WATER GLOBAL PRACTICE
The Cost of Irrigation Water
in the Jordan Valley
Caroline van den Berg and Sana Kh. H. Agha Al Nimer
with support from Turi Fileccia, Luz Maria Gonzalez, and Suhail Wahseh
The Cost of Irrigation Water
in the Jordan Valley
April 2016
Caroline van den Berg and Sana Kh. H. Agha Al Nimer
with support from Turi Fileccia, Luz Maria Gonzalez, and Suhail Wahseh
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Contents
Acknowledgments vii
Abbreviations viii
Executive Summary ix
1 Introduction 1
Background 1
Objectives2
Methodology 3
Notes4
2 Institutional Framework of the Irrigation Water Sector
in the Jordan Valley 5
Note6
3 Water Balance in the Jordan Valley 7
Introduction 7
Water Scarcity in the Jordan Valley 9
Conclusions 14
4 Irrigated Agriculture in the Jordan Valley 15
Introduction 15
Agricultural Transformation in the Jordan Valley 17
Current Production Systems and Cropping Patterns in the Jordan Valley 20
Crop and Farm Economics in the Jordan Valley 22
Main Issues Farmers in the Jordan Valley Are Facing 24
Crop Water Productivity 27
Conclusions 28
Notes29
5 Jordan Valley Authority’s Current Revenues 31
Introduction 31
Water Revenues 31
Water Revenues from Irrigation 33
Water Revenues from Industry 36
Conclusions 36
Notes37
6 Jordan Valley Authority’s Operation and Maintenance Costs 38
Introduction 38
Water Operation and Maintenance Costs 40
Staff Costs 41
Energy Costs 41
Maintenance Costs 43
Income Statement of Water Business, Jordan Valley Authority 45
Conclusions 48
Notes49
The Cost of Irrigation Water in the Jordan Valley iii
7 Jordan Valley Authority’s Operation and Maintenance
Cost Requirements 50
Introduction 50
Requirements for Operation and Maintenance Staff Costs 50
Energy Costs 51
Maintenance Costs 53
Depreciation 54
Summary of Operation and Maintenance Requirements 55
Conclusions 55
Notes56
8 Proposed Tariff and Cost Recovery 57
Concepts of Cost Recovery 57
Scenario Analysis 58
Sensitivity and Risk Analysis 60
Benchmarking Jordanian Irrigation Tariffs 62
Conclusions 63
Notes63
9 Impact of Cost Recovery on Farm Incomes 64
Farm Models 64
Effect of Tariffs on Farm Incomes 64
Farm Incomes under Different Cost Recovery Scenarios 66
Effect of Cost Recovery Scenarios for Poor Farmers 67
Notes69
10 Conclusions 70
Improving Revenues 70
Increasing Efficiency in Service Delivery 72
Impact of Tariff Increases on Poor Farmers 73
Appendix A Allocation of Water in the Jordan Valley 74
Appendix B Water User Associations in the Jordan Valley 75
Appendix C Crop Budgets 77
Appendix D Subsidy Principles 91
Appendix E Irrigation Pricing Systems 92
Appendix F Jordan Valley Authority Staffing 93
Appendix G Risk Analysis 94
References 98
Box
1.1 Evidence of Misclassification of Expenditures across Budget Types 4
Figures
4.1 Historical Area and Cropping Pattern Trends for Major Crops
in the Jordan Valley 20
4.2 Share of Crops in the Jordan Valley, 2010 22
iv The Cost of Irrigation Water in the Jordan Valley
4.3 Geographic Distribution of Cropping Patterns in the Jordan Valley 23
4.4 Historical Production Trends in the Jordan Valley 23
5.1 Irrigation Revenues, 2005–12 32
6.1 Composition of Jordan Valley Authority Operation and
Maintenance Costs 39
7.1 Cropping Patterns in the Jordan Valley in 1994, 2000
(Before Legalization of Fruit Crops), and 2010 51
8.1 Risk Analysis of Irrigation Operation and Maintenance Cost
Based on Quota Allocations with 2013 Electricity Price 61
8.2 Risk Analysis of Irrigation and Operation and Maintenance
and Depreciation Cost Based on Quota Allocations with 2017
Electricity Price 62
Map
B.1 Geographic Distribution of Water Users Associations 76
Tables
3.1 Water Inflows into the Jordan Valley 8
3.2 Water Inflows and Water Used into the Jordan Valley 9
3.3 Profile of Farmers Facing Water Scarcity, by Location 10
3.4 Profile of Farmers Facing Water Scarcity, by Cropping Pattern 10
3.5 Profile of Farmers Facing Water Scarcity, by Source of Water 11
3.6 Profile of Farmers Facing Water Scarcity, by Farming Method 11
3.7 Profile of Farmers Facing Water Scarcity, by Irrigation Method 12
3.8 Profile of Farmers Facing Water Scarcity, Regression Analysis 12
3.9 Profile of Farmers Facing Water Quality Problems,
Regression Analysis 13
4.1 Irrigation Projects in the Jordan Valley (from North to South) 16
4.2 Total Cultivated and Irrigated Area in Jordan in 2011 16
4.3 Quota System by Jordan Valley Authority (2004 Onward) 16
4.4 Total Crop Area and Production in the Jordan Valley, 1994–2010 17
4.5 Total Vegetable Crop Area and Production in the Jordan Valley,
1994–2010 18
4.6 Total Field Crop Area and Production in the Jordan Valley, 1994–2010 18
4.7 Total Tree Crop Area and Production in the Jordan Valley, 1994–2010 19
4.8 Major Production Systems in the Jordan Valley 21
4.9 Cropping Patterns in the Jordan Valley 21
4.10 Crop Production in the Jordan Valley 21
4.11 Crop Production Systems Revenues and Costs in the Jordan Valley,
Full Cost 25
4.12 Crop Water Productivity 28
5.1 Irrigation Water Tariffs 32
5.2 Jordan Valley Authority Revenues, 2000–12 34
5.3 Water Volume Supplied and Billed 35
5.4 Collection Efficiency of Irrigation Water Tariffs 35
The Cost of Irrigation Water in the Jordan Valley v
5.5 Estimated Irrigation Revenues Based on Quota Allocations, 2011 36
6.1 JVA Operation and Maintenance Costs 39
6.2 JVA Employment 40
6.3 JVA Actual Expenditure in Government Budget 40
6.4 Energy Use at Pumping Stations in Each Directorate 42
6.5 Energy Costs at Pumping Stations in Each Directorate 42
6.6 Energy Tariff at Pumping Stations in Each Directorate 43
6.7 JVA Operation and Maintenance of Water Services 44
6.8 JVA Financial Performance Indicators 45
6.9 Summary of Current Costs for Irrigation Water, 2012,
Three-Year Average 45
6.10 Asset Inventory of the JVA 46
6.11 Depreciation as a Percentage of Current Assets and Implicit
Lifetime of Assets 47
6.12 JVA Financial Performance Indicators with Depreciation Included 47
7.1 Current and Required Number of Employees for Water Activities,
Jordan Valley Authority 51
7.2 Current and Required Electricity Costs for Irrigation Water Pumping 52
7.3 Current and Required Fuel Costs 53
7.4 Current and Required Pumping Water Costs to Amman 53
7.5 Current and Required Maintenance Costs 54
7.6 Depreciation of JVA in 2010 Prices 54
7.7 Summary of Required Operation and Maintenance Costs for
Irrigation Water, 2013 (2013 Electricity Price Rates) 55
8.1 Required Irrigation Tariff Increases under Different Scenarios
with Current Billed Volume 59
8.2 Sensitivity Analysis of Irrigation Costs to Be Covered with Full
Electricity Rate Increase (in 2013 Prices) 61
8.3 Irrigation Water Prices, Jordan Compared with Selected Countries 62
9.1 Jordan Valley—Simulation at Current Market Prices 65
9.2 Jordan Valley—Simulation at Best Market Prices 65
9.3 Net Farm Incomes under Different Irrigation Tariffs at Current
Market Prices 66
9.4 Net Farm Incomes under Different Irrigation Tariffs at Best
Market Prices under Different Cost Recovery Scenarios 66
9.5 Water Costs as a Percentage of Total Costs, by Major Crop under
Different Cost Recovery Scenarios 67
9.6 Location of Poor Farmers in the Jordan Valley 68
9.7 Profile of Poor Farmers 68
A.1 Current Annual Quota System, 2004 74
B.1 Irrigated Area Covered by the Water User Association Program 75
vi The Cost of Irrigation Water in the Jordan Valley
Acknowledgments
This study was prepared by a World Bank team led by Caroline van den Berg
(lead water economist, GWADR, World Bank) and Sana Kh. H. Agha Al
Nimer (senior water and sanitation specialist, GWADR) under the over-
all guidance of Steven Schonberger (practice manager, GWADR). Zakia
Chummun and Claudine Kader (program assistants) provided extensive
administrative support. The study also benefited greatly from the insight,
input, and guidance of Luz Maria Gonzalez; Suhail Wahseh; and the Food
and Agriculture Organization team, led by Turi Fileccia and included Inna
Punda and Florin Niculas.
The peer reviewers were Joop Stoutjesdijk and Ahmed Shawky, who pro-
vided valuable comments that helped improve the analysis and sharpened the
focus of the study.
The authors express their deep gratitude to the government of Jordan and
its Ministry of Water Resources and Irrigation for their support and collabo-
ration. Special thanks are due to Eng. Sa’ad Abu-Hammour, Secretary General
of the Jordan Valley Authority (JVA); Dr. Khalil Absi; Eng. Qais Owaise; Esam
Rahal; Sanna Qtishat, Operation and maintenance Director of the JVA; and
all the JVA staff in the Jordan Valley who undertook the farmer surveys.
The study was funded under the Water Partnership Program.
The Cost of Irrigation Water in the Jordan Valley vii
Abbreviations
FOB free-on-board
GTZ Gesellschaft für Technische Zusammenarbeit (Germany)
ha hectare
JD Jordanian dinar
JRV Jordan River Valley
JVA Jordan Valley Authority
NEPCO National Electricity Power Company
O&M operation and maintenance
WAJ Water Authority of Jordan
WUA water user association
viii The Cost of Irrigation Water in the Jordan Valley
Executive Summary
Jordan is one of the most water-stressed countries in the world. Its annual
renewable resources of 145 cubic meters per capita are far below the threshold
of severe water scarcity of 500 cubic meters. The competition among water
needs for irrigation, industrial and domestic uses, wetland protection, and
in-stream habitat needs continues to pose serious challenges in Jordan. As a
result of this competition, the available fresh water for farmers in Jordan, and
more specifically farmers in the Jordan Valley, has declined. The five-year
moving average dropped from 155 million cubic meters in 2003 to 131 million
cubic meters in 2009. The drop in fresh water has been accompanied by an
increase in treated wastewater, which although assisting in maintaining access
to water for agriculture, has had an impact on the quality of the available
water. Nevertheless, the total crop area has increased from 28,000 hectares in
1994 to 34,300 hectares in 2012.
In the past 20 years, agricultural productivity in the Jordan Valley has
increased despite the sector’s major water resource constraints. The increased
reliance on new farming and irrigation technologies (most notably the intro-
duction of greenhouses and drip irrigation technologies) and the expansion
of the area planted have resulted in higher agricultural output. However, the
forces driving these changes are weakening, and in 2012 and 2013 the country
registered negative growth rates in the sector. In the Jordan Valley, this lack of
growth also translated for the first time into a decline in crop productivity per
dunum.1 Despite the modernization of agriculture in the Jordan Valley, crop-
ping patterns have barely changed over the last 20 years. In 1994, the five
major crops (tomato, cucumber, eggplant, squash, and potato) constituted
62 percent of the total cropped vegetable, whereas the share of these five crops
increased to 70 percent in 2012. Banana has shown an expansion due to the
crop’s artificially high prices resulting from import restrictions.
In the Jordan Valley, the public irrigation infrastructure assets are managed
by the Jordan Valley Authority (JVA), the government organization responsi-
ble for the socioeconomic development of the Jordan Valley. Ensuring that
the Jordan Valley can thrive will depend on the capacity of the JVA to provide
the needed water quantity and quality. Currently, the JVA’s capacity is ham-
pered by its lack of financial viability. Although the JVA has strived in recent
years to improve its revenue base, more effort is needed to secure its financial
sustainability. Although the JVA has increased industrial tariffs, it has left irri-
gation tariffs untouched (which are extremely low at JD 0.011 per cubic meter
and have not been adjusted since 1994).
The large operating deficits within the context of an increasingly aging
infrastructure have already resulted in depreciation and maintenance pay-
ments increasingly being squeezed out, jeopardizing the medium-to-long-
term viability of the existing water infrastructure. With the increase in energy
prices (and the dismantling of energy subsidies), the JVA’s financial results
will be highly compromised in the short term. The postponement of
The Cost of Irrigation Water in the Jordan Valley ix
investments during the last decade, and increasing energy costs coupled with
new responsibilities regarding the pumping of water to Amman, have con-
tributed to large operating losses which, in 2012, were equivalent to about
40 percent of total recurrent expenditures. In view of the many uncertainties,
including changes in energy subsidies currently extended to the water sector,
the upward risk for further operation and maintenance cost increases seem
higher than the downward risks. Yet, it also shows that the JVA will have to lay
out a roadmap for irrigation water tariff increases that are accompanied by
efficiency improvements and other measures to help farmers make the transi-
tion to higher tariffs.
The purpose of this study is to determine the cost of irrigation water in the
Jordan Valley, compare this cost with the revenues generated by the JVA,
and to estimate the impact of increasing irrigation water prices—based on
different levels of cost recovery—on farming.
The study undertook a financial analysis of the JVA combining data from
the JVA’s administration and the JVA’s budget books, while collecting more
disaggregated data on the JVA’s revenues and expenditure from its financial
and operational departments. It supplemented this analysis with farmer sur-
veys in the Jordan Valley and an assessment of the agricultural sector using
data from from the Jordanian Department of Statistics and an expert team of
the Food and Agriculture Organization.
The cost of irrigation water in the Jordan Valley. The analysis shows that
the JVA needs significant tariff increases to strengthen its financial sustain-
ability. Depending on the level of cost recovery, the minimum required tariff
increases for irrigation water could be very large. If the JVA wanted to at least
cover its operation and maintenance costs in 2013, it would have required an
irrigation water tariff of JD 0.108 per cubic meter—assuming that the current
cross-subsidies and current inefficiency levels remain unchanged. Yet, if
the JVA were able to reduce its billing and collection inefficiencies, the
required irrigation water tariff would drop to JD 0.066 per cubic meter. If the
government wanted to pursue its objective as stated in the Government of
Jordan’s Water Strategy (2009) that depreciation should also be covered,
the irrigation water tariff would have to increase to between JD 0.132 and
JD 0.215 per cubic meter, depending on whether billing and collection
inefficiencies improve.
The tariff increases necessary to ensure JVA’s financial viability are rather
large, especially compared to current tariffs, and will require time to be imple-
mented. The more efficient JVA becomes in providing irrigation water ser-
vices, the more able it will be to reduce the size of the required tariff increases.
The JVA has several routes to improving its efficiency, which include chang-
ing billing and collection practices, changing revenue policies, and efficiency
improvements in the delivery of JVA services.
Change in billing and collection practices. The farmer survey that was under-
taken by the JVA in 2011–12 for this study found that billing efficiency was
only 82 percent and collection efficiency only 75 percent. Hence, JVA is
obtaining less than 62 percent of its potential revenues. Improving billing
and collection efficiency would go a long way toward lessening the need
x The Cost of Irrigation Water in the Jordan Valley
for irrigation water tariff increases, while also ensuring fairness in water tariffs.
In addition, the current practice of billing farmers on the basis of quota
allocations, when actual water volumes provided are often significantly lower,
will need to be reviewed, because farmers may not be willing to pay for water
that has not been received. Since the JVA is increasingly transferring the dis-
tribution responsibility to water user associations (WUAs), it should consider
putting WUAs in charge of billing and collecting irrigation water tariffs from
farmers.
Change in JVA’s and WUA’s capability to retain revenues. Currently, the JVA
is a ministerial department that collects revenues, but which then transfers
these revenues to the Treasury, a policy that does not provide many incentives
to increase billing and collection efficiencies. This report, therefore, recom-
mends ensuring that billed and collected revenues are retained by the JVA or
WUAs (if responsibility has been transferred), and allowing the WUAs to
keep their share needed for the operation and maintenance of the distribution
networks, while handing the rest over to the JVA. This would also dovetail
with the government’s vision of transforming the JVA into a bulk water
supplier.
Efficiency improvements in the delivery of JVA services. Although the JVA
has cut costs significantly over the years, especially with regard to mainte-
nance and investments, there is still ample scope for efficiency gains. These
gains are especially evident in energy cost savings, including a more explicit
agreement with the Water Authority of Jordan on water pumping to Amman,
improvement in staff productivity and maintenance policies and implementa-
tion. Energy makes up an increasing part of the total operating costs of JVA
(due to the increase in electricity prices and reduction of subsidies). In addi-
tion, JVA’s mandate was expanded to include pumping water to Amman,
without explicit agreements on the costs and revenues linked to that p umping.
An explicit agreement with the Water Authority of Jordan on water pumping,
and a policy to improve energy efficiency, would be first steps in improving
energy efficiency in the JVA. At the same time, staff productivity as measured
by staff per farmer served is very low, and hence there is ample scope to
improve staff productivity in the JVA. Finally, although maintenance has
been neglected in recent years, and the required irrigation water tariffs
assume a much higher maintenance provision, the JVA could develop and
implement an asset management plan to extend asset life; rationalize rehabil-
itation, repair, and replacement investment decisions; and rationalizing
maintenance.
The impact of increasing irrigation water tariffs on farmers. The pro-
posed irrigation water tariffs are much higher than the rates currently in
place. A comparison with other countries shows that the proposed tariff sce-
narios are comparable to irrigation water tariffs in countries for which data
are available. The impact of tariff increases on farmers’ incomes is in general
moderate, because water costs make up only a small part of the total cost of
farming. Yet, as can be expected, certain cropping patterns will be much more
affected by the tariff increases than others. It is especially crops that tend to
consume large volumes of water (especially citrus) that will feel the impact of
The Cost of Irrigation Water in the Jordan Valley xi
the irrigation water tariffs. In the case of another water-intensive crop as
banana, which benefits from import restrictions, only very large tariff
increases will make this crop unprofitable.
Because the agricultural sector in Jordan is under stress, having registered
negative growth in 2012 and 2013, any government policy to rationalize irri-
gation water subsidies should, where possible, try to increase the resilience of
farmers in a comprehensive manner. The farming sector in the Jordan Valley
will have to address issues related to, among others, the marketing of crops,
and provide support to introduce new technologies that reduce the risks for
farmers to change cropping patterns. These are not under the purview of the
JVA, but will help improve the productivity in the sector. In addition, the
government should assess the impact of the irrigation water tariffs on poor
farmers. The farmer survey found that 17 percent of the survey respondents
could be classified as poor. Propoor farm policies can come in different forms,
ranging from cross-subsidies in the irrigation tariff structure to direct income
support to poor farmers. Because the number of poor farmers is very small, it
is relatively easy for government to provide income support to poor farmers
in the Jordan Valley.
