it requires, desalination has contributed to the GCC’s status as one of the highest CO2 emitting regions in the world, it stated.

"The huge amounts of fuel they must use for desalination have also kept these countries from using this resource for more productive economic purposes, such as in exports or for the development of petrochemicals," remarked Tarek El Sayed, a partner with Strategy& and a member of the firm’s energy, chemicals, and utilities practice.

El Sayed said inorder to move toward greater sustainability in their water sectors, GCC countries will have to address three issues: excessive water demand, inadequate water supplies, and ineffective institutional frameworks.

Although some GCC countries have started to make progress in these areas, they should move faster and intensify their efforts. Steps to manage the water sector must occur in an integrated fashion because of the impact that water has on multiple industries — from energy to agriculture to recreation, he added.

When it comes to their water usage, the GCC countries are in a bind. On a per capita per annum (pcpa) basis, GCC countries consume about 65 per cent more water than the world average — 816 cubic meters pcpa, versus 500 cu m pcpa.

This might not present such a problem if GCC countries had substantial renewable resources, notably from rainfall and groundwater. However, these resources are in short supply, and the chief means of supplying potable water — through desalinating seawater - is energy intensive and places a strain on the economy and the environment, said the Strategy& in its study.

The extent of the mismatch between resources and consumption is evident in the largest consumers of water. Saudi Arabia and the UAE consume between 10 and 39 times the amount of renewable water available to them, depleting their aquifers at much faster rates than they can be replenished by rainfall.

Only Oman comes anywhere close to having enough water from renewable sources to meet its domestic demand, stated the study.

The region’s arid climate is certainly the most significant element of the water challenge. However, there are man-made factors too, including technical problems with water supply systems, the region’s fast economic and population growth, and inefficiencies in managing and regulating the water sector.

High cost of seawater desalination

In no other part of the world is seawater desalination technology used more heavily than in the GCC — and no other part of the world benefits as much from desalinated water, stated Strategy& in its report.

On an average day, GCC countries produce more than 12 million cu m of desalinated seawater, accounting for a quarter of all the water consumed in the region and 70 per cent of the water used for domestic purposes.

However, this technological feat has come with significant environmental costs. Desalination plants create carbon emissions by burning fuel, and they discharge the salt left over from the process back into the sea, remarked Johnny Ayoub, a principal with Strategy& in Beirut and a member of the energy, chemicals, and utilities practice.

This has increased the temperature and salinity of the Gulf, with the latter rising by around two per cent over the last 20 years, with a negative impact on marine life and ecosystems. The increasing salinity makes future desalination even more difficult. Extensive desalination has also increased the CO2 emissions of GCC countries, contributing to their status as some of the highest per capita carbon emitters in the world, said Ayoub.

Furthermore, desalinated seawater has some practical problems, including the difficulty and expense of storing it in large strategic reserves.

As for the surface water and groundwater that exists, its quality is deteriorating due to aquifer overuse and pollution, especially from poorly managed sewage.

From an economic perspective, current water-sector practices are not sustainable, according to the study by Strategy&.

.Indeed, academic studies indicate that seawater desalination consumes around eight times more energy than groundwater and reclaimed wastewater projects, and three times more energy than brackish water desalination projects.

Desalination energy requirements consume from 10 per cent to 25 per cent of national power generation. Moreover, no attempt is made to recover the costs of producing water.

On the contrary, the energy sector usually provides subsidized fuel to the utilities producing water, or the cost difference is made up by the individual country’s government. The net result is that those consuming water typically pay no more than a fraction of the cost of producing and distributing the water in most GCC countries.
 
These subsidies create important economic inefficiencies. The first is the opportunity cost. Fuel used to desalinate water is fuel that does not contribute to other parts of the economy - it cannot be used for export or as a feedstock for petrochemicals.

Second, the subsidies eliminate any incentive for consumers to use water sparingly because they disguise the true cost of water. In the GCC, these inefficiencies are aggravated by the way existing water resources are managed, mainly due to technical and commercial losses in water systems, stated the report.