Note
1. One dunum is equivalent to 1,000 square meters, or 0.1 hectare.
xii The Cost of Irrigation Water in the Jordan Valley
Chapter 1
Introduction
Background
Jordan is one of the most water-stressed countries in the world. Its annual
renewable resources of 145 cubic meters per capita are far below the threshold
of severe water scarcity of 500 cubic meters (Aquastat 2008; Northcliff et al.
2008). The competition among water needs for irrigation, industrial and
domestic uses, wetland protection, and in-stream habitat needs continues to
pose serious challenges to the country. These challenges are further exacer-
bated by the deterioration of water quality. The competition for increasingly
scarce water resources is reflected in the use of water sources. In 2007,
(the latest year for which data are available), agriculture withdrew about
64 percent of the renewable water resources compared to 74 percent in 1992.
The share of agriculture decreased during the same period from close to
8 percent to less than 3 percent of gross domestic product in 2007.
However, compared to many other countries in the region, Jordan has
made progress in water sector reform. For example, the Government of
Jordan is paying attention to sector policies and is trying to address water
scarcity. The government has a system of quotas and tariffs in place for irriga-
tion water. Favorable institutional arrangements exist, with a regulatory
authority, the Ministry of Water and Irrigation, and two providers for irriga-
tion and water supply and sanitation services, the Jordan Valley Authority
(JVA) and the Water Authority of Jordan. Further, the government has
embarked on the establishment of water user associations (WUAs) to deliver
retail irrigation services to farmers. Farmers in about 40 percent of the Jordan
Valley are in various stages of establishing WUAs. These WUAs interface with
the JVA at the level of the head units along the King Abdullah Canal and in
the irrigation systems in the Southern Ghors. Finally, recent major invest-
ments have both increased the supply of bulk water and enhanced wastewater
treatment capacity (making reuse of wastewater possible).
The production of agricultural produce in the Jordan Valley could not be
achieved without irrigation. In the Jordan Valley, the total crop area increased
from 28,000 hectares (ha) in 1994 to 34,300 hectares in 2012, with virtually all
of that area being irrigated. Water is delivered to farms through pressurized
closed conduits. The challenge is to allocate the limited supply of water avail-
able to the approximately 10,000 Jordan Valley farms1 in a transparent and
equitable way and to apply it to crops so as to maximize output per unit water,
prevent the accumulation of salts and other soil contaminants, and avoid
deep percolation losses of water below crop root zones.
The Government’s 2009 Water Strategy lays out the future challenges for
irrigation in Jordan, and focuses on reducing the annual water allocation for
irrigation (in favor of domestic and industrial demand) by improving effi-
ciency through appropriate water tariffs, the use of new technologies, and
The Cost of Irrigation Water in the Jordan Valley 1
incentives for farmers to improve the efficiency of on-farm irrigation. The
Water Strategy is supplemented by the Irrigation Water Policy (GoJ n.d.) and
the Irrigation Water Allocation and Use Policy (GoJ n.d.). These policies con-
solidate and elaborate elements of that policy relating to on-farm water man-
agement, management and administration, water tariffs, and irrigation
efficiency, whereas the Irrigation Equipment and System Design Policy (GoJ
n.d.) provides a policy on defining and updating irrigation equipment and
system design standards.
Objectives
Given the general scarcity of water in Jordan, the government is aiming to
sustain or even increase agricultural production while at the same time pro-
moting more efficient use of water. The government expects water demand
management and water conservation to play an important role in achieving
sustainable use of freshwater resources in Jordan. Water demand manage-
ment in irrigated agriculture is expected to generate significant savings in the
water sector. The JVA—through the Ministry of Water and Irrigation—is
expected to undertake all necessary water demand management measures
(economic, technical, and regulatory) to support more efficient use of water,
and in turn, help sustain or increase agricultural production.
According to the 2009 Water Strategy, irrigation water tariffs will play a key
role in the process of efficiency improvements. Irrigation tariffs aim to cover
actual operation and maintenance expenses,2 and increasingly also fund part
of the capital costs of the services. The cost recovery issue has been discussed
in the sector for many years. Differential prices shall be applied to irrigation
water to account for water quantity and quality, taking into consideration the
socioeconomic aspects. Pricing instruments are to be supplemented by incen-
tive programs and reform of systems so as to promote water use efficiency by
farmers. Such programs might include the establishment of sustainable fund-
ing mechanisms to provide low-interest long-term loans, tax incentives,
grants, and fee waivers for efficient water use equipment. At the same time,
the government will develop and implement incentives to encourage
low-water-consuming, high-value crops so as to increase the highest eco-
nomic return per cubic meter of water used and the sustainability and effi-
ciency of the existing irrigation systems.
The objectives of this study are to (a) determine the financial cost of irriga-
tion water in the Jordan Valley and the levels of cost recovery for irrigation
water that can be achieved by comparing the costs of irrigation water (using
different cost scenarios) and the revenues generated by the JVA in the Jordan
Valley, and (b) estimate the impact of increasing irrigation water prices (based
on different levels of cost recovery) on farm incomes and water productivity
and use in the Jordan Valley.
A study on the cost of irrigation in the Jordan Valley and its estimated
financial impact on farm income was conducted in 1993 by the Ministry of
Planning and the Ministry of Water and Irrigation, and provided important
2 The Cost of Irrigation Water in the Jordan Valley
input in determining irrigation water policies. The current study will be an
update of the 1993 study but will also expand its scope to (a) examine how
irrigation tariffs and water quotas have affected water use in the irrigation
water sector in the Jordan Valley between 1997 and 2010; (b) look into the
poverty impacts of increasing irrigation tariffs, using the methodology devel-
oped in the Venot, Molle, and Hassan (2007) study to determine how differ-
ent prices will affect different farmer groups, including poor farmers; and (c)
determine any indirect effects that might occur because of the policies imple-
mented since 1993.
Methodology
The study team used, as a starting point, the methodology presented in the
1993 report by the Gesellschaft für Internationale Zusammenarbeit (GIZ),
which mainly focused on determining the financial cost of providing irriga-
tion water in the Jordan Valley, especially operation and maintenance costs. It
included an analysis on how to improve efficiency in operation and mainte-
nance, how to generate cost savings, and how the different tariffs would affect
farmers’ incomes using various cropping patterns. This part of the study was
later reproduced and detailed in the work of Venot, Molle, and Hassan (2007)
and Molle, Venot, and Hassan (2008) to determine the trends in land tenure,
irrigation water pricing, cropping patterns (production/yields by crop), farm
gate prices, production costs, water costs, and socioeconomic characteristics
of landholdings (size of farm, type of farms, type of landholding, and so on).
The current study focused on assessing the financial costs of providing
operation and maintenance. It supplemented this methodology with a farm
budget survey in which about 230 farms3 were surveyed about their cropping
patterns, revenue and cost flows, water availability, and consumption to deter-
mine how farmers would react to changes in irrigation water prices.
Most of the financial cost analysis is based on a public expenditure review
of the JVA to determine its minimum financial needs—under improved levels
of efficiency—to keep on providing water to farmers in the Jordan Valley
(Sommaripa 2011). Budget estimates and disaggregated actual expenditures
are recorded for the period covering 2004 to 2012, with specific focus on 2008
and beyond. Although data before 2008 are available, the format in which
these data are available makes them difficult to compare with data after 2008,
when the JVA accounting systems were upgraded.
The data collection process raised a number of methodological issues that
were dealt with as carefully as possible. First, data availability and quality dic-
tate the type of analysis of budget allocation and expenditure to be conducted.
Second, special attention was given to ensuring that expenses were analyzed
and classified according to their economic use either as capital or current
expenditure (box 1.1).
The budget lines were individually examined and assigned to the correct
capital or current expenditure category. As a result, it is possible to quantify
the extent to which misclassification of spending across budget categories has
The Cost of Irrigation Water in the Jordan Valley 3
Box 1.1 Evidence of Misclassification of Expenditures across
Budget Types
Jordan has a dual budget system aimed at separating capital expenses, recorded in the develop-
ment budget, and current expenses, recorded in the recurrent budget. The data collection process
examined whether individual budget lines were correctly classified according to their economic
nature into capital versus current spending, regardless of whether the budget line belonged orig-
inally to either budget.
A line-by-line review of the budget reveals that recurrent expenditures constitute a significant
part of the development expenditure. This misclassification is a result of the sector responding
to incentives created by less flexible criteria for allocating discretionary shares of the recurrent
budget than for shares of the development budget.
Incremental budgeting did not allow for significant changes in the cost structure of the JVA to
be reflected in the budget, which especially became a problem after 2008, when the accounting
systems were upgraded. In the JVA budget, recurrent expenditure amounting to about JD 8.8
million was misclassified in the 2011 budget expenditure as development expenditure against a
total expenditure of JD 21.9 million. Since then, the misclassification of recurrent expenditure has
decreased, as has development expenditure.
been taking place (see box 1.1). It has become evident that nowadays, devel-
opment budgets are not always a good proxy for investment, and the func-
tional separation between current and capital spending is increasingly fuzzy.
This reinforces the temptation to postpone maintenance of existing assets and
to delay allocation of resources of ongoing projects, a situation that makes
monitoring of the quality of spending difficult.
Notes
1. The average size of the estimated 10,000 landholdings in the Jordan Valley is rela-
tively small, at about 3.5 ha (Venot, Molle, and Hassan 2007).
2. For more details on cost recovery in irrigation, see Easter and Liu (2007);
Johansson et al. (2002); and Molle and Berkoff (2007).
3. According to the typology undertaken by Venot, Molle, and Hassan (2007).
4 The Cost of Irrigation Water in the Jordan Valley
Chapter 2
Institutional Framework of the
Irrigation Water Sector in the
Jordan Valley
The Jordan Valley Authority (JVA) was established in 1973 as the Jordan
Valley Commission, but was given its current name in 1977. The area of the
JVA’s responsibilities extends from the Yarmouk River in the North to
the Red Sea in the South. The eastern extension of the area is limited by a
300-meter contour line north of the Dead Sea and a 500-meter contour line
south of the Dead Sea. The King Abdullah Canal serves as the backbone
of the JVA water distribution system north of the Dead Sea irrigating farm
units.
The JVA is a governmental organization responsible for the social and eco-
nomic development of the Jordan River Valley, including the development,
use, protection, and conservation of water resources, and supports the infra-
structure in the Jordan Valley. Its core activities are in land and water resources
development.
The JVA’s obligations are established in the Jordan Valley Development
Law of 1988 and the 2001 amendments. Article 3 of the law includes respon-
sibilities,1 which focus on the development of water resources in the Jordan
Valley, and on their use for farm irrigation; domestic, municipal, and indus-
try use; generation of hydroelectric power; and other beneficial uses. Also
included is the protection and conservation of these resources and the imple-
mentation of all works related to the development, use, protection, and con-
servation thereof, including among others:
•• Planning, design, construction, and the operation and maintenance of
irrigation projects and related structures, conveyance and distribution
networks, surface and subsurface drainage works, flood protection works,
and roads and buildings for;
•• Soil surveys and classification, identification, and reclamation of lands for
use in irrigated agriculture, and land division into farm units;
•• Development and improvement of environmental and living conditions
in the Jordan Valley;
•• Implementation of related works, including:
•• Setting rules and regulations for land on which construction of
buildings is permitted, setback lines, rights of way, outside towns,
and villages borders;
•• Land development for residential, industrial, agricultural, and other
uses;
•• Planning, design, and construction of farm roads;
The Cost of Irrigation Water in the Jordan Valley 5
•• Social development of the Jordan Valley, which includes the
involvement of private agencies to help achieve development
objectives; and
•• Additional development activities as requested by the Jordanian
Cabinet.
Jordan’s 2009 strategy, “Water for Life,” proposed a new structure for the
delivery of irrigation water. Delivery of bulk water irrigation would be man-
aged by one organization, whereas the retail distribution of agricultural water
would be managed by water user associations (WUAs). In the long term, the
proposed bulk water provider in the Jordan Valley would focus on the regula-
tion and supervision of bulk irrigation water services. Involvement of stake-
holders and the private sector in irrigation management would be introduced
and gradually promoted. It is foreseen that with these changes in the institu-
tional structure, appropriate water tariffs and incentives would be introduced
to promote water efficiency in irrigation, and ensure higher economic returns
for irrigated agricultural products. Yet, progress towards moving to a bulk
supplier has been very modest. By 2013, there were 20 registered water user
associations (compared to 18 in 2009). By that same year, the JVA had trans-
ferred the distribution of irrigation water to 16 of these registered WUAs,
covering 44 percent of the irrigated area in the Jordan Valley.
Note
1. Jordan Valley Development Law of 1988, amended in 2001 by Law No. 30.
6 The Cost of Irrigation Water in the Jordan Valley
Chapter 3
Water Balance in the Jordan
Valley
Introduction
The Jordan River Valley (JRV) drains an area of about 18,300 square kilometers
on both sides of the Jordan River. Within Jordan, it drains an area of about
7,627 square kilometers. The JRV basin is divided into five major subbasins:
Upper Jordan, Yarmouk River, Lower Jordan, East Dead Sea, and the South
Dead Sea. The available resources in the Valley are ground and surface water
resources in addition to treated effluent from the treatment plants to the
Valley or discharging to wadis.
Upper Jordan River Subbasin. The Hasbani, Banyas, and Lidan Rivers are
the main tributaries of this subbasin, which drains into Lake Tiberias. Other
sources are minor springs and seasonal flow. The total contribution of this
subbasin is 660 million cubic meters per year. The evaporation rate from the
lake is about 270 million cubic meters per year.
Yarmouk River Subbasin. This subbasin is the biggest contributor to the
Jordan River flow. Historically, the annual discharge to the Jordan River was
about 600 million cubic meters per year. Measurements show that the flow of
the river has declined over the last decade. The annual discharge of the
Yarmouk River (base and winter flow) to the Jordan River is about 200 million
cubic meters. The flow diverted to the King Abdullah Canal and Unity Dam
has declined over the last decade from 108 million cubic meters in 1995 to
about 25 million cubic meters in 2011.
Lower Jordan Subbasin. The main tributaries to the Lower Jordan River
Subbasin are the Zarqa River (the largest tributary) and the Wadis Al Arab,
Ziglab, Jurum, Yabis, Kufranja, Rajib, Shuieb, Kafreen, and Hisban. The vol-
ume of water from this subbasin amounted to 116 million cubic meters per
year in 2010. This includes the base flows and runoffs and treated effluent
from the As Samra and Irbid treatment plants.
East Dead Sea Subbasin. Several wadis contribute to the flow in this subba-
sin; the major wadis are Wadi Mujib and Wadi Wala, but their overall contri-
bution is very small.
Total available water resources in the Jordan Valley have declined in the last
decades due to the construction of dams and other diversions mainly for agri-
cultural use. The available resources in the Jordan Valley are shown in
table 3.1. The contribution from surface water (Yarmouk River) varies from
year to year due to infrastructure development in Syria. Currently, water vol-
umes from surface water sources are between 25 percent and 40 percent of the
1992 contribution. The contribution of side wadis varies based on rainfall
intensity and storage capacity of the dams. The use of treated effluent has
increased significantly in recent years.
The Cost of Irrigation Water in the Jordan Valley 7
8
Table 3.1 Water Inflows into the Jordan Valley
million m 3 per year
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Yamouk 54.616 30.414 22.953 54.748 68.610 42.550 14.249 31.765 23.496 28.500 26.203 26.407
Mukhaibah Wells 17.865 19.871 30.880 24.410 28.753 32.121 34.665 31.830 30.199 28.529 27.698 25.557
Ziqlab 5.111 4.393 4.150 8.158 8.235 7.284 6.429 5.136 3.896 3.752 2.384 2.374
Jarem 4.518 2.771 2.502 3.662 4.041 3.225 3.304 3.278 2.672 2.406 2.249 1.877
The Cost of Irrigation Water in the Jordan Valley
Kufranja 5.043 2.727 3.657 17.320 4.180 6.518 4.147 4.280 2.204 2.694 2.371 2.460
Rajib 3.535 1.712 2.639 11.775 2.792 3.124 2.337 2.596 1.596 1.629 0.106 0.022
Zarqa River 77.287 72.774 87.514 117.477 82.466 89.098 76.293 82.110 79.341 98.171 104.228 95.414
Shieb 4.674 4.398 7.812 13.911 4.468 4.698 3.933 6.142 3.071 6.155 5.549 4.006
Kafreen 8.028 6.558 14.592 23.137 8.518 11.615 7.393 10.855 6.938 8.435 11.257 6.746
Hesban 1.498 1.375 3.296 4.074 2.782 3.186 2.173 0.909 1.031 3.031 3.091 3.080
N. Conveyor 54.485 45.360 51.138 53.392 50.206 46.989 53.121 43.480 42.137 42.219 45.525 43.628
Small wadis 1.000 0.319 0.337 15.308 2.329 4.811 2.527 1.762 1.653 1.578 0.046 0.050
Total 237.760 192.672 231.470 347.372 267.380 255.220 210.571 224.144 198.234 227.407 230.706 211.622
Source: JVA Control Center.
Note: KAC = King Abdullah Canal.
Table 3.2 reflects how water inflows are used. The water available for
irrigation purposes is affected by the diversion of scarce water resources
for drinking water purposes. An increasing part of the water inflows is used
for drinking and irrigation.
In addition to these inflows, wastewater is also being reused. In 2011, this
treated wastewater flow amounted to 110 million cubic meters, of which JVA
estimated 75 percent was being used by farmers in the Jordan Valley (equiva-
lent to 83 million cubic meters per year).
Hence, with an average freshwater flow of 124 million cubic meters in 2011
and an average flow of reused wastewater of about 83 million cubic meters,
the available flow for irrigation is estimated at 207 million cubic meters. The
flow of reused wastewater becoming available to Jordan Valley farmers is
increasing as part of the policy of the government to extend wastewater col-
lection and treatment, while planning to reuse these wastewater flows in agri-
culture and industry.
Water Scarcity in the Jordan Valley
The farmer survey conducted between December 2011 and January 2012
looked into farmers’ perspectives regarding water scarcity. Farmers facing
water scarcity have been defined as those who stated that “access to water for
crops” was the most important problem that the government should solve. This
amounts to 100 farmers (42 percent of the sample of 236 farmers i
nterviewed).
Almost all the farmers facing water scarcity conditions are located in the
Table 3.2 Water Inflows and Water Used into the Jordan Valley
Water for all Three-year
Total Drinking
uses as a trend average
Estimated Discharged Drinking water water as a
percentage of water uses
Year inflow for irrigation water for all percentage
of total as a percentage
(MCM) (MCM) (MCM) uses of of total
water of total water
(MCM) water uses
inflows inflows
2001 192.67 102.07 39.94 142.01 74% n.a. 28%
2002 231.47 158.39 36.75 195.13 84% 73% 19%
2003 343.37 169.53 38.50 208.02 60% 77% 19%
2004 267.38 183.75 50.60 234.35 88% 77% 22%
2005 255.22 162.49 53.53 216.02 85% 86% 25%
2006 210.57 128.83 52.68 181.51 86% 83% 29%
2007 214.14 136.92 40.61 177.52 79% 84% 23%
2008 198.23 125.10 43.79 168.89 85% 81% 26%
2009 227.41 132.33 49.43 181.76 80% 83% 27%
2010 230.71 138.21 53.00 191.21 83% 82% 28%
2011 211.62 123.72 53.54 177.26 84% 83% 30%
Average 236.87 133.36 46.48 179.85 76 76% 26%
Source: JVA Control Center.
Note: MCM = million cubic meters; n.a. = not available.
The Cost of Irrigation Water in the Jordan Valley 9
Northern Ghors (71 percent), Karamah (47 percent), or Middle Ghors
percent). Farmers from the Southern Ghors did not perceive water scarcity
(38
as the most important issue to tackle. Seventy-one percent of the surveyed
farmers living in the Northern Ghors face an acute problem of water scarcity,
unlike the majority of surveyed farmers in the other three regions (table 3.3).
Among those farmers facing water scarcity, 48 percent are family farms and
52 percent are entrepreneurial farms (the proportions in the full sample were
41 percent and 59 percent, respectively). Table 3.4 shows that 82 percent of
the surveyed farmers growing banana and 76 percent of the surveyed farmers
growing citrus crops face major water shortages. Yet, less than one-third of
the surveyed farmers growing vegetables confirmed facing major water scar-
city issues.
In general, farmers relying on wells do not face major water shortages.
Farmers facing water scarcity issues often combine sources, while 36 percent
of the surveyed farmers who rely solely on the King Abdullah Canal face
water scarcity (table 3.5).
Half of the surveyed farmers using open field techniques reported facing
major water scarcity, which is consistent with the previous finding that farm-
ers growing citrus and banana suffer the most from water shortages. A large
majority of the surveyed farmers using plastic houses or plastic tunnels con-
firmed not facing acute water scarcity (table 3.6).
Table 3.3 Profile of Farmers Facing Water Scarcity, by Location
Total Farmers facing Farmers not facing
Region number major water scarcity major water scarcity Total (%)
of farmers problems (%) problems (%)
Northern Ghors 49 71 29 100
Middle Ghors 77 38 62 100
Karamah 74 47 53 100
Southern Ghors 36 3 97 100
Source: Survey for the “The Cost of Irrigation Water in the Jordan Valley” study.
Table 3.4 Profile of Farmers Facing Water Scarcity, by Cropping
Pattern
Farmers facing Farmers not facing
Main activity Total number
major water scarcity major water scarcity Total (%)
(Q2.6) of farmers
conditions (%) conditions (%)
Citrus crops 34 76 24 100
Palm dates 8 50 50 100
Vegetables 155 29 71 100
Banana 17 82 18 100
Mixed farming 5 60 40 100
Other 9 44 56 100
Source: Survey for the “The Cost of Irrigation Water in the Jordan Valley” study.
Note: (Q2.6) = survey question Q2.6.
10 The Cost of Irrigation Water in the Jordan Valley
Table 3.5 Profile of Farmers Facing Water Scarcity, by Source of Water
Farmers facing Farmers not
Main source of
Full sample major water facing major Total (%)
irrigation water
scarcity (%) water scarcity (%)
King Abdullah Canal 47 36 64 100
Water reuse 34 56 44 100
Wells 38 3 97 100
Springs 79 42 58 100
Dams 7 86 14 100
Combination of resources 31 77 23 100
Total 236 42 58 100
Source: Survey for the “The Cost of Irrigation Water in the Jordan Valley” study.
Table 3.6 Profile of Farmers Facing Water Scarcity, by Farming
Method
Farmers Farmers not
facing major facing major
Farming method Full sample Total (%)
water scarcity water scarcity
problems (%) problem (%)
Open field 165 50 50 100
Plastic house 29 28 72 100
Plastic tunnel 6 17 83 100
Other 2 0 100 100
Combination of methods 34 26 74 100
Total 236 42 58 100
Source: Survey for the “The Cost of Irrigation Water in the Jordan Valley” study.
The majority of farmers using surface irrigation or localized tubes (as
their main irrigation method) reported water scarcity as an issue, while only
one-third of surveyed farmers using drip irrigation technologies did so
(table 3.7).
Farms facing major water scarcity problems are, on average, smaller (46
dunum) than farms that do not (74 dunum). Farmers with major water scar-
city issues irrigate a larger proportion of their land (91 percent), on average,
than the farmers who do not (81 percent). Farmers dealing with water scar-
city problems are more likely to use open field methods (either exclusively or
in combination with other methods) and are less likely to use drip irrigation
(either exclusively or in combination with other irrigation techniques).
Finally, farmers facing acute water shortages are more likely to grow citrus
and banana and less likely to grow vegetables (table 3.8). As a result, farmers
who complain about water scarcity issues tend to use less water per dunum
than those who do not. Interestingly, even though they have access to less
water per dunum, their net crop revenue per dunum is not statistically signifi-
cant different from other farmers.
The Cost of Irrigation Water in the Jordan Valley 11
Table 3.7 Profile of Farmers Facing Water Scarcity, by
Irrigation Method
Farmers facing Farmers not facing
Full
Irrigation method major water scarcity major water scarcity Total (%)
sample
problems (%) problem (%)
Surface irrigation 20 80 20 100
Localized tubes 8 75 25 100
Drip 192 34 66 100
Micro-sprinkler 2 100 0 100
Subsurface irrigation 1 100 0 100
Source: Survey for the “The Cost of Irrigation Water in the Jordan Valley” study.
Table 3.8 Profile of Farmers Facing Water Scarcity, Regression Analysis
Farmers facing Farmers not
major water facing major water Mean test
Indicator
scarcity problems scarcity problems (significance)a
Mean (median) Mean (median)
Number of farmers 100 136 —
Farm size (dunum) 46 (34) 74 (36) (**)
Irrigated area (dunum) 37 (30) 39 (30) n.s.
Share of irrigated area (%) 91 (100) 81 (98) (***)
Distance to the water source (m) b
104 (50) 168 (50) n.s.
Estimated water use (m3/year) 12,012 (11,513) 17,705 (14,836) (***)
Estimated per dunum water use (m3/year)c 346 (347) 559 (450) (***)
Income category 2.1 (2) 2.5 (2) (*)
Expenditures (JD/year) 8,753 (5,000) 19,492 (11,500) (***)
Per dunum expenditures (JD/year/dunum) 236 (115) 464 (279) (***)
Crop revenues (JD/year) 21,250 (15,000) 33,094 (17,140) (**)
Per dunum crop revenues (JD/year/dunum) 588 (417) 666 (397) n.s.
Crop net revenues (JD/year) 10,074 (7,666) 16,459 (7,000) n.s.
Per dunum crop net revenues (JD/year/dunum) 280 (177) 283 (121) n.s.
Open field method exclusively (%) 82 61 (***)
Open field method in combination (%) 91 79 (**)
Drip irrigation exclusively (%) 65 93 (***)
Drip irrigation in combination (%) 72 95 (***)
Vegetables as main crop (%) d
45 82 (***)
Banana as main crop (%) d
14 2 (***)
Citrus as main cropd (%) 30 7 (***)
Farm value (JD/m2) 376 (200) 287 (200) (*)
Source: Survey for the “The Cost of Irrigation Water in the Jordan Valley” study.
Note: — = not applicable. a. n.s., *, **, *** = not significant, significant at the 10% level, 5% level, and 1% level, respectively.
b. The average distance to the water source is calculated from answers to question Q3.2. We take the middle point of each
interval and the lower bound for the last interval (“more than 4 km”). A number of farmers did not answer this question.
c. Calculated from answers to questions Q3.7. d. Obtained from answers to question Q4.1.
JD = Jordanian dinar; m = meter; m2 = square meter; m3 = cubic meter.
12 The Cost of Irrigation Water in the Jordan Valley
Farmers facing water quality issues have been defined as those who stated
that “water quality” was the most important environmental problem that the
government should solve. This amounts to 26 farmers overall (equivalent to
11 percent of the sample). Among the farmers reporting water quality issues,
73 percent live in the Middle Ghors region, 23 percent live in Karamah, and
only 1 percent lives in the Southern Ghors. None of the farmers living in the
Northern Ghors experience major water quality problems. Among those
farmers reporting water quality problems, 81 percent are entrepreneurial
farms. They tend to grow vegetables. Among the 26 farmers facing water
quality issues, 73 percent rely on springs as their main source of irrigation
water and about 19 percent rely on recycled water. Among the farmers facing
major water quality issues, 50 percent use open field as the main farming
method and 38 percent use plastic houses, whereas almost all of these farmers
use drip irrigation technologies. Farmers who complain about water quality
have lower per dunum crop revenues than farmers who do not.
Table 3.9 shows some average (and median) characteristics for farmers fac-
ing major water quality problems and farmers not facing major water quality
problems, along with the significance of the corresponding mean test. Farmers
facing major water quality problems are wealthier, on average, and have
higher expenditure and gross and net revenues (in total and on a per dunum
basis). These farmers are also less likely to use open field methods.
Table 3.9 Profile of Farmers Facing Water Quality Problems, Regression Analysis
Farmers facing Farmers not facing
major water major water quality Mean test
Indicator
quality problems problems (significance)a
Mean (median) Mean (median)
Number of farmers 26 210 —
Farm size (dunum) 48 (35) 64 (35) n.s.
Irrigated area (dunum) 41 (34) 37 (30) n.s.
Share of irrigated area (%) 96 (100) 84 (100) (**)
Distance to the water source (m)b 138 (50) 138 (50) n.s.
Estimated water use (m3/year) 16,215 (14,461) 15,082 (13,478) n.s.
Estimated per dunum water use (m3/year) 375 (345) 480 (374) n.s.
Income category 3.12 (2) 2.21 (2) (***)
Expenditures (JD/year) 28,032 (20,000) 13,318 (8,000) (***)
Per dunum expenditures (JD/year/dunum) 673 (452) 330 (206) (***)
Crop revenues (JD/year) 46,031 (30,000) 25,431 (15,200) (**)
Per dunum crop revenues (JD/year/dunum) 1,108 (827) 567 (385) (***)
Crop net revenues (JD/year) 18,782 (11,000) 12,917 (6,350) n.s.
Per dunum crop net revenues (JD/year/dunum) 430 (189) 261 (154) n.s.
Open field method exclusively (%) 50 72 (**)
Open field method in combination (%) 54 88 (***)
Drip irrigation exclusively (%) 88 80 n.s.
table continues next page
The Cost of Irrigation Water in the Jordan Valley 13
Table 3.9 continued
Farmers facing Farmers not facing
major water major water quality Mean test
Indicator
quality problems problems (significance)a
Mean (median) Mean (median)
Drip irrigation in combination (%) 88 85 n.s.
Vegetables as main crop (%) c
73 65 n.s.
Banana as main crop (%) c
12 7 n.s.
Citrus as main cropc (%) 8 18 n.s.
Farm value (JD/m2) 317 (240) 331 (200) n.s.
Source: Survey for the “The Cost of Irrigation Water in the Jordan Valley” study.
Note: — = not applicable. a. n.s., *, **, *** = not significant, significant at the 10% level, 5% level, and 1% level, respectively.
b. The average distance to the water source is calculated from answers to Q3.2. We take the middle point of each interval and the
lower bound for the last interval (“more than 4 km”). A number of farmers did not answer this question. c. Obtained from answers
to question Q4.1.
JD = Jordanian dinar; m = meter; m2 = square meter; m3 = cubic meter.
Conclusions
The profiles of farmers who face water scarcity are distinct. Farmers who
complain about lack of access to water tend to be located in the northern part
of the Jordan Valley. Their cropping pattern is more likely to be dominated by
the production of citrus and banana, which are be water-intensive crops.
Farmers who face water scarcity also tend to be more dependent on open field
farming methods and less likely to use drip irrigation methods. Water quality
issues are less prominent in the responses of the surveyed farmers and were
mostly brought up by farmers in the Middle Ghors. Farmers facing water
quality issues are more likely to grow vegetables that are usually farmed under
greenhouse conditions. They also have invested in drip irrigation methods to
use water more efficiently.
14 The Cost of Irrigation Water in the Jordan Valley
Chapter 4
Irrigated Agriculture in the
Jordan Valley
Introduction
Development of irrigated agriculture started toward the end of the 1950s
around the side wadis of the Jordan Valley. With the construction of the East
Ghor Canal, later named the King Abdullah Canal, which diverted water
from the Yarmouk River to the Jordan Valley, intensive irrigation became
possible. The King Abdullah Canal, running along the East Bank of the Jordan
Valley, constitutes the backbone of the Jordan Valley hydraulic scheme. The
canal was extended three times to over 110 kilometers. In the past five decades,
10 dams have been constructed with a combined storage capacity of around
322 million cubic meters. The main reservoir is the King Talal Dam on the
Zarqa River, with a total capacity of 80 million cubic meters.1 Irrigation
schemes in the Jordan Valley have been constructed, rehabilitated, operated,
and maintained by the government.
Agriculture is the main water user in the Jordan Valley, with an average
design consumption of 220 million cubic meters per year. A series of irriga-
tion projects have been implemented over the years (see table 4.1) to serve a
command area of about 360,000 dunum,2 organized around 10,000 farm units
(of 35 to 40 dunum each).
In 2010, agricultural land in the Jordan Valley made up about 13 percent of
the total agricultural land in use in the country. Yet, unlike the rest of Jordan,
the Jordan Valley almost exclusively depends on irrigated water to grow its
crops. Its cropping pattern is quite distinct from that of the Highlands, with
vegetables being the most important crop (table 4.2).
Since the 1990s, surface irrigation channels have been converted
into pressurized piped systems to raise irrigation efficiency. At present,
surface irrigation in the Jordan Valley is virtually nonexistent, although
capital-poor farmers practice a hybrid form of surface and localized
irrigation.
Despite major investment efforts, overall system efficiency is still a major
challenge because of increasing water scarcity and competing uses of
water resources. Actual water consumption is only 45 percent of design
consumption. Water is allocated through a crop-based water quota system.
Five crop planting categories are acknowledged by the JVA: vegetables,
citrus trees, banana, cereals and grains, and others (fruit trees). However,
only three planting categories (vegetables, citrus trees, and banana) are
used for allocating farm water quotas. From the 1960s and throughout the
1980s, quotas (see table 4.3 for the quota schedule) were related to actual
crop water requirements. With the emergence of water scarcity, the JVA
The Cost of Irrigation Water in the Jordan Valley 15
Table 4.1 Irrigation Projects in the Jordan Valley (from North to South)
Irrigation Project Size (in dunum)
Wadi Arab (1985) 12,530
North East Ghor (1978) 27,600
North Ghor Conversion (1996) 73,000
Zarqa Triangle (1978) 16,500
Middle Ghor (1992) 64,544
King Abdullah Canal Extension (1978) 36,915
King Abdullah Canal Extension (1988) 60,000
Hisban Kafrein (1978) 16,590
South Ghor I (1985) 47,000
South Ghor II (2004, to be completed) 9,700
Total 364,379
Source: JVA.
Table 4.2 Total Cultivated and Irrigated Area in Jordan in 2011
Jordan Jordan Valley
Crops Irrigated Nonirrigated Total Irrigated Nonirrigated
Total area
area area area area area
(dunum)
(dunum) (dunum) dunum)
( (dunum) (dunum)
Tree crops 850,049 469,751 380,298 109,052 107,672 1,380
Field crops 1,129,038 87,549 11,041,489 21,315 20,283 1,033
Vegetables 428,628 407,195 21,432 183,672 183,627 45
Total 2,407,714 964,495 1,443,219 314,039 311,581 2,457
Sources: JVA. See also IWMI/IRD “Research Report,” 18, 2007.
Table 4.3 Quota System by Jordan Valley Authority (2004 Onward)
Quotas (m3/ha/day)
Vegetables Citrus Banana
March 16–31 15 On demand but < 20
April 1–15 15
20 30
April 16–30
20
May 1–June 15 30 50
June 15–August 15 On demand but < 10
40 70
August 16–September 15 10
September 16–October 15 15
October 16–31 30 50
20
November 1–December 15
On demand but < 20
December 16–March 15 10
Sources: JVA. See also IWMI/IRD “Research Report,” 18, 2007.
16 The Cost of Irrigation Water in the Jordan Valley
froze the existing cropping patterns in the Jordan Valley and decided to
grant “vegetable allowances” to all areas not covered by orchards at the
time. The aim was to avoid further area expansion of citrus and banana,
since they are crops with high water requirements.3 Before 1999, the annual
values of official water allocations (November to April) totaled 4,800, 9,500,
and 17,200 cubic meters per hectare for vegetables, citrus trees, and banana,
respectively. Prolonged drought years have imposed adjustments to quotas
that are still valid today: 3,600, 7,500, and 12,550 cubic meters per hectare
for the same crops, respectively.
Agricultural Transformation in the Jordan Valley
In the last 15 years, major changes have occurred in the Valley. Water scarcity,
as discussed in Chapter 4, resulted in smaller water quota allocations. Farmers
have reacted to this by expanding their cropping area and increasing crop
productivity.
Between 1994 and 2010, the area under cultivation in the Jordan Valley
grew significantly, at 22 percent. The expansion was especially pronounced for
tree and vegetable crops. During the same period, the area under cultivation
for field crops declined significantly, as can be seen in table 4.4. Concurrently,
the sector has become more productive as measured by increases in average
yield per dunum. The production volume per dunum almost doubled, driven
by increases in productivity in field and vegetable crops. Tree crop productiv-
ity declined over the same period.
Vegetables. The most important crops planted in the Jordan Valley are
tomato, eggplant, cucumber, potato, and squash. The area planted increased
by 29 percent over the last 15 years. At the same time, average yields
increased by 145 percent over the same period, from 1.86 metric tons per
dunum to 4.75 metric tons in 2010. Expansion beyond 200,000 dunum
appears unlikely and would be achievable only to a limited extent and only
if market or policy shocks occur to other crops (for example, removal of
banana import tariffs).
The expansion of vegetable production is mainly the result of large
on-farm investments and the commercialization of agriculture in the
Table 4.4 Total Crop Area and Production in the Jordan Valley,
1994–2010
percent
Fruit trees
Indicator Vegetables Cereals Traditional
Citrus Banana Total
crops
Area planted 129 70 126 115 276 138
Production (in metric ton) 316 197 82 182 299 105
Average yield (in kilogram) 245 282 65 158 109 76
Source: Fileccia and Punda 2012.
The Cost of Irrigation Water in the Jordan Valley 17
Table 4.5 Total Vegetable Crop Area and Production in the Jordan
Valley, 1994–2010
percent
Increase between Increase between Increase between
Indicator
1994 and 2010 1994 and 2000 2000 and 2010
Area planted 129 114 113
Production (in metric tons) 316 201 157
Average yield (in kilograms) 245 176 139
Source: Fileccia and Punda 2012.