A glaring example is that more than 80 per cent of the region’s water is used for agriculture, even though agriculture does not contribute more than two per cent of any GCC country’s GDP. Another difficulty is that 22 per cent of domestic water is either lost to leakage or is not metered, and therefore produces no revenue.

Non-metered water is also a problem in the agricultural sector with the irrigation of crops, where there are important losses to evaporation and limited control over the abstraction level, stated the study.

GCC policymakers can address these water challenges with policy initiatives to further three main goals that will ultimately lead to sustainability: managing water demand, increasing the supply of water, and strengthening the institutions responsible for water sustainability.

GCC governments should look to make these changes in an integrated fashion, simultaneously considering the impact on all the sectors affected by water policy.

This is because the water, energy, and agriculture sectors are inextricably linked in the GCC — and have a major impact on the environment. Integrated planning across these sectors by the entities responsible for them allows for a systematic analysis of all potential linkages and trade-offs and can ensure that countries’ long-term economic interests are taken into account.

Changing the tariff structure

Water and wastewater tariff restructuring is a critical element in managing water demand. It is not a given that GCC governments should cover all the costs of delivering and consuming water in their countries.

On the contrary, excessive and inefficient water consumption demonstrates the negative, unintended effects of such policies. Water and
wastewater tariffs should be set at levels that allow utilities to recover the largest possible portion of their costs, while still providing customers with affordable water, said Strategy& in its study.

International benchmarks suggest that some GCC emirates and countries, particularly Abu Dhabi, Bahrain, and Saudi Arabia, have ample room to raise prices.

Tariffs should not be raised randomly. Instead, any increase should come as part of a regulatory impact assessment study, so that the effect on consumers’ needs and wallets is understood. To the extent that subsidies remain part of the tariff system, they can be used to help poorer households pay for water. Such a direct subsidy scheme was first introduced as part of a water sector reform in Chile in the early 1990s, it stated.

Behavioural change

An important part of demand management is building awareness and changing consumer behaviours. GCC ministries and utilities have already initiated broad efforts to increase awareness about water conservation, stated Strategy& in the study.

These efforts have included media campaigns, the distribution of efficient water textures, themed workshops and conferences, lectures in educational institutions, and advertising the results of successful pilot projects, stated the experts.

There are many additional ways that governments can increase awareness of water conservation. One is by employing techniques from commercial marketing. For instance, a country could use the results of a market segmentation study to tailor messages and communications to specific audiences, they stated.

Utilities could also provide their customers with information about their consumption, and encourage them to conserve. Another way is to have a more explicit labeling of water-dispensing devices such as showerheads and washing machines, to guide and inform consumer choices.

Mandatory regulations can be effective in reducing water consumption in buildings. To avoid too much change too quickly, these regulations could be limited to new buildings and renovation projects and they could be phased in, starting with less stringent requirements.

To reduce wastage of water, governments should introduce efficiency measures and limit the production of crops locally, especially where non-renewable water or seawater desalination are used, said the experts.

Such measures include promoting less-water-intensive crops, mandating efficient irrigation techniques, and removing subsidies on local farming. Some GCC governments have started moving in this direction.

For instance, the Saudi government has said it will stop buying wheat from local farmers by 2016 to discourage wheat cultivation and to conserve non-renewable water resources. In the future, all wheat will be imported.

The Abu Dhabi Food Control Authority has begun replacing Rhodes grass with more water-efficient crops, such as bufelgrass. Some GCC countries have even started to acquire farmland in other countries on which to grow crops, thereby saving their own water resources and ensuring food supply, the experts added.

According to them, water has never been an easy issue in the GCC, but with the growth of the region’s populations and economies, the sustainability challenge is growing more severe.

GCC governments are addressing the challenge to varying degrees, but they can do much more. Addressing water sustainability requires resources, a plan, and an integrated approach.

There is a lot that GCC countries can learn from each other’s experience and from the efforts of governments elsewhere around the world. Now is the time for them to formulate strategies and make changes that will safeguard the future.-TradeArabia News Service




Tags: Water | GCC | Sustainability | challenge |

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