Table 4.6 Total Field Crop Area and Production in the Jordan Valley,
1994–2010
percent
Increase between Increase between Increase between
Indicator
1994 and 2010 1994 and 2000 2000 and 2010
Area planted 70 92 76
Production (in metric tons) 197 149 133
Average yield (in kilograms) 282 161 175
Source: Fileccia and Punda 2012.
Jordan Valley. Most of the productivity increases occurred before 2000
(table 4.5). The sector has become increasingly less diversified. The five main
crops constituted 62 percent of the cropped area in 1994. In 2010, the con-
tribution of these major crops increased to 68 percent. In total production
volumes, this specialization is even more striking. The five major crops made
up 70 percent of vegetable crop production in 1994, but no less than 80 per-
cent in 2010.
Field crops. The most important field crops are maize, wheat, barley, and
clover. Although the crop area declined between 1994 and 2010, productivity
increased from 0.42 metric tons per dunum in 1994 to 1.39 metric tons in
2010. In 1994, wheat and barley constituted 83 percent of the total cereal crop
area in the Jordan Valley, but in 2010, the share of these two crops declined to
43 percent, with increasing importance of maize and clover. Productivity for
barley and wheat hardly changed between 1994 and 2010, but that of maize
and clover did (table 4.6).
Fruit tree crops. The development of fruit tree crops presents a complex
picture. Despite the government’s efforts to freeze the existing cropping pat-
terns in the Jordan Valley, further area expansion of citrus and banana—crops
that have higher water requirements4—occurred between 1994 and 2010
(table 4.7). Most of the increase in area expansion took place before 2000. This
expansion is linked to a waiver that was introduced in 2004 to legalize citrus
orchards that were planted between 1991 and 2001. Trends of citrus produc-
tion reflect farmers’ coping strategies through changes in orchard specializa-
tion (that is, species conversion from clementine and mandarin cultivars to
lemon and oranges).
18 The Cost of Irrigation Water in the Jordan Valley
Table 4.7 Total Tree Crop Area and Production in the Jordan Valley,
1994–2010
Increase between Increase between Increase between
Indicator
1994 and 2010 1994 and 2000 2000 and 2010
Area planted 138 143 97
Production (in metric tons) 105 90 117
Average yield (in kilograms) 76 63 121
Source: Fileccia and Punda 2012.
The area planted with banana crops expanded rapidly between 1994 and
2000, declined during 2000–07, and expanded after 2007. At the same time,
the areas used for more traditional tree crops, such as grapes, olives, dates,
and figs, increased (see figure 4.4).
Productivity increases vary widely among types of crops. Citrus produc-
tion, despite the increase in area planted with citrus trees, declined rapidly
between 1994 and 2010, with average yields in 2010 only about 65 percent of
those in 1994. Farmers responded to stem the production losses by intensify-
ing production through increasing the number of trees per dunum. Banana
crops show a different pattern. Crop area increased, but so did production
and average yield, with almost all the crop area expansion taking place
between 1994 and 2000 and all productivity growth after 2000. As for tradi-
tional crops, like dates, most of the growth in production has been linked to
area expansion, with limited increases in average yields.
Major on-farm investments have been made in the past to cope with
reduced irrigation water availability and reliability, while maintaining or
increasing production. To date, almost all farms have adopted some sort of
localized irrigation technology. Even those farmers who are considering using
surface irrigation (on citrus orchards) have in reality adopted a piped system
to irrigate individual trees. The majority of farmers have constructed standby
ponds to collect and store water when it is distributed by the JVA at farm
turnouts to better regulate farm irrigation scheduling. A number of farmers
use groundwater to expand their water quotas. Yet, few farmers have been
able to improve water quality where this has become a major issue (particu-
larly in the middle and southern part of the Jordan Valley, which receives
water from the King Talal Dam).
Another development that has had an impact on the Jordan Valley are
land market transactions. Venot, Molle, and Hassan (2007) cite an esti-
mated land rent of US$570 per hectare per year. In discussions with farm-
ers in 2012, land rental values of about JD 143 per dunum per year (which
translates to JD 1,430 per hectare per year, equivalent to US$2,043 per
hectare per year) were registered. A 2012 farmer survey even registered
values approaching JD 4,000 per hectare per year (equivalent to more than
US$5,700). The increase in rental values has resulted in an increase in land
transactions—especially in farms classified as entrepreneurial farms—with
20 percent of the surveyed farmers mentioning a change in ownership or
The Cost of Irrigation Water in the Jordan Valley 19
Figure 4.1 Historical Area and Cropping Pattern Trends for Major Crops in the
Jordan Valley
Vegetables Dates
210 11
Planted area, 1000 x du
Planted area, 1000 x du
200
9
190
7
180
5
170
160 3
150 1
1994 2000 2005 2006 2007 2008 2009 2010 1994 2000 2005 2006 2007 2008 2009 2010
Citrus Banana
80 21
Planted area, 1000 x du
Planted area, 1000 x du
20
75 19
18
70
17
16
65
15
60 14
13
55 12
1994 2000 2005 2006 2007 2008 2009 2010 1994 2000 2005 2006 2007 2008 2009 2010
Source: Fileccia and Punda 2012.
rental status in the five years before the survey. These transactions have
also resulted in a consolidation of farms. Although 80 percent of the farms
surveyed mentioned they consisted of one farm unit of 35 to 40 dunum,
20 percent of the farms consist of more than one farm unit, while the aver-
age farm size increased to slightly over 60 dunum, suggesting that the agri-
cultural sector in the Jordan Valley is consolidating, with fewer but larger
farms.
According to Venot, Molle, and Hassan (2007), 87 percent of farm man-
agers farmed 51 percent of the total area in the Jordan Valley. In the 2012
farmer survey, non-owners made up 53 percent of the farm managers
farming 45 percent of the total farm area. This suggests that agriculture in
the Jordan Valley is becoming increasingly entrepreneurial. Facing
increased water scarcity and country-specific market problems, only farm-
ers with sufficient investment capacity are able to stay profitable in the
Jordan Valley.
Current Production Systems and Cropping
Patterns in the Jordan Valley
Eight broad farm-type systems prevail in the Jordan Valley. Based on ongoing
research and survey data5 and as compared to actual cropping pattern infor-
mation (Department of Statistics), their distribution is shown in table 4.8.
As shown in table 4.9, 4.10 and figure 4.2, about 342,000 dunum were
cultivated in the Jordan Valley in 2012, with an irrigation intensity of
99 percent.
20 The Cost of Irrigation Water in the Jordan Valley
Table 4.8 Major Production Systems in the Jordan Valley
percent
Type of production system Share
Citrus farms – surface irrigation (partially localized) 9
Citrus farms – drip irrigation 9
Vegetables – open field 31
Vegetables – greenhouses 11
Vegetables – open field and greenhouses 11
Banana 7
Dates 3
Mixed 19
Source: Fileccia and Punda 2012.
Table 4.9 Cropping Patterns in the Jordan Valley
dunum
Crop 1994 2005 2008 2010 2011 2012
Vegetables 152,552 156,420 207,141 196,946 183,672 200,313
Field crops 43,550 36,395 33,451 33,337 21,315 30,416
Fruit trees 80,525 93,825 102,386 106,592 109,052 111,625
of which:
Citrus 55,605 64,838 65,274 65,849 65,989 6,137
Banana 15,979 12,637 16,242 18,434 19,617 20,811
Dates 753 4,949 9,395 10,101 10,712 11,418
Others 8,188 11,401 11,476 12,208 12,734 13,259
Planted area 276,627 286,640 342,978 336,875 314,038 342,429
Irrigated area 275,102 282,827 338,533 333,630 311,581 340,904
Nonirrigated 1,525 2,900 4,444 3,245 2,457 1,525
Source: Fileccia and Punda 2012.
Table 4.10 Crop Production in the Jordan Valley
metric tons
Crop 1994 2005 2008 2010 2011 2012
Vegetables 252,591 640,124 743,774 798,274 876,140 915,756
Field crops 18,078 58,197 38,944 43,572 30,686 23,289
Fruit trees 179,482 177,391 150,274 182,067 171,546 166,871
of which:
Citrus 148,480 134,148 89,526 116,415 104,894 107,892
Banana 23,970 31,820 41,422 43,625 48,105 38,669
Dates 227 2,514 5,665 7,511 7,583 6,548
Others 6,805 8,909 13,661 14,516 10,964 13,762
Total 450,151 875,712 932,992 1,024,463 1,078,372 1,105,916
Productivity 1,627 3,055 2,720 3,041 3,434 3,230
per dunum in
kilograms
Source: Fileccia and Punda 2012.
The Cost of Irrigation Water in the Jordan Valley 21
Figure 4.2 Share of Crops in the Jordan Valley, 2010
3% 4%
5%
20%
58%
10%
Vegetables Field crops
Citrus Banana
Dates Other fruit trees
Source: Fileccia and Punda 2012.
The geographic distribution of the Jordan Valley cropping pattern is
depicted in figure 4.3. North Shuna (Northern Directorate) covers about
117,000 dunum of planted area. In this area, citrus is the main crop. The Dair
Alla (Middle Directorate) crop area stands at about 76,000 dunum. The crop
area in Southern Shuna (Karamah) is 66,000 dunum and in Ghor Essafi
(Southern Ghors) 48,000 dunum. In Dair Alla (Middle Directorate), the
Southern Shuna (Karamah), and Ghor Essafi (Southern Ghors), vegetables
are the most important crops. Southern Shuna accounts for 70 percent of the
banana cropping area.
Crop and Farm Economics in the Jordan Valley
Crop and farm budgets have been analyzed by computing elements of the
most representative crops and production systems in the Jordan Valley. With
regard to production costs, the following main assumptions have been used:
(a) Land rental cost has been generalized (as an opportunity cost) to all pro-
duction systems, given that it prevails everywhere in the Valley. (b) Permanent
labor is overwhelming compared to seasonal work, and it has been universal-
ized in most cases. (c) Management input by owner or tenant is significant
and is computed everywhere. (d) Investment cost depreciation is calculated
on actual wear and tear, as discussed with farmers (and not by using technical
proxies). (e) No taxes are applicable.
Yield outputs are derived using surveys based on discussions with primary
informants and were cross-checked with relevant secondary and other pro-
fessional sources (such as the Ministry of Agriculture, the National Center for
22 The Cost of Irrigation Water in the Jordan Valley
Figure 4.3 Geographic Distribution of Cropping Patterns in the
Jordan Valley
a. Northern Shuna 2010 b. Southern Shuna 2010
planting planting
1% 2%
2%
6% 6%
32% 20%
58%
47%
12% 2% 12%
c. Dair Alla 2010 planting d. Ghor Essafi 2010 planting
3% 2%
1%
5% 3% 6%
8%
10%
74%
88%
Vegetables Field crops Citrus
Banana Dates Other fruit trees
Source: Fileccia and Punda 2012.
Figure 4.4 Historical Production Trends in the Jordan Valley
Vegetables Dates
950
850 7
Output, 1000 x MT
6
Output, 1000 x MT
750
650 5
550 4
450 3
350 2
250 1
150 0
1994 2000 2005 2006 2007 2008 2009 2010 1994 2000 2005 2006 2007 2008 2009 2010
Citrus Banana
150 45
140
40
Output, 1000 x MT
Output, 1000 x MT
130
120 35
110 30
100
25
90
80 20
1994 2000 2005 2006 2007 2008 2009 2010 1994 2000 2005 2006 2007 2008 2009 2010
Source: Fileccia and Punda 2012.
Note: MT = metric tons
The Cost of Irrigation Water in the Jordan Valley 23
Agricultural Research and Extension, the Agriculture Credit Corporation,
and the private sector). Output farm gate prices are also derived from surveys
of multiple primary informants. Sensitivity simulations have been attempted
by using the Department of Statistics’ average 2010 prices and by referring to
free-on-board (FOB) prices,6 deducting marketing costs,7 or by considering
whichever best price is obtainable by the producers.
At current prevailing price levels, few production systems generate positive
net returns. Only banana, melon grown under greenhouse conditions, and
dates produce net benefits (see table 4.11). Open field potatoes and drip irri-
gated citrus also provide positive benefits.
To determine returns to investment and farmland, Jordan Valley producers
need to pursue best possible farm gate prices, which are achievable only by
trading either in export conditions (for instance, to European markets) or in
special cases, even in the Amman fresh fruit market (for example, melon), or
else by targeting high-value produce (for example, Medjool dates).
Main Issues Farmers in the Jordan Valley
Are Facing
Based on discussions with farmers and private sector farm representatives in
the Jordan Valley, four outstanding issues have emerged, which may rank dif-
ferently depending on the location and the farming category.
Irrigation water. About 42 percent of the farmers interviewed reported
access to water for crops as the most important issue to tackle.
In the northern part of the Valley, it is mainly a question of water quantity
and reliability. Water quality is acknowledged as good, at least for the time
being.8 As evident from JVA consumption data, water is distributed to farm-
ers below quota allocations. Even farmers who have made major investments
to improve their irrigation system efficiency (drip irrigation and farm reser-
voirs) confirmed that they were unable to satisfy the crops’ water require-
ments. Farmers with higher capital resources use groundwater to integrate
irrigation scheduling. However, groundwater is in most cases brackish,
requiring further investment for desalinization purposes.
In the middle of the Valley and in Southern Shuna (Karamah Directorate),
which is served by the King Talal Dam water, farmers not only mention
water quantity as an issue, but also water quality. Insufficient water quantity
and poor water quality are reported to be affecting cropping pattern choices
and yields. They also impose higher maintenance costs to the irrigation
systems.
In the Southern Ghors, distributed water quality is not considered an
issue; yet, because of insufficient quantity, farmers now increasingly inte-
grate their irrigation requirements with groundwater, depending on avail-
ability of resources, which is often of lower quality. Where farmers experience
salinity problems, these have been compounded in recent years as a result of
reduced water availability and consequent insufficient (or lack of) leaching
irrigation.
24 The Cost of Irrigation Water in the Jordan Valley
The Cost of Irrigation Water in the Jordan Valley
Table 4.11 Crop Production Systems Revenues and Costs in the Jordan Valley, Full Cost
Jordanian dinar
Returns with average (2010) department Returns with best market/ FOB price
Returns in current situation
of statistics price (2010–11)
Type of crop
Gross revenue Total cost Net return Net return Gross revenue Net return Net return Gross revenue Net return Net return
JD/unit JD/unit JD/unit (%) JD/unit JD/unit (%) JD/unit JD/unit (%)
Banana (years 2–5) 2,138 1,316 822 62 — — — 2,138 822 62
Citrus after (8 years), drip 920 859 61 7 992 133 0 2,326 1,467 171
irrigation
Citrus after (8 years), 540 657 (117) –18 496 (161) –25 1,163 506 77
surface irrigation
Cucumber, greenhouse 1,500 1,745 (245) –14 1,181 (563) –32 2,985 1,241 71
Dates (after 8 years) 3,567 3,196 371 12 — — — 8,750 5,554 174
Melon, greenhouse 3,500 2,739 761 28 274 (2,192) –89 3,500 761 28
Potato, open field 2,800 2,559 241 9 739 (1,820) –71 2,800 241 9
Tomato, greenhouse 2,940 3,107 (167) –5 1,663 130 0 3,648 2,094 135
Tomato, open field 588 1,263 (675) –53 673 (590) –47 1,459 196 16
Source: Field interviews, March 2012, as recorded in Fileccia and Punda (2012).
Note: These calculations assume that for tree crops, the initial start-up costs before trees are mature are not included in the calculations.
— = not available.
25
Farmers in the Jordan Valley generally do not complain about water prices,
which are perceived as the least of their production costs. The majority of
interviewed farmers stated a willingness to pay higher prices, provided that
adequate and reliable water quantity and quality are guaranteed.
Labor and management. Less than 10 percent of the labor requirements
are provided by the Jordanian workforce. Trustworthy functions are del-
egated to Jordanian workers (for example, supervision, mechanical opera-
tions, plant protection, seedlings production, and asset maintenance),
including females (for example, produce grading, handling, and packaging).
Migrant labor is very important in the Jordan Valley. There are no major
wage differentials between Jordanian and migrant workers, but recently,
migrant workers have been increasingly moving to other sectors (civil
works) that offer better salaries. The situation is perceived as critical by
almost all farmers, and the labor crunch is a reality in many areas of the
Valley. As a result, at the time of the survey in 2012, the cost of labor was
reported to be rising significantly.9 During the past three or four decades, a
number of migrant workers, attracted by labor opportunities, have settled
in these areas. Over time, many have evolved into farm tenants, who use
family labor.10 Some have also engaged in related efficient agribusinesses
and service provision activities. These farmers have become an important
economic segment in the Jordan Valley.
Finally, farm management has a differentiated pattern in the Jordan Valley.
Broadly speaking, the current pattern appears to be evolving as follows:
management through professional but aging executives in the northern part
of the Valley, foreigner operated in the middle part of the Valley, and quali-
fied younger operators in the southern part of the Valley. A matter for con-
cern is the perspective in the north that market and economic prospects
might not attract a rapid generational shift there. Sustained negative trends
may also persuade other operators to gradually withdraw from the Valley
and eventually also extinguish the enthusiasm of the young professionals in
the south.
Country-specific market problems. Marketing-related issues are men-
tioned by 38 percent of farmers as their most pressing problem (see also
Nachbaur 2004). Farmers mention issues with access to marketing (25 percent
of the farmers), sale price of agricultural products (11 percent), and export
regulations (2 percent) as impediments, while availability of labor, access to
credit, and cost of agricultural inputs are also mentioned. The Jordan Valley is
considered the main agribusiness hub of the country. The domestic market
undoubtedly has its own importance and relevance. However, due to the nat-
ural agroecological comparative advantages posed by this “natural greenhouse”
to produce off-season or time-of-year anticipated fruit and vegetable produce
for the European market, export trade constitutes the prime opportunity for
the Valley’s output.
This opportunity is constrained by the geopolitical shocks to which the
country and the region are regularly subjected. Border transit restrictions,
which occasionally occur11 at the time when markets are more advantageous,
have dramatic consequences on the produce, which is perishable, subject to
26 The Cost of Irrigation Water in the Jordan Valley
significantly higher transportation costs, or otherwise subject to lower prices
by traders and domestic markets. Alternative routes to Europe and Russia or
the Commonwealth of Independent States markets could be sought, which
are, however, not always in the reach and capacity of all producers and traders
operating in the Valley.
Finance for technology. Farmers in the Valley have made important prog-
ress in adopting technology, particularly during the last decade. This has
resulted in conversion from gravity or surface irrigation to localized or drip
irrigation, improved irrigation scheduling by including on-farm water reser-
voirs, increased cropped area under plastic houses, adoption of quality seeds
and seedlings of higher-yielding varieties, cultivar changes based on actual
market demand, and improved plant nutrient management. The farmer sur-
vey revealed that 81 percent of the respondents use drip irrigation, another
5 percent use some other form of localized tube irrigation, and another
percent use surface irrigation. In the Middle and South of the Jordan Valley
8
and the Southern Ghors, drip irrigation is almost universal. Yet, in the
Northern Ghors only 51 percent of farmers use drip irrigation, 31 percent
depend on sprinkler irrigation, and another 14 percent use some form of
localized tubes to irrigate their plots.
About 70 percent of the farmer respondents practice open field farming
methods. However, the importance of greenhouses (plastic tunnels and plas-
tic houses) has increased rapidly. Currently, 15 percent of survey respondents
reported growing their crops in greenhouses, and another 14 percent use a
combination of open field farming and greenhouses. Greenhouses are mostly
concentrated in the Middle Directorate to grow vegetables.
Growing vegetable and fruit crops on a large scale is a major undertak-
ing that requires continuous upgrading and innovation. The producers
who have a profitable economic future in the Jordan Valley are only those
who have the investment capacity to fully upgrade the efficiency of o n-farm
irrigation systems by extending production under high-tech greenhouse
conditions, adopting climate-smart and sustainable agriculture technolo-
gies and methodologies, producing crops of high market value, and
increasing the marketing value of their produce. Yet, to be able to make the
necessary investments, farmers will need to have access to convenient
terms of credit so they will be able to achieve the needed investment
upgrades.
Crop Water Productivity
Water productivity is defined in different ways. We have used a simple and
relatively rough definition that measures crop production (in monetary
terms) against the gross inflow of water. Water productivity as measured in
table 4.12 is only an approximation, since water use is based on water quota
allocation in the Jordan Valley. Since it is known that the water available is less
than that of the quota allocation, actual water crop productivity is higher than
presented in table 4.12. However, since insufficient disaggregated data relate
The Cost of Irrigation Water in the Jordan Valley 27
Table 4.12 Crop Water Productivity
Jordanian dinar per m 3
Gross revenues per cubic meter of irrigation water required
Crop
Current survey prices Best market prices
Tomato (greenhouse) 8.17 20.27
Tomato (open field) 1.60 4.10
Cucumber (greenhouse) 8.33 16.59
Potato (open field) 7.77 7.78
Melon (greenhouse) 9.72 9.72
Dates: non-Medjool 8.22 8.22
Medjool 20.16 20.16
Banana 1.61 1.61
Citrus surface 0.47 1.20
Citrus drip 0.96 2.43
Source: Fileccia and Punda 2012.
crop production volumes and values with water consumption, it is difficult to
achieve a higher level of precision than the level reflected in the table.
As shown in table 4.12, crop water productivity (in monetary terms) is
highly dependent on crop prices. The expected relationships have been con-
firmed for the Jordan Valley. Drip irrigation tends to be associated with higher
crop water productivity than surface water irrigation. In addition, the use of
greenhouses tends to also be associated with higher crop water productivity
than the use of open field farming techniques. The table also shows that crop
prices have a big influence on water crop productivity.
Conclusions
To ensure a sustainable economic future for the Jordan Valley, a number of
actions need to be taken, including the following:
•• Ensuring the long-term certainty of the availability and good quality of
irrigation water
•• Pursuing high productivity through precision agronomic technologies
•• Maximizing production of export vegetables grown under high-tech
greenhouses (computerized with temperature or humidity control sys-
tems over 25 percent of the current vegetable area, or about 50,000
dunum)
•• Optimizing citrus orchards (in the north) by gradually diversifying (over
50 percent of the current citrus area, or about 30,000 dunum) with other
high-value fruit trees, including table grapes
•• Expanding date palm area (with Medjool dates variety) to the extent pos-
sible (doubling the current date palm area to 20,000 dunum), and reduc-
ing the banana area
•• Improving overall marketing and value-adding capacity.
28 The Cost of Irrigation Water in the Jordan Valley
If the Jordan Valley Authority does not succeed in ensuring the long-term
quantity and quality or water, it will have to rely more on quota allocation and
reduce overall crop area based on actual water availability, and/or reduce the
length of the cropping season (until April) to enhance market opportunities
for off-season produce.
These proposed actions would require considerable investment in the
Jordan Valley. The Food and Agriculture Organization estimated the invest-
ment requirement to be about US$1.5 billion (excluding the investment
related to the off-farm irrigation system). Special policy attention to agricul-
ture of the Valley is needed, with an immediate focus on labor and migration
matters, ad-hoc intergovernmental trade agreements, and area-specific
engagements with donors and international financial institutions to source
required funding, and toward the concrete facilitation of credit opportunities
to farmers. Eventually, the government should consider removing any resid-
ual trade barriers. Furthermore, public sector responsibilities and a related
investment in improved irrigation water management and distribution to
guarantee farmers long-term security on a set amount of good quality water.
Finally, sector service providers (for example, the National Center for
Agricultural Research and Extension) would need to concentrate their
research and development efforts on effectively addressing the major
issues producers are concerned about. The establishment of a modern and
efficient market information system (through, for example, an empow-
ered Jordan Exporters and Producers Association for Fruits and Vegetables)
to guide producers’ planting and marketing strategies may also be
warranted.
Notes
1. The King Talal Dam provides water through the King Abdullah Canal to irrigate
the middle and south of the Jordan Valley. This water is a mixture of fresh water
and treated wastewater from the As Samra wastewater treatment plant, which
serves Amman and Zarqa.
2. One dunum is equivalent to 0.1 hectare, or 1,000 square meters.
3. A waiver was introduced in 2004 when the JVA legalized citrus orchards planted
between 1991 and 2001.
4. A waiver was introduced in 2004 when the JVA legalized citrus orchards planted
between 1991 and 2001.
5. The World Bank commissioned a farmer survey under the “The Cost of Irrigation
Water in the Jordan Valley” study, which was conducted in early 2012.
6. Source: 2012 Global Trade Information Services, Inc.
7. Source: Department of Statistics.
8. The northern part of the Jordan Valley is the main area for citrus orchards, where
water quality is crucial to ensure sustainability of this asset. Should the King Talal
Dam water be extended to any portion of this area to address irrigation deficien-
cies, the survival of the citrus orchards could be endangered.
9. An entrepreneur reported that daily wages at peak demand time range widely
from JD 10 to JD 30.
The Cost of Irrigation Water in the Jordan Valley 29
10. Most migrant workers are located between Al-Ramil and Karamah. Some of them
arrived in Jordan during the 1970s and work now, with their families, on farms
that are larger than average (6 to 12 ha); others arrived during the 1990s and tend
to have smaller farms (Source: IWMI 2007). Migrant labor is paid half the current
daily wage rate (JD 4 to JD 5 per day).
11. For example, in 2012, at the optimal market time, Jordanian container trucks were
unable to reach Turkey (and thereafter the European markets) through Syria or
Iraq.
30 The Cost of Irrigation Water in the Jordan Valley
Chapter 5
Jordan Valley Authority’s
Current Revenues
Introduction
The Jordan Valley Authority (JVA) derives revenues from four different
sources: land and housing revenues, water charges, other operating revenues,
and non-operating revenues. Land and housing revenues consist mainly of
rent and sales of land that has been developed, recovered, or improved by the
JVA. The revenues consist of user charges for land plots for domestic,
industrial, commercial, or agricultural uses. The rental and lease revenues
come from farm units, housing units, and leases to investors
Farm units. The JVA divides the irrigable lands into farm units of between
30 and 40 dunum1 (that is, 3 to 4 hectare). When renting these units, the
contract stipulates that they must be used for agricultural purposes only. The
lease value ranges from JD 30 to JD 40 JD per hectare per year. A total of
360,000 dunum (about 36,000 ha) has been developed and distributed to
farmers, to irrigate around 10,000 farm units.
Housing units. The JVA allocates, develops, and improves some land for
housing purposes when such lands are not allocated for faming units. The
allocation follows the land use plans approved by the board of the JVA.
Lease to investors. Investors lease the land where a project is implemented.
The investor is entitled to purchase the land, and the value of the lease is
deducted from the price of such land.
Water Revenues
Water revenues consist of the sale of raw water for irrigation and industrial
use in the Jordan Valley. Along the Valley, the JVA has four management cen-
ters in the Northern, Middle, Karamah, and Southern Ghors Directorates.
Each center is in charge of billing and collecting user charges. The water busi-
ness consists of distributing raw water for irrigation in all directorates and for
irrigation and industrial use in the Southern Ghors.
The data on revenues from the different sources in the JVA vary signifi-
cantly. The major sources of data are the Finance Department and the Control
Center in Deir Allah. The data from the two sources differ widely, with the
Finance Department data being consistently higher than the data reported by
the Control Center since 2004.
The different sources of revenues are as follows as summarized in figure 5.1:
Irrigation water tariff. The tariff was established in 1994 and has remained
constant since. It is based on an increasing block rate where consumption
varies from 8 to 35 fils (cents) per cubic meter (table 5.1). The inflation rate
The Cost of Irrigation Water in the Jordan Valley 31
Figure 5.1 Irrigation Revenues, 2005–12
12,000
10,000
8,000
6,000
4,000
2,000
0
2005 2006 2007 2008 2009 2010 2011 2012
Non-operating revenues Other operating revenues Industry Irrigation Land and housing
Table 5.1 Irrigation Water Tariffs
Volume of water consumed Current unit price 2011 prices if tariffs were adjusted
(m3/month) (JD/m3) inflation (JD/m3)
for
0–2,500 0.008 0.014
2,501–3,500 0.015 0.027
3,501–4,500 0.020 0.036
More than 4,500 0.035 0.063
Source: JVA Financial Department.
from 1994 to 2011 was 81 percent,2 which means that today’s tariffs are about
half the 1994 price.
Water charges for industrial use. The JVA charge for industrial use is JD 1.25
per cubic meter since 2011.
Energy cost of pumping water from the North Conveyor. In January 2011, the
JVA started to charge the Water Authority of Jordan a cost equivalent to the
energy cost of pumping water from the North Conveyor. The water is elevated
1,000 meters to the water treatment plant of Zei, which is operated by
Miyahuna. About 50 million cubic meters of water is pumped per year. This
cost is refunded by the Water Authority of Jordan to the JVA, and started to
enter the books in 2011.
In addition to the above-mentioned main categories, the JVA also generates
revenues from other operating and non-operating revenues.
Other operating revenues. This consists of bids, which result from the
works to be awarded to private investors, and stamps, for all legal docu-
ments signed with the JVA, such as leases, registrations, water titles, land
titles, and licenses.
Non-operating revenues. This category consists mainly of fines and pen-
alties for late payments. It also includes the sales of land, which are one-
time payments. Revenues increased from 2005 to 2007,3 after which they
32 The Cost of Irrigation Water in the Jordan Valley
started to decline. Most of the revenues associated with the Land and
Housing Department followed a downward trend. Table 5.2 shows that
water revenues make up the majority of the JVA revenues.
Water Revenues from Irrigation
Water revenues are based on the water allocation made by the JVA on the
basis of crop-based quotas. The quotas are set according to water availability
and demand patterns. Given that competition for water has increased, the
quota system is reviewed on a regular basis, according to water availability. In
2004, the JVA established new quotas to better match supply of water and
crop water requirements. The current annual quotas correspond to 3,600
cubic meters per hectare for vegetables, 7,650 cubic meters per hectare for
citrus, and 12,550 cubic meters per hectare for banana (as discussed in
Chapter 4).
Water volume supplied and billed. The information on the volume of
water supplied by the JVA is not consistent across the different data sources.
The information at the pumping stations of the JVA differs from the informa-
tion registered by the directorates, and also from the information obtained in
Deir Allah (where the control center of the Jordan Valley network is located).
The data suggest that water production has been declining since 2005. This is
to be expected, since a larger share of the water supplied by the JVA is being
used for municipal water supply in Amman.
It is also not clear what portion of the volume of water is actually used by
the farmers. The JVA bills the farmers according to the quota system, which
does not necessarily correspond to the volume of water used because of dif-
ferences in water availability, type of crop cultivated, irrigation system, type of
farm, and degree of intensification of farming, among other reasons. Water
volume billed is registered by the JVA Control Center as 144 million cubic
meters per year in 2010 compared to 129 million cubic meters of water sup-
plied (table 5.3). This suggests that most JVA customers are charged on the
basis of quota allocations instead of actual consumption levels.
Billing Efficiency. The JVA does not supply bills for its customers, but
rather provides receipts when customers pay their bills. The farmer survey
data show that 18 percent of the farmers interviewed did not respond to this
question, which could suggest that they do not pay for water from the JVA
(either because they do not use the water or because they use it without pay-
ing), or that the respondent does not know the answer (if the respondent is
not the one paying the water bill).
Collection Efficiency. Ten percent of farmers responded that they did not
receive a receipt from the JVA, which may indicate that they do not pay for
their water, or that the JVA did not provide them with a receipt. Therefore, it
is likely that up to 28 percent of JVA customers do not pay for the water they
consume. The farmers who do not receive receipts are almost solely concen-
trated in the Karamah Directorate, whereas all the respondents in the
Northern and Southern Ghors receive receipts.
The Cost of Irrigation Water in the Jordan Valley 33
Table 5.2 Jordan Valley Authority Revenues, 2000–12
34
REVENUES JVA (JD, thousands) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012p
Land and housing
Housing for JVA employees 20 22 28 26 25 20 16 13 24 31 65 23
Rented land 519 503 377 372 395 397 3,535 1,165 411 315 400 248
Housing units 8 7 54 59 140 168 165 192 370 571 356 418
Agricultural units and services — — — — — — — — 57 77 73 48
Total 547 532 459 457 560 585 3,716 1,370 862 994 894 732
Water
Irrigation – Jordan Valley 239 281 474 86 2,342 2,010 2,235 2,049 2,007 2,120 1,967 1,815
The Cost of Irrigation Water in the Jordan Valley
Water for industry — — — — 2,168 2,143 1,703 1,865 1,906 2,440 4,798 6,343
Total 239 281 474 86 4,510 4,153 3,938 3,914 3,913 4,560 6,775 8,198
Other operating revenues
Stamps 28 134 546 35 61 33 133 70 202 19 166 20
University 6 23 86 17 10 7 30 23 43 12 5
Bids — — 6 5 — — — 8 21 9 8 6
Electricity 26 27 — — 370 654 760 329 315 287 299 285
Other income 20 16 57 245 32 29 14 491 61 96 802 617
Total 80 200 694 302 474 723 937 921 642 423 1,291 938
OPERATIONAL REVENUES 866 1,013 1,627 845 5,544 5,461 8,591 6,205 5,417 5,977 8,952 9.826
Non-operating revenues
Land sold 2,097 903 602 1,134 70 1,753 1,912 2,567 45 162 83 0
Fines 0 0 31 25 18 5 47 31 24 1 9 1
Total 2,097 903 633 1,159 88 1,758 1,959 2,598 69 163 92 1
TOTAL REVENUES 2,962 1,917 2,259 2,005 5,632 7,219 10,551 8,803 5,487 6,140 9,045 9,827
Source: JVA.
Note: — = not available.
Table 5.3 Water Volume Supplied and Billed
thousand m 3 per year
2004 2005 2006 2007 2008 2009 2010
Southern Ghors 34,219 36,747 35,294 34,937 36,546 38,118 37,191
Northern Directorate 46,948 46,185 35,996 35,910 31,704 30,170 33,175
Middle Directorate 37,767 53,482 45,751 44,867 43,180 40,826 44,972
Karamah Directorate 26,183 27,709 23,593 24,925 24,959 23,913 25,616
Total irrigation 145,118 164,123 140,634 140,640 136,389 133,026 140,953
Industry in Southern Ghors 1,572 339 121 369 860 975 3,747
Total volume water billed 146,690 164,462 140,755 141,009 137,249 134,001 144,700
Total volume water supplied 165,592 179,512 161,714 152,038 131,334 129,718 129,247
Source: JVA Control Center.
Table 5.4 Collection Efficiency of Irrigation Water Tariffs
percent
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Southern Ghors 73 82 87 112 130 110 140 109 117 105
Northern — 65 67 76 76 73 70 73 72 69
Directorate
Middle 65 68 76 76 79 79 78 76 74 64
Directorate
Karamah 54 52 52 62 65 58 61 64 63 67
Directorate
Total irrigation — 69 73 82 87 81 87 81 83 75
Source: JVA Control Center.
Note: — = not available.
Based on data from the Finance Department, in 2010, the JVA billed, on
average, 11 fils per cubic meter for irrigation water. In 2010, the JVA was only
able to collect about 75 percent of the revenues despite the very low tariffs.
Collection efficiency has declined in recent years, which may reflect the diffi-
cult financial conditions many farmers face.
The low efficiency in collecting revenues (table 5.4) may be linked to the
fact that JVA revenues are collected and then transferred to the Treasury. This
practice is likely to provide few incentives to the JVA to collect revenues. The
low tariffs also do not provide many incentives to bill and collect from farm-
ers, since the costs of collecting revenues is high relative to the amount
collected.
One area for further investigation is the water consumption pattern in the
Southern Ghors. Even though the JVA Control Center confirms a large
amount of water being supplied and billed to the Southern Ghors, almost all
farmers in the directorate who were interviewed in the survey reported using
groundwater as their main source of water. When farmers pay for the water
they actually use instead of the water they are allocated (on the basis of their
quota), it is likely that JVA revenues will decline due to both volume and tariff
effects. Based on the JVA’s data presented in table 5.3, actual water volume
The Cost of Irrigation Water in the Jordan Valley 35
Table 5.5 Estimated Irrigation Revenues Based on Quota
Allocations, 2011
Quota
Calculated
Crop Crop allocation Allocation Tariff
revenues
(dunum) (ha) (m3/ha/ (m3) (in JD)
(in JD)
year)
Vegetables 228,433 22,843 3,600 82,234,800 0.008 657,878
Citrus 65,989 6,599 7,500 49,491,750 0.015 742,388
Banana 19,617 1,962 12,550 246,193,350 0.035 861,809
billed was about 141 million cubic meters in 2010, whereas an estimate based
on quota allocation results in 2010 would result in a billed volume of 156
million cubic meters (see Table 5.5). Hence, billing inefficiencies were
10 percent in 2010 compared to the results of the farmer survey (discussed
above) that registered billing inefficiencies of 18 percent in 2012.
Water Revenues from Industry
The JVA currently charges a tariff of JD 1.25 per cubic meter for raw water to
be used by industry. In 2010, the JVA billed industries for 3.8 million cubic
meters, generating a total revenue from industry of JD 2.4 million. With the
introduction of the new tariff in 2011, revenues from industry increased sig-
nificantly to more than JD 6.3 million in 2012. This sharp increase has resulted
in the share of industrial revenues increasing from 45 percent in 2010 to
65 percent in 2012.
Since 2011, the JVA has charged the Water Authority of Jordan the electric-
ity cost for pumping water to Amman. This issue will be discussed in more
detail in Chapter 6 on operation and maintenance costs.
Conclusions
The large differences in revenue information generated by the different
departments in the JVA (the Finance Department, the JVA Control Center,
and the four directorates) make it difficult to accurately determine the
revenue-generating capacity of the JVA. As a result, management has to take
decisions on the basis of inadequate and unreliable information.
Nevertheless, in view of the above analysis, it is clear that the JVA can sig-
nificantly improve its revenue flows. The rapid increase in industrial tariffs
shows that the revenue base can be increased. This increase in revenues will
also require a change in accountability regarding the revenues. Currently, all
revenues are transferred to the Treasury and do not return to JVA. As such,
the incentive for the JVA to bill and collect efficiently and effectively to expand
its revenue base is small.
36 The Cost of Irrigation Water in the Jordan Valley
The revenues flows can be characterized as follows.
Industrial water revenues. If one assumes no additional fixed charges to
industry, it is likely that the increase in water tariffs has so far not affected the
consumption of water from the industry, suggesting that water was a critical
input into business expansion and that more efficient use of water (recycling)
and/or substitution is not easy to implement in the short term.
Irrigation water revenues. In 2010, the JVA collected only about 75 percent
of irrigation revenues. The farmer surveys held in 2012 put the collection effi-
ciency even lower, at 72 percent. Reducing billing and collection efficiencies
could result in a significant increase in revenues.
Water pumping to Amman. If the JVA provides additional services such as
the pumping of water to Amman, the costs associated with this service should
be charged to those benefiting from the service. By not doing so, the JVA is
essentially cross-subsidizing groups of water users outside the Jordan Valley.
If it is assumed that the costs of pumping water to Amman only requires elec-
tricity (and does not require any other input from the JVA), then by not
charging these costs to the beneficiaries of this pumping, the JVA lost at least
JD 2.0 million in revenues in 2010.
JVA’s practice of charging customers against quota allocations resulted in
higher revenues than if farmers were charged for their effective use of water.
If the JVA reverted over time to an effective scheme where users pay on the
basis of their meter readings, this would need to be taken into consideration
when designing tariffs, since calculating tariffs that cover operation and
maintenance costs on the basis of quota allocations instead of effective use
will result in different tariff requirements.
Notes
1. One dunum is equivalent to 1,000 m2, or 0.1 ha; thus, 1 ha equals 10 dunum.
2. Source: The Central Bank of Jordan.
3. Data before 2005 depend on a different accounting system, and hence are not
directly comparable to data after 2005.
The Cost of Irrigation Water in the Jordan Valley 37
Chapter 6
Jordan Valley Authority’s
Operation and Maintenance
Costs
Introduction
The information available on operation and maintenance (O&M) costs is for
2004 to 2012 (table 6.1). There is, however, a significant difference between
data originating before and after 2008, when a new accounting system was
introduced. The large increases in O&M costs since 2007 are likely the result
of more complete recordkeeping. The period 2007 and 2008 also coincided
with a spike in food and energy prices that may have adversely affected the
O&M costs through significant increases in staff and energy costs.
Total operating costs in 2008 were more than double the total operating
costs in 2007. Different cost categories show different trends. Personnel costs
increased by 25 percent. Energy was either completely subsidized before 2008
or was not registered at all, since energy costs increased from only JD 57,000
in 2007 to JD 5.7 million in 2008. The JVA has always required sizable amounts
of energy, given the need to pump water to distribute for irrigation and indus-
trial purposes. Finally, there was a fivefold increase in social security, contri-
butions, and third-party services.
As a result, the share by cost component has changed significantly over
time. Personnel costs were about 90 percent of total costs before 2008, then
decreased to 53 percent in 2008, and have since crept up to 62 percent in
2012. Energy cost has increased rapidly since 2007 (figure 6.1).
Data on staff numbers vary widely according to source—actual staff work-
ing in the JVA in 2010 varies from 1,400 to 1,800 depending on the source of
information used.1 For this report, we have used the estimate presented in
table 6.2. The number of employees decreased from about 2,000 in 2009 to
1,591 in 2011, which corresponds to a 19 percent reduction in staff. Staff
numbers in the daily wages category declined by 86 percent between 2009
and 2011. The share of JVA employees with a high school degree increased
from 52 percent to 70 percent between 2009 and 2011. The outflow of highly
qualified staff (defined as those with a college degree) continues; between
2009 and 2011, about 8 percent of college-educated employees left the JVA.
The budget books of the Ministry of Finance show that escalating O&M
costs are a big issue. The actual current costs (O&M costs) increased from JD
5 million in 2004 to JD 13 million in 2010, with almost all of the increase
occurring after 2008.
A part of the current costs are ending up in the JVA’s capital cost budgets.
udget.
In 2004, 10 percent of the total current costs were hidden in the capital b
By 2011, this share had increased to 40 percent. As a result, the share of capital
38 The Cost of Irrigation Water in the Jordan Valley
Table 6.1 JVA Operation and Maintenance Costs
Jordanian dinar, thousands
Expense category 2004 2005 2006 2007 2008 2009 2010 2011 2012*
Salaries and 4,812 5,580 5,893 5,911 7,408 7,622 7,399 7,623 8,568
allowances
Social security, 295 264 311 338 1,679 1,618 1,657 1,382 1,460
contributions, third-
party services
Total staff costs 5,107 5,844 6,204 6,249 9,087 9,240 9,056 9,005 10,028
Consulting fees 220 883 178 14 16
and studies
Utility bills — — — — 129 159 173 142 166
Supplies (office 100 111 108 138 225 437 256 11 13
and cleaning)
Maintenance of 48 48 2 425 946 1,431 648 71 165
assets not related
to irrigation
Insurance, 151 169 207 172 558 624 660 117 137
transportation,
subscriptions,
publicity, taxes, and
training expenses
Electricity 27 7 35 57 3,717 2,984 2,187 2,396 2,098
Pumping water 1,270 2,546 2,033 4,426 2,700
Fuel — — — — 710 758 680 686 735
Total energy cost 27 7 35 57 5,696 6,288 4,900 77,508 5,533
Monitoring water — — — — 150 166 166 0 0
quality
Maintenance — — — — 145 567 283 51 44
of irrigation
equipment
Financial expenses — — — — 14 136 1 0 0
Total operating 5,434 6,179 6,556 7,041 17,170 19,932 16,322 16,919 16,102
expenses
Source: JVA Financial Department.
Note: *2012 are preliminary figures.
— = not available.
Figure 6.1 Composition of Jordan Valley Authority Operation and Maintenance Costs
100%
80%
60%
40%
20%
0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 P
Staff costs Energy Maintenance Other
The Cost of Irrigation Water in the Jordan Valley 39
Table 6.2 JVA Employment
Level 1 – Level 2 – Level 3 – Contracts –
Year Daily wages Total
college degree 2 years college high school highly educated
2009 238 160 1,031 12 525 1,966
2010 225 161 1,131 12 160 1,689
2011 220 160 1,121 18 72 1,591
Source: JVA’s Human Resources Department.
Table 6.3 JVA Actual Expenditure in Government Budget
2012
Category 2004 2005 2006 2007 2008 2009 2010 2011
Prelim.
Current costs 4,873 4,936 5,311 5,198 6,034 6,839 7,626 8,145 9,164
Current portion in 561 1,243 1,245 1,500 6,671 7,160 5,801 8,794 6,938
capital costs
Total current costs 5,434 6,179 6,556 6,698 12,705 13,400 13,427 16,938 16,102
Current cost in 10 20 19 22 53 51 43 52 43
capital budget as
% of current costs
Total capital costs 48,176 33,493 38,660 25,887 16,511 26,663 16,089 13,166 8,712
excluding current
costs
Total capital and 53,610 39,672 45,216 32,580 29,216 40,663 29,516 30,105 24,814
current costs
Capital costs 90 84 86 79 57 66 55 44 35
(excluding current
costs) as % of
total costs
Current cost 5,434 6,179 6,556 7,041 17,170 19,932 16,322 16,919 16,102
(JVA Finance
Department)
Difference in 0 0 0 5 35 49 22 0 0
current costs
between Ministry
of Finance and
JVA data (%)
Sources: Ministry of Finance, Budget Department, and JVA Finance Department.
investment in the total JVA budget has decreased from 90 percent of total
expenditure in 2004 to only 43 percent in 2012 (table 6.3). This expenditure
pattern is not commonly seen in the water sector elsewhere in the world,
which in general tends to be heavily skewed to capital costs because of the
capital-intensive character of the sector.
Water Operation and Maintenance Costs
To estimate the costs associated with water activities, the operating costs of
the JVA, available from 2004, were broken down in two categories: costs
directly associated with the water business and other costs. The first
40 The Cost of Irrigation Water in the Jordan Valley
category consisted of electricity costs related to operation (excluding
pumping costs), costs from pumping stations, costs related to monitoring
the quality of water, maintenance of irrigation equipment, and personnel
costs related to employees in the directorates and Southern Ghors. The
second category of “other costs” consists of all other costs (such as staff
costs, administrative costs, and maintenance of equipment other than irri-
gation). These costs have been allocated to the provision of irrigation water
services based on the share of irrigation costs as measured by employment
in the total JVA costs.
Staff Costs
Because of the widespread difference in actual staff numbers in the JVA, we
assume that the number of staff was 1,591 in 2011 (according to table 6.2),
with 1,501 permanent staff and 90 temporary contracts.2 The data for 2010
show the following:
•• The Water Section of the JVA makes up 79 percent of the total workforce
in the JVA.
•• Most of the workforce is linked to the four directorates (North, Middle,
Karamah, and Southern Valley) and the Dams Directorate. These five
directorates make up 65 percent of the JVA staff.
•• Highly qualified staff (that is, staff with at least a college degree), make up
only 15 percent of the total JVA workforce.
•• The shortage of professional staff in the JVA is still an issue; 20 years after
the 1993 GTZ study, only 11 percent of the employees in the JVA Water
Section have a college degree. The Dams Directorate is the directorate
with the highest share of staff with a college degree, at 19 percent, which
is much lower than in 1993.
In 2012, staff costs made up about 62 percent of total O&M costs. If salaries
and wages are linked to employment numbers, the average monthly salary of
a JVA employee is about JD 387 per month, compared to a minimum wage in
2012 of JD 190 per month. The relatively low level of these base salaries may
explain the rapid increases in allowances. In 2010, allowances made up
15 percent of total staff costs and are likely a tool to supplement salaries and
wages in the JVA.3
Energy Costs
Pumping costs. Given that energy costs are so important to running the
water business at the JVA, special attention was paid to understanding
consumption patterns and energy tariffs charged to the JVA. Information
was obtained for 2005–07 and 2009–10. The information was provided by
the Finance Department but only for Northern, Middle, and Karamah
Directorates.
The Cost of Irrigation Water in the Jordan Valley 41
The available information for the directorates contains energy c onsumption
and the respective cost for each pumping station in each directorate. These
pumping costs make up 78 percent of the total energy costs in the JVA. The
energy use for pumping in the Valley is about 0.39 kilowatt hours per cubic
meters of water supplied, which is much higher than the energy use provided
in the 1993 GTZ study. It is not clear whether the large difference is the result
of information deficiencies, the result of delayed maintenance, or a combina-
tion of these factors.
The cost per kilowatt hour of energy differs among the directorates and
varies from JD 0.038 per kilowatt hour in the Northern Directorate to JD
0.061 in the Middle Directorate, with an electricity rate for pumping of about
JD 0.041 per kilowatt hour (see tables 6.4, 6.5, and 6.6).
Pumping costs to Amman. In recent years, an increasing part of the water
that the JVA supplied is used to supply water to Amman. In 2010, this flow of
water was estimated at 53 million cubic meters. In return, the JVA receives
treated wastewater that is blended and reused, especially in the Middle
Directorate. The costs associated with this water pumping are significant
because the water has to be lifted more than 1,000 m. The JVA values these
pumping costs at the electricity rate of JD 0.041 per cubic meter of water
pumped, similar to the cost of electricity. However, this is only a nominal cost.
If the true energy requirement4 (assuming 100 percent pump efficiency) is
Table 6.4 Energy Use at Pumping Stations in Each Directorate
Megawatt hours per year
Directorate 2005 2006 2007 2009 2010
Northern Directorate 15,100 13,757 15,312 5,890 8,080
Middle Directorate 1,152 865 1,919 639 883
(mostly gravity based)
Karamah (South) 7,795 12,282 27,504 25,369 30,222
Directorate
Southern Ghors n.a. n.a. n.a. n.a. n.a.
Total Energy Usage 24,047 26,904 44,734 31,897 39,185
Source: JVA Control Center.
Note: n.a. = not applicable.
Table 6.5 Energy Costs at Pumping Stations in Each Directorate
Jordanian dinar, thousands
Directorate 2005 2006 2007 2009 2010
Northern Directorate 482 523 414 292 309
Middle Directorate 47 46 45 36 54
Karamah (South) Directorate 258 551 1,215 1,213 1,350
Southern Ghors n.a. n.a. n.a. n.a. n.a.
Total Energy Costs 787 1,121 1,675 1,541 1,714
Source: Finance Department.
Note: n.a. = not applicable.
42 The Cost of Irrigation Water in the Jordan Valley
Table 6.6 Energy Tariff at Pumping Stations in Each Directorate
Jordanian dinar per m 3
Tariff 2005 2006 2007 2009 2010
Northern Directorate 0.03 0.04 0.03 0.05 0.04
Middle Directorate 0.04 0.05 0.02 0.06 0.06
Karamah (South) Directorate 0.03 0.04 0.04 0.05 0.04
Southern Ghors n.a. n.a. n.a. n.a. n.a.
Total energy tariff per kWh 0.03 0.04 0.04 0.05 0.04
Source: Calculations based on information from Finance Department and Control Center.
Note: n.a. = not applicable.
2.8 watts per hour to lift 1 cubic meter of water 1 meter, the actual volume of
energy needed to pump water to Amman was about 150 million kilowatt hour
in 2010. If the JVA pumps the water in stages through pumping stations, the
cost of pumping will be lower; but if pumping efficiency is below 100 percent,
the overall energy requirements will increase.
To better understand the true cost of pumping water to Amman and hence
be better able to price this service, the JVA should collect information on the
volume of energy consumed to pump water to Amman, and the overhead cost
of pumping water to Amman.
Maintenance Costs
The maintenance costs are highly volatile, suggesting that maintenance acts as
a balancing item in the JVA budget. As a result, maintenance costs vary sig-
nificantly over time (table 6.7). In addition, maintenance costs are low. The
total asset base of the JVA in historical prices amounts to JD 356 million.5 The
average total maintenance costs alone are about JD 1 million (equivalent to
0.3 percent of the asset base), which further reflects that maintenance is seri-
ously underfunded. A rapid assessment of the JVA budget shows that mainte-
nance often ends up in the capital budget and as such is crowding out the
capital investment program of the JVA. The current portion of the capital
expenditures amounted to 26 percent in 2010 (equivalent to close to JD 6
million). This translates to a total maintenance cost that is equivalent to about
JD 7 million—equivalent to about 2 percent of the asset value in historical
prices. Ward (2010) noted that where the opportunity costs of irrigation water
are high (as is the case in the Jordan Valley), investments in irrigation infra-
structure maintenance will perform weakly.
Summary of Operation and Maintenance Costs
Based on staff numbers (including overhead), 92 percent of the staff costs,
utility costs, and maintenance of assets not associated directly with irrigation
are associated with the water business. Energy costs and maintenance costs of
irrigation are fully connected to the water business.
The Cost of Irrigation Water in the Jordan Valley 43
Table 6.7 JVA Operation and Maintenance of Water Services
Jordanian dinar, thousands
2012
Expense category 2005 2006 2007 2008 2009 2010 2011
prelim.
Salaries and allowances 5,162 5,451 5,468 6,852 7,050 6,844 7,013 7,883
Social security, contributions, 244 288 313 1,533 1,497 1,533 1,271 1,343
third-party services
Total staff costs 5,406 5,739 5,780 8,405 8,547 8,377 8,284 9,226
Consulting fees and studies — — — 204 817 165 13 15
Utility bills — — — 119 147 160 131 153
Supplies (office and cleaning) 103 100 128 208 404 237 10 12
Maintenance of assets not 44 2 393 875 1,324 599 65 152
related to irrigation
Insurance, transportation taxes 156 191 159 516 577 611 108 126
on sales, training expenses
Electricity 7 35 57 3,717 2,984 2,187 2,396 2,098
Pumping water 1,270 2,546 2,033 4,426 2,700
Fuel — — — 710 758 680 686 735
Total energy cost 7 35 57 5,696 6,288 4,900 7,508 5,533
Monitoring water quality — — — 150 166 166 0 0
Maintenance of irrigation — — — 145 567 283 51 44
equipment
Total Operating Expenses JVA 5,716 6,067 6,517 16,319 18,837 15,497 16,170 15,260
Total billed water volume 164 141 141 137 134 145 137 155
(million m3)
Note: — = not available
Table 6.8 shows that the JVA is not able to cover its basic operating costs; its
revenues fall far short despite a large increase in industrial revenues after the
price increase in 2011.
The lack of cost recovery ensures that the JVA’s dependence on taxpayers is
increasing. The taxpayers’ share in covering the JVA’s operating deficit
increased from 23 percent in 2004 to 76 percent in 2009. Since then, due to
the tariff increases for industrial water users and further cost savings (mainly
due to declines in maintenance costs), the operating deficit declined to 60
percent of O&M costs in 2012. Future taxpayers will also be paying for JVA’s
low levels of cost recovery. Shortfalls in basic maintenance will require addi-
tional replacement and rehabilitation of existing infrastructure in the near
future.
The JVA currently provides three types of services: water for irrigation,
water for industry, and pumping. Pumping services are not explicitly acknowl-
edged, but they are an important service, with the ensuing costs but no explicit
revenue base. Table 6.9 presents the costs associated with providing all three
services. Yet, as noted, the costs of the JVA are mainly driven by the availabil-
ity of budget funds. In recent years—most notably in 2011 and 2012—certain
cost categories have been reduced significantly (energy costs, maintenance
costs, and other costs). Hence, when presenting the cost allocation, we will
44 The Cost of Irrigation Water in the Jordan Valley
Table 6.8 JVA Financial Performance Indicators
Jordanian dinar, thousands
Indicator 2005 2006 2007 2008 2009 2010 2011 2012
Operating revenues 4,984 4,876 4,875 4,835 4,555 4,983 8,057 9,093
Irrigation water 2,342 2,010 2,235 2,049 2,007 2,120 1,967 1,815
Water for industries 2,168 2,143 1,703 1,865 1,906 2,440 4,798 6,343
Other operating revenues 474 723 937 921 642 423 1,292 935
(excluding land and
housing)
Operating costs from water 5,716 6,067 6,517 16,319 18,837 15,497 16,170 15,260
Total operating income –732 –1,191 –1,642 –11,484 –14,282 –10,514 –8,113 –6,117
O&M cost recovery (%) 87 81 75 30 24 32 50 60
Source: Calculations based on information from the JVA Finance Department.
Table 6.9 Summary of Current Costs for Irrigation Water, 2012, Three-Year Average
Jordanian dinar, thousands
O&M cost O&M cost O&M cost O&M cost
Expense category
TOTAL INDUSTRY IRRIGATION PUMPING
Total staff costs 8,614 198 5,289 3,136
Electricity 700 25 675 —
Pumping costs 3,053 — — 3,053
Fuel 2,227 80 2,147 —
Total energy cost — 105 2,822 3,053
Maintenance of assets not related to irrigation 271 6 166 99
Maintenance of irrigation equipment 181 — 181 —
Total maintenance costs 452 6 347 99
Other expenditure 577 13 354 210
Total operating expenses of JVA before depreciation 15,624 323 8,813 6,497
Total water volume (million m3) 231 5 141 86
O&M costs in JD per m of water
3
0.067 0.062 0.063 0.078
Source: Calculations based on information from the Finance Department and Control Center.
Note: — = not available.
use data for the period between 2008 and 2012. The cost allocation between
the different users is based on current billed volume of water.
According to the farmer survey, water use as reported by the JVA is about
30 percent higher than water users’ estimations (as measured by meters and
flows). If the actual consumed volume is the measure at which rates are being
calculated, then the irrigation tariff would be 30 percent higher.
Income Statement of Water Business,
Jordan Valley Authority
The income statement reflects all revenues and costs (including depreciation
and interest payments). The most important cost item apart from the operat-
ing costs and revenues is depreciation, because the JVA has a large asset base.
The Cost of Irrigation Water in the Jordan Valley 45
Depreciation. Depreciation enables the JVA to replace existing assets in
the future. To estimate the value of assets used for water activities, assets were
classified in two categories: assets exclusively related to water activities, and
assets shared with other activities. The first category of assets refers to dam
and irrigation equipment, and their total value was included. Those assets
correspond to 84 percent of JVA’s total assets. This percentage was used to
allocate the second category of assets as water related. The results are pre-
sented in table 6.10.
Table 6.10 shows that the JVA had total assets valued at JD 357 million at
historical prices in 2010. Most of the water infrastructure of the JVA dates
back from the 1960s to 1980s. Hence, it is likely that the actual replacement
value of these assets is significantly higher than the historical price
valuation.
In addition, the asset value base may be higher than is registered in
table 6.10, since the increase in assets as registered in the JVA’s budget books
does not correspond to the investment flows that the Ministry of Finance
registers in its budget books. The JVA’s capital budget (excluding the current
portion in its capital budget) assumes that the asset base should have been
increasing more between 2008 and 2010. Adjusted for the current portion
in the capital expenditure, the JVA’s capital expenditure reached JD
million in 2010. However, this capital expenditure is only partially
16
reflected in the asset register of the JVA, which registered new capital assets
of only JD 3 million. It is unclear why only JD 3 million of the invested JD
16 million in 2010 entered the JVA books; it is likely that the transfer of
assets is incomplete.
Currently, depreciation is set at about JD 5.6 million, which is an underesti-
mation of the real depreciation requirements because of the undervaluation of
Table 6.10 Asset Inventory of the JVA
Jordanian dinar, thousands
Category 2008 2009 2010
Assets related exclusively to water activities
Dams 268,913 270,825 274,049
Irrigation systems 35,361 35,682 35,682
Subtotal 304,274 306,506 309,731
Assets shared with other JVA activities
% Assigned to water activities 84 85 85
Construction and buildings 13,630 13,602 13,627
Furniture – office equipment 26 29 26
Tools and equipment 32,212 32,035 31,994
Information systems 298 309 335
Vehicles 3,386 1,005 1,007
Assets assigned to water activities 49,552 46,980 46,990
Total assets (water related) 353,826 353,487 356,720
Source: JVA Finance Department.
46 The Cost of Irrigation Water in the Jordan Valley
the asset base (as explained above). A further element of the undervaluation is
the JVA’s use of very long depreciation periods, which is not in line with best
practice. As table 6.11 shows, assets such as furniture, tools, and, to a lesser
extent, vehicles, have very long depreciation periods. The large fluctuations in
depreciation from year to year, moreover, suggest that depreciation is not sys-
tematically charged.
The decline in the capital budget is worrying because with a total historical
cost asset base of JD 357 million, and an annual capital investment program
of about JD 13 million to JD 16 million in most recent years, total annual
depreciation costs (based on good practice and at historical prices) should
amount to at least JD 14 million. This would mean that virtually the total cur-
rent investment budget is needed to cover the replacement of existing assets
(on a historical cost basis). Hence, the JVA is currently not able to maintain its
current asset base.
Table 6.11 Depreciation as a Percentage of Current Assets and
Implicit Lifetime of Assets
2009 2010 Lifetime of Good practice lifetime
Category
(%) (%)
assets in years of assets in years
Dams 2.0 2.1 49 50
Irrigation systems 4.0 4.0 25 25
Construction and buildings 2.3 3.1 32 25
Furniture – office equipment 8.7 1.6 61 5
Tools and equipment 4.9 5.9 17 5
Information systems 3.7 19.9 5 5
Vehicles –247.7 12.5 8 5
Total 1.8 2.7 37 25
Source: JVA Finance Department.
Table 6.12 JVA Financial Performance Indicators with
Depreciation Included
Jordanian dinar, thousands
2012
Indicator 2008 2009 2010 2011
prelim.
Operating revenues 4,835 4,555 4,983 8,057 9,093
Irrigation water 2,049 2,007 2,120 1,967 1,815
Water for industries 1,865 1,906 2,440 4,798 6,343
Other operating revenues 921 642 423 1,292 935
(excl. land and housing)
Operating costs from 21,836 24,354 21,126 21,854 20,944
water (incl. depreciation)
Total operating income –17,001 –19,799 –16,143 –13,797 –11,851
Cost recovery (%) 22% 19% 24% 37% 43%
Source: Calculations based on information from the JVA Finance Department (estimates for 2011 and 2012
depreciation).
The Cost of Irrigation Water in the Jordan Valley 47
Interest payments. These payments in the JVA are minimal and according
to practice, interest payments are made by government and are not included
in the financial statements of the JVA.
Adjusted income statement. An adjusted income statement for the JVA
water operations is presented in table 6.12, with total depreciation costs of JD
5.6 million per year, increasing the actual net operating loss to JD 16 million
in 2010 when no pumping revenues were collected by the JVA, which assumes
a level of cost recovery of only 24 percent.
Conclusions
JVA’s capacity to track its operating and maintenance costs needs to be sig-
nificantly improved, an observation already made in the previous chapter on
operating revenues. The JVA’s inability to cover a part of its O&M costs
through its revenues has resulted in pressure on the JVA to curb costs. The
agency has tried to reduce its energy costs. At the same time, depreciation
and maintenance payments have been squeezed, which means that the medi-
um-to-long-term viability of the existing infrastructure is in jeopardy. The
delays in maintenance have resulted in an increasingly large part of the
investments being used for ad-hoc maintenance and rehabilitation, whereas
the lack of current revenues severely affects the capacity of the JVA to attract
higher-qualified staff.
Energy costs are currently highly subsidized in Jordan, with the JVA paying
highly subsidized rates for water pumping. The increase in energy prices and
the expected further electricity rate increases will affect the JVA, since energy
makes up about 30 percent of its total O&M costs. The data on actual electric-
ity consumption—both for pumping irrigation water and for pumping water
through Amman—are not very consistent, but suggest that there is room for
improvement.
Compared to the 1993 GTZ study, energy needs for irrigation pumping
have increased significantly since 1993, from about 0.10 kilowatt hour per
cubic meter to about 0.39 kilowatt hour per cubic meter in 2010. The addi-
tional services provided by the JVA by pumping water to Amman (a rela-
tively new service for the JVA) explains (part of) this difference. Nonetheless,
it is likely that information deficiencies and years of delayed maintenance
have also contributed to this increase in energy intensity. Any investment
planning program for the JVA should make investments for energy effi-
ciency improvement a high priority, since they can reduce energy volumes
significantly and, hence, will help the JVA better cope with increasing elec-
tricity and energy prices.
Finally, the JVA uses a nominal rate for pumping water to Amman. The JVA
should know precisely how much this service costs in terms of energy, but
also in any ancillary costs in the form of staff requirements and basic over-
head. This would enable the JVA to value and better price the service it pro-
vides, since the price of bulk water for the Water Authority of Jordan is now
implicitly set at JD 0.045 per cubic meter.6
48 The Cost of Irrigation Water in the Jordan Valley
Notes
1. Data in the 2012 budget indicate 1,800 people working at the JVA in 2010. Data
from the Human Resources Department vary between 1,400 and 1,591 in 2011.
2. Data from JVA’s Human Resources Department show that in 2011, the JVA Water
Section included 1,189 direct employees and 172 indirect employees (allocating
the administration staff to the different directorates based on staff numbers).
Hence, in 2011, there were 1,361 permanent employees in the Water Section. Yet,
details on staff in the budget books of the government refer to much higher staff
numbers.
3. The Ministry of Finance budget books show a different picture, with a much lower
contribution of wages and salaries and a much larger share of allowances in the
JVA budget. Interestingly, a significant part of the wage and salary component
of the JVA staff (including allowances) is put in the capital budget of the agency
instead of the current budget.
4. The true energy requirements for lifting 1 ton of water 1 meter are 1,000 kg *
1 m = 10,000 Nm = 10,000 J = 2.7778 × 10−7 * 10,000 kWh = 2.78 * 10−3 kWh = 2.8 Wh
(where kg = kilogram, m = meter, Nm = Newton meter for, J = joule,
kWh = kilowatt hour, and Wh = watt hour).
5. Because much of the infrastructure was put in place decades ago, historical cost
assessments are likely to underestimate current maintenance requirements.
6. This price also gives an indication of the price the JVA implicitly pays for treated
wastewater.
The Cost of Irrigation Water in the Jordan Valley 49
Chapter 7
Jordan Valley Authority’s
Operation and Maintenance
Cost Requirements
Introduction
The assessment of the Jordan Valley Authority’s (JVA’s) finances as depicted
in Chapter 6 shows that the its financial viability is severely compromised.
The escalation of operation and maintenance (O&M) costs is the result of
inflation, fuel price increases, and explicit acknowledgment of the assign-
ment of new tasks (that is, increasing flows of water being pumped to Amman
to supplement the public water supply). In the absence of an increase in the
JVA’s revenue, these escalating costs are resulting in increasingly large financ-
ing gaps. The JVA has dealt with the increasing operating losses by crowding
out its investment programs and increasingly diverting capital funding
toward paying for operational losses and postponing maintenance. The long-
term effects of this behavior is that the quality of the assets and, hence, the
quality of the service, is and will be adversely affected. The limits to continu-
ing this behavior are becoming evident, since government budgets are likely
to decline in the immediate future.
The lack of adjustments to the irrigation tariffs has resulted in a real
decline in irrigation tariffs, which provides farmers with few incentives to
use irrigation water more efficiently. Although water availability limits the
increase in irrigation water demand, the effects are shown in irrigation
consumption patterns. The Jordan Valley has seen few changes in crop-
ping patterns over the last two decades (see figure 7.1) due to the combi-
nation of low tariffs (that are declining in real terms), and a quota
allocation that favors banana and fruit tree crops (both crops with high
water requirements).
In this section, we will calculate the O&M requirements of the JVA to
ensure that the agency can provide services of better quality without compro-
mising its long-term future.
Requirements for Operation and Maintenance
Staff Costs
According to the JVA’s Financial Department, there were 1,501 permanent
employees working in the JVA in 2011 (estimates from the budget books
show a total of 1,658, which increases to 1,756 in 2012). If those in the admin-
istrative offices were distributed proportionally to revenues, 1,361 employees
were in the Water Division and the remaining staff in the Land Division.
50 The Cost of Irrigation Water in the Jordan Valley
Figure 7.1 Cropping Patterns in the Jordan Valley in 1994, 2000
(Before Legalization of Fruit Crops), and 2010
100%
80%
60%
40%
20%
0%
1994 2000 2010
Other fruit trees Citrus Bananas Field crops Vegetables
Source: Department of Statistics.
Table 7.1 Current and Required Number of Employees for Water
Activities, Jordan Valley Authority
Employee category Working in JVA in 2011 Efficiency scenario Difference
Level 1 (college degree) 152 66 86
Level 2 (2 years college) 108 148 –40
Level 3 (high school or less) 1,130 1,007 123
TOTAL 1,389 1,220 169
Sources: GTZ 1993; JVA Financial Department.
The 1993 GTZ study calculated that about 1,220 employees would be
needed to carry out improved JVA operations in water activities, assuming
that the task of the JVA is to operate and maintain the existing water irrigation
infrastructure (table 7.1). This number is lower than the staff currently work-
ing in the JVA, and hence, efficiency improvements can be made.
Salaries have increased significantly since 1994, with monthly salaries
increasing from JD 184 per month per employee to JD 379 per month in
2012. Overall, real salary increases have been averaging 1.7 percent per year.
Despite these increases, salaries of JVA employees are still significantly lower
than the salary of their peers in the private sector, making it difficult for the
JVA to attract well-qualified staff. Even though there could be gains in reduc-
ing staff numbers, it is likely that the qualifications of the staff need to improve,
and an active human resources policy is required in combination with a revi-
sion of salary levels and structures. We will assume that the effects of reducing
staff numbers and higher staff costs will balance each other out.
Energy Costs
Energy costs are divided in three categories: electricity cost from the pumping
stations along the distribution system, fuel, and electricity paid for pumping
water in the Northern Conveyor.
The Cost of Irrigation Water in the Jordan Valley 51
Electricity cost from the pumping stations along the distribution sys-
tem. In 2010, the energy required for irrigation water pumping was estimated
at 0.39 kilowatt hour per cubic meter. Benchmarks elsewhere show that there
is room for improvement in the actual consumption per cubic meter of irri-
gation water. Energy costs are heavily influenced by the price of electricity. A
2012 paper, “Options for Immediate Fiscal Adjustment and Longer Term
Consolidation” (World Bank 2012) shows that electricity is heavily subsidized
in Jordan. The electricity tariff for the JVA has been cross-subsidized by other
consumer groups. Since a realignment of energy subsidies is taking place,
energy tariffs are likely to increase significantly. Tariffs increased in 2012 to
JD 0.066 per kilowatt hour. However, the actual cost-recovery-based tariff
needed to ensure that the National Electricity Power Company’s (NEPCO)’s
tariffs do not fall below its buying tariff is likely to be around JD 0.133 per
kilowatt hour. Hence, in the short term, electricity prices for water pumping
will have to increase from, on average, JD 0.04 per kilowatt hour in 2010 to JD
0.066 per kilowatt hour in 2012. In 2013, the government announced another
15 percent tariff increase, which would bring the rate to JD 0.0759. In the
longer run, electricity prices are likely to further increase to a cost-
recovery-
based tariff of JD 0.133 per kilowatt hour by 2017 (table 7.2).
Fuel. Between 2008 and end 2010, the Government of Jordan phased out
cash subsidies on petroleum products, causing a sharp drop in oil subsidies.
However, early in December 2010, oil retail prices (except for heavy fuel oil
for industrial consumption, power generation, and aviation fuels) were
again frozen. Furthermore, petroleum subsidies were reintroduced. We
assume that the fuel prices follow the same price developments as that of
electricity (table 7.3).
Pumping water from the Northern Conveyor. In 2010, the volume of
water the JVA provided to Amman was estimated at 53 million cubic
meters. Since then, according to recent JVA data, the volume of water
pumped increased to more than 100 million cubic meters in 2012. This is
Table 7.2 Current and Required Electricity Costs for Irrigation Water Pumping
With electricity cost
Electricity indicator 2010 2012 2013
recovery rate
Volume of water produced (thousand m3) 129,247 129,247 129,247 129,247
Cost per kWh (JD) 0.04 0.066 0.0759 0.133
Electricity used per m3 of water produced (kWh) 0.39 0.39 0.39 0.39
Base case scenario of current volume energy
consumption savings:
Scenario I: efficiency gain of 10 percent n.a. 0.35 0.35 0.35
Scenario II: efficiency gain of 25 percent n.a. 0.29 0.29 0.29
Total electricity costs (JD, thousands) in 2010 and 2012 2,033 2,700 — —
Base case scenario electricity costs (JD, thousands) n.a. 3,327 3,826 6,704
Scenario I: electricity costs (JD, thousands) n.a. 2,994 3,433 6,016
Scenario II: electricity costs (JD, thousands) n.a. 2,661 2,845 4,985
Source: JVA.
Note: — = not applicable; n.a. = not available.
52 The Cost of Irrigation Water in the Jordan Valley
Table 7.3 Current and Required Fuel Costs
2013 With electricity
Fuel indicators 2010 2012
(average of 3 years) cost recovery rate
Volume of water produced (thousand m3) 129,247 129,247 129,247 129,247
Cost per m3 (JD) 0.005 0.009 0.010 0.0175
Total fuel costs (JD, thousands) in 2010 and 2012 680 735
Base case fuel costs in (JD, thousands) n.a. 1,122 1,226 2,261
Scenario I: fuel cost (JD, thousands) n.a. 1,010 1,103 2,036
Scenario II: fuel cost (JD, thousands) n.a. 842 920 1,696
Source: JVA.
Note: n.a. = not applicable.
Table 7.4 Current and Required Pumping Water Costs to Amman
2013 With electricity
Pumping indicator 2010 2012
(3-year average) cost recovery rate
Volume of water produced (thousand m3) 53,936 105,700 86,000 86,000
Cost per m (JD)
3
0.038 0.066 0.0759 0.133
Electricity consumption per m3 1.00 1.00 1.00 1.00
Total fuel costs (JD, thousands) in 2010 and 2012 2,033 2,700 — —
Base case pumping costs in (JD, thousands) n.a. 6,976 6,527 11,483
Scenario I: pumping cost (JD, thousands) n.a. 6,278 5,874 10,294
Scenario II: pumping costs (JD, thousands) n.a. 5,232 4,896 8,578
Source: JVA.
Note: — = not available; n.a. = not applicable.
a rapid increase since 2010, and it is not clear whether this increase is a
permanent feature of the JVA’s business. In return, the JVA receives treated
wastewater that is blended and reused, especially in the Middle Directorate.1
The costs associated with this water pumping are significant, especially
since the water must be lifted more than 1,000 m. The JVA values these
pumping costs at the electricity rate of JD 0.041 per cubic meter of water
pumped.2 However, this is a nominal cost only, because energy prices have
been increasing, it implicitly assumes that each cubic meter of water
pumped requires 1 kilowatt hour of energy, and it assumes that pumping
this water requires only electricity but not staff or any other input from the
JVA (table 7.4).
Maintenance Costs
Because maintenance is currently on an ad-hoc basis, an improved mainte-
nance program would include routine maintenance taking place to reduce
rehabilitation requirements. GTZ, in its 1993 study, included a maintenance
plan that would undertake routine maintenance, which it valued at JD
The Cost of Irrigation Water in the Jordan Valley 53
1.7 million at 1993 prices. However, since 1993, the JVA has increased its asset
base by about JD 149 million. It is likely that productivity increases have also
taken place in the corresponding period, which can partially offset the
increase in maintenance costs. We have assumed a net increase of mainte-
nance costs of about 1.5 percent of total historical asset value, compared with
an actual maintenance cost in 2010 of less than 0.8 percent of total historical
asset value (table 7.5).
Depreciation
Currently, depreciation is set at about JD 5.6 million, which is likely to sig-
nificantly underestimate the real depreciation requirements because of the
undervaluation of assets and the fact that depreciation periods are not in
line with best practice (table 7.6). Depreciating against replacement value
would require much higher depreciation payments and has not been
included here.
Table 7.5 Current and Required Maintenance Costs
Jordanian dinar, thousands
GTZ study GTZ study
Indicator 2010 2012
1993 prices
adjusted for 2012
Maintenance for irrigation infrastructure 283 44 1,406 2,410
Maintenance for equipment 615 596 277 763
Maintenance for assets not directly n.a. n.a. n.a. n.a.
linked to irrigation water infrastructure
Maintenance in capital budget of JVA 4,201 5,490 n.a. n.a.
Total 5,099 6,130 n.a. 3,821
Source: JVA.
Note: n.a. = not available.
Table 7.6 Depreciation of JVA in 2010 Prices
Jordanian dinar, thousands
Depreciation
Indicator Asset base Depreciation
period (years)
Assets related exclusively to water activities
Dams 274,049 5,481 50
Irrigation systems 35,682 1,427 25
Assets related shared with other JVA activities
Construction and buildings 13,627 545 25
Furniture – office equipment 26 5 5
Tools and equipment 31,994 6,399 5
Information systems 335 67 5
Vehicles 1,007 201 5
Total 356,720 14,126
Source: JVA.
54 The Cost of Irrigation Water in the Jordan Valley
Summary of Operation and Maintenance
Requirements
Table 7.7 shows that the actual cost requirements are significantly higher than
the current costs the JVA registers today. In the table, we assume that the steep
increase in salary costs in the JVA in 2012 is structural and that staff costs will
increase by 3 percent in 2013. We assume for the remaining costs—electricity
and fuel—that they will increase due to electricity price increases. In addition,
we assume that maintenance costs will need to increase to a level that allows
for a more sustainable use of resources. The cost allocation between the differ-
ent users is based on current billed volume of water of the last three years.
Conclusions
The analysis shows that O&M requirements are significantly higher than
what is currently set aside for the sector through the government’s budget
and the revenue flow from the JVA (by charging farmers and industry for
Table 7.7 Summary of Required Operation and Maintenance Costs for Irrigation
Water, 2013 (2013 Electricity Price Rates)
Jordanian dinar, thousands
O&M cost O&M cost O&M cost O&M cost
Expense category
TOTAL INDUSTRY IRRIGATION PUMPING
Total staff costs 9,225 148 6,098 2,980
Electricity 3,826 134 3,692
Pumping costs 6,527 6,527
Fuel 1,226 43 1,183
Total energy cost 12,581 177 4,875 6,527
Maintenance of assets not related to irrigation 1,411 22 932 453
Maintenance of irrigation equipment 2,410 2,410
Total maintenance costs 3,821 22 3,574 453
Other expenditure 1,500 24 992 485
Total operating expenses of JVA before depreciation 26,125 371 15,307 10,445
Depreciation 14,126 226 9,377 4,520
Total operating expenses of JVA after depreciation 40,251 597 24,604 14,965
Total billed water volume (million m3) 145 5 141 86
Total required O&M costs without industrial 0.179 0.071 0.109 0.121
cross-subsidies on current billed volume
Total required O&M costs with industrial 0.135 1.25 0.066 0.121
cross-subsidies on current billed volume
Total required O&M costs plus depreciation cost 0.28 0.11 0.17 0.17
(on historical asset cost base) without industrial
cross-subsidies
Total required O&M costs plus depreciation cost 0.23 1.25 0.13 0.17
(on historical asset cost base) with industrial
cross-subsidies
Source: Calculations based on information from the Finance Department and Control Center.
Note: Cross-subsidies are assumed to move from industry water users to irrigation water users.
The Cost of Irrigation Water in the Jordan Valley 55
water provided). The postponement of investments in the last decade and
increasing energy costs, in combination with new responsibilities regarding
the pumping of water to Amman, are resulting in a minimum required O&M
cost of JD 26 million (compared to an actual amount in 2012 that was less
than JD 16 million [both figures excluding depreciation]).
Improvements in billing and collection are likely to generate more revenues
for the JVA, but these will not be sufficient to cover the O&M cost shortfall
without resorting to either tariff increases, increases in government subsidies,
or both. This is especially true since the JVA currently bills on the basis of
quota allocations, whereas actual water supplied is lower. Hence, unless the
government decides to pay for these increasing operating losses in full, tariff
increases will be necessary to ensure JVA’s financial sustainability.
Notes
1. It is estimated that the volume of wastewater the JVA receives is about 89 million
cubic meters per year.
2. This assumes that each cubic meter of water pumped requires 1 kWh of energy.
With the altitude differences that must be covered, it is likely that the real cost to
the JVA is higher.
56 The Cost of Irrigation Water in the Jordan Valley
Chapter 8
Proposed Tariff and Cost
Recovery
Concepts of Cost Recovery
The costs associated with the construction of water supply and wastewater
infrastructure and its operation and maintenance (O&M) can include both
financial and economic costs.
Financial costs are directly associated with the provision of water services
by the agency, in this case the Jordan Valley Authority (JVA), and include
O&M costs to fund the daily operations of the infrastructure; capital costs,
which cover the capital for the renewal of existing infrastructure (deprecia-
tion); and the capital needed for expansion of the service.
Economic costs are the financial costs of the service and any externalities
related to the environment or the resource costs and benefits of water,1
whereas the financial costs for service provision are adjusted for price distor-
tions and transfer payments. The economic costs of the service reflect the
costs of providing the service for society.
What constitutes full cost recovery can vary widely. When financial sus-
tainability is the major concern, the recovery of the financial cost is impor-
tant. However, full cost recovery can also include the economic costs of
services, including the pricing of externalities. Paying for the full cost of irri-
gation water services is difficult regardless of the objective being pursued.
This is because the value that users attach to water services is not necessarily
equal to the cost of these services. The results of this mismatch between pri-
vate benefits and social costs is chronic underinvestment in the water sector
and inadequate maintenance, which together result in the provision of
low-quality services, resulting in users not willing to pay for these services.
This results in a downward cycle of low collection efficiencies that result in
agencies not generating sufficient funds to undertake adequate maintenance,
let alone expansion.
Achieving full cost recovery solely through water tariffs has proved to be
elusive even in many developed countries. In many countries, water tariffs are
low. Increasing these rates to full cost recovery levels will require huge tariff
increases that are often politically difficult to attain because there is a general
concern that full cost recovery rates will clash with the need for affordability
of services, and will therefore not enable the poor to access these basic ser-
vices. Nonetheless, evidence has shown that subsidies are often not well tar-
geted and hence not effective in reaching the poor.
To achieve financial sustainability, the tariff should be fixed at such a level
that all cash flow needs can be met, which in the case of the JVA is likely to
require at least coverage of direct O&M costs and depreciation funds and, where
possible, a contribution to future capital requirements by collected revenues.
The Cost of Irrigation Water in the Jordan Valley 57
Yet, because the current tariff levels are so low, it is likely that moving to a tariff
system that covers basic cash flow needs will require a phased approach before
that goal can be attained.
Scenario Analysis
Currently, there are three different tariffs: for irrigation water, for industrial
water, and for water for pumping. We make the following assumptions in our
analysis: (a) water for pumping is priced against cost price, with the total
O&M costs for water pumping consisting of staff costs, energy costs, and
maintenance costs allocated on the basis of water volume consumed or
pumped; (b) water for pumping will be fully paid for by either the govern-
ment or water consumers in the cities served by the JVA’s raw water; (c) indus-
trial water is priced against the current rate of JD 1.25 per cubic meters2; and
(d) cross-subsidies are in place, with industrial water users cross-subsidizing
water for irrigation.
The following scenarios will be tested. In all scenarios, it is assumed that the
costs of water pumping will be fully paid for by the service providers benefit-
ing from these services. All three scenarios are measured in constant 2013
prices.
Base Case Scenario: Actual O&M Cost Scenario. This includes the current
O&M cost based on actual cost in 2013 prices allocated between industrial
and irrigation water use.
Scenario I: Optimized O&M Cost Scenario. This is based on the funds
required to operate the JVA in such a manner that all assets are operated and
maintained according to good practice. This scenario assumes that (a) the
electricity prices are at actual cost in 2013; (b) the costs are allocated among
three user categories: industry, irrigation, and water pumping; and (c) a cross-
subsidy policy is in place for the industry that subsidizes farmers’ water use.
Scenario II: Sustainable O&M Cost Scenario based on billed quota alloca-
tions. In this scenario, we include the optimized O&M cost plus depreciation,
and (a) depreciation is based on full historical costs; (b) the electricity prices
are at actual cost in 2013; (c) the costs are allocated among three user catego-
ries: industry, irrigation, and water pumping; (d) the practice of billing on
quota allocations remains in place; and (e) a cross-subsidy policy is in place
for the industry that subsidizes farmers’ water use.
Scenario III: Sustainable O&M Cost Scenario based on billed volumes on
effective use. In this scenario, we include the optimized O&M cost plus depre-
ciation, and (a) depreciation is based on full historical costs; (b) the costs are
allocated among three user categories: industry, irrigation, and water pump-
ing; (c) electricity prices are expected to increase to JD 0.133 per kilowatt
hour by 2017; (d) the practice of billing on quota allocations is changed in
favor of a tariff system, where actual consumption volumes are charged; and
(e) a cross-subsidy policy is in place for the industry that subsidizes farmers’
water use.
Table 8.1 provides details on the three scenarios.
58 The Cost of Irrigation Water in the Jordan Valley
The costs of providing irrigation water (depending on the scenario) under
the three scenarios range from JD 0.033 to JD 0.343 per m3 in 2013, assuming
that the electricity rates will be significantly increased, cross-subsidies from
industry will help alleviate the impact on farmers, pumping costs are paid for
by those who benefit from them (Amman water users), and the JVA will con-
tinue to charge on billed volume (not actual volume).
Currently, the most important source of revenues for the JVA is industrial
water revenues, which generated more revenues in 2012 than it received for
irrigation water, while industrial water use is just a fraction of total water use.
In 2012, industrial water revenues constituted 71 percent of total revenues
while supplying only 2 to 3 percent of the total water volume consumed. In
view of the high price of industrial water and the normally observed high
price elasticity of industrial water users, the scope for the JVA to charge indus-
trial water users significantly more in the future may be limited.
Table 8.1 shows that the costs of providing irrigation water are significantly
higher than what is currently charged (an estimated average of JD 0.011 per
cubic meter). If the JVA were to charge farmers against water consumed
instead of the quota allocations, irrigation water rates would have to be
increased even more. In fact, actual irrigation water tariffs should be signifi-
cantly higher, since currently (as shown in Chapter 5), billing and collection
efficiencies are at 82 percent and 75 percent, respectively. If these efficiencies
do not improve, then the actual required tariffs will be significantly higher
and would increase to JD 0.343 per cubic meter.
Table 8.1 Required Irrigation Tariff Increases under Different Scenarios
with Current Billed Volume
Scenario II: Scenario III: Scenario III:
Current O&M Scenario I:
O&M plus O&M plus O&M plus
cost O&M
depreciation depreciation depreciation
Expense category (3-year and 2013
and 2013 against 2017 against 2017
average electricity
electricity electricity electricity
2010–12) prices
prices price price
Total staff costs 6,098 6,098 6,098 6,098 6,098
Electricity 2,025 3,692 3,692 6,470 6,470
Fuel 709 1,183 1,183 2,182 2,182
Total energy cost 2,734 4,875 4,875 8,652 8,652
Maintenance of assets not 100 932 932 932 932
related to irrigation
Maintenance of irrigation 44 2,410 2,410 2,410 2,410
equipment
Total maintenance costs 144 3,342 3,342 3,342 3,342
Other expenditure 202 992 992 992 992
Total operating expenses JVA 9,178 15,307 15,307 19,083 19,083
before depreciation
Depreciation n.a. n.a. 9,337 9,337 9,337
Total operating expenses JVA n.a. n.a. 24,644 28,905 28,905
after depreciation
table continues next page
The Cost of Irrigation Water in the Jordan Valley 59
Table 8.1 continued
Scenario II: Scenario III: Scenario III:
Current O&M Scenario I:
O&M plus O&M plus O&M plus
cost O&M
depreciation depreciation depreciation
Expense category (3-year and 2013
and 2013 against 2017 against 2017
average electricity
electricity electricity electricity
2010–12) prices
prices price price
Total billed water volume 141 141 141 141 n.a.
(million m3) based on quota
allocation
Total billed water volume n.a. n.a. n.a. n.a. 108
(million m3) based on actual
water supplied
Total cost (in JD per m3) on
basis of quota (or actual)
volume (with cross-subsidies)
100% billing and collection 0.033 0.066 0.132 0.162 0.211
efficiency
Current billing and collection 0.054 0.108 0.215 0.263 0.343
efficiency
Source: Calculations based on information from the JVA Finance Department.
Note: Industrial water revenues have been assumed to be constant over the period. The reason behind this assumption is that
industrial water consumption fluctuates heavily over the years, as do revenues. Since industrial water use tends to be more
price elastic than that of irrigation water or water supply, we have assumed most increases in prices will be offset by declines in
consumption.
n.a. = not applicable.
Sensitivity and Risk Analysis
The results obtained so far assume that all variables are at current levels of
efficiency. We see different inefficiencies such as energy inefficiency, mainte-
nance inefficiency, staff productivity challenges, low billing efficiency, and low
collection efficiency.
Results of the analysis, presented in table 8.2, show that the required tariff
increases are sensitive to efficiency improvements, most notably changes in
billing and collection efficiency. If all farmers who use JVA water paid for it,
the O&M costs per unit of water billed would decrease significantly. Other
efficiency improvements can reduce energy, maintenance, and staff costs, but
the effect is less significant. However, the analysis shows that efficiency
improvements alone will not be sufficient to put the JVA on a path of financial
viability. Therefore, tariff increases will be needed.
This is even more pertinent since there are more downward than upward
risks to consider. There is considerable room to improve efficiencies in
the JVA, especially regarding billing and collection efficiencies, and to
a lesser extent, energy efficiency. A combination of different efficiency
improvements will enable JVA to dampen the effect of irrigation tariffs
significantly.
Figures 8.1 and 8.2 show the most likely tariff required if the JVA were able
to improve its efficiency while maintaining the use of quota allocations. When
we run a risk analysis, assuming cross-subsidies, the effect of efficiency
improvements is significant. Without efficiency improvements, the required
60 The Cost of Irrigation Water in the Jordan Valley
Table 8.2 Sensitivity Analysis of Irrigation Costs to Be Covered with Full Electricity
Rate Increase (in 2013 Prices)
Scenario II: Scenario III:
Required Required
Scenario I: sustainability cost sustainability cost
Expense category Required based on quota based on quota
O&M cost allocations at allocations at
2013 electricity 2017 electricity
prices prices
Base case with current inefficiencies and no 0.108 0.215 0.343
cross-subsidies
Energy efficiency improvement with 25% 0.093 0.201 0.318
Maintenance efficiency with 25% 0.098 0.206 0.321
Staff productivity improvements with 25% 0.090 0.197 0.32
Improvements in billing efficiency to 100% 0.088 0.177 0.282
Improvements in collection efficiency to 100% 0.071 0.161 0.258
Improvements in billing and collection efficiency 0.066 0.132 0.211
to 100%
Source: Calculations based on information from the JVA Finance Department.
Figure 8.1 Risk Analysis of Irrigation Operation and Maintenance Cost Based on
Quota Allocations with 2013 Electricity Price
Jordanian dinar per m 3
280
260
240
220
0.02 200
180
Probability
Frequency
160
140
120
0.01 100
80
60
40
20
0 0
0.030 0.040 0.050 0.060 0.070 0.080 0.090 0.100 0.110 0.120 0.130 0.140 0.150 0.160 0.170
tariff to cover O&M costs, at 2017 electricity prices, would be JD 0.203 per
cubic meter. Yet, when we include a combination of different efficiency
improvements, the median required O&M tariff increase could drop to
JD 0.09 per cubic meter, and the tariff to cover O&M and depreciation could
drop from JD 0.343 to JD 0.196 per cubic meter if these efficiencies were
implemented.
The Cost of Irrigation Water in the Jordan Valley 61
Figure 8.2 Risk Analysis of Irrigation and Operation and Maintenance and
Depreciation Cost Based on Quota Allocations with 2017 Electricity Price
Jordanian dinar per m 3
(AN19)
260
240
220
0.02 200
180
Probability
Frequency
160
140
120
0.01 100
80
60
40
20
0 0
0.140 0.160 0.180 0.200 0.220 0.240 0.260 0.280 0.300
Table 8.3 Irrigation Water Prices, Jordan Compared with Selected Countries
Country Tariff system Year
Jordan Current irrigation tariff: US$0.011 2013
(2013 energy price increase, with Tariff under Scenario I: US$0.066 (O&M cost)
cross-subsidies,100% billing and Tariff under Scenario II: US$0.132 (full cost)
collection efficiency)
Jordan Current irrigation tariff: US$0.011 2017 in
(2017 energy price increase, with Tariff under Scenario III: US$0.211 (full cost) 2013 prices
cross-subsidies, 100% billing and
collection efficiency)
France Average irrigation water prices in Province 2012
US$0.14 –US$0.36 per cubic meter
Israel Average irrigation water tariffs 2013
US$0.55–US$0.78 (agricultural water tariff)
US$0.27 (for saline and treated wastewater used in
agriculture)
Italy Average irrigation water tariff (made up of a fixed 2012
charge per hectare and a charge per cubic meter)
Average fixed charge; US$88–US$230 per hectare
Average charge per cubic meter: US$0.15–US$2.03
Spain Average charge per cubic meter: 2012
Segura basin – US$0.04 (surface water or treated
wastewater) – US$0.58 (desalinated water)
Castilla-Mancha – US$0.19
Source: Dinar, Pochat, and Albiac-Murillo 2015.
Benchmarking Jordanian Irrigation Tariffs
Table 8.3 compares the tariff scenarios in Jordan, discussed above, with those
in selected countries. Despite much effort to collect data on irrigation water
tariffs, very little updated information is available. The Food and Agriculture
Organization published an assessment in 2002, but this information has not
62 The Cost of Irrigation Water in the Jordan Valley
been updated. We rely mainly on Dinar, Pochat, and Albiac-Murillo (2015)
for some data on irrigation water tariffs, although even in that publication,
there are far fewer data on irrigation prices than on drinking water and waste-
water tariffs. In addition, the data in that publication are mostly limited to
developed countries.
Conclusions
The analysis above shows that the JVA needs significant tariff increases (and/
or government subsidies) to achieve financial sustainability. Depending on
the level of cost recovery, the minimum required tariff increases are going to
be very large, assuming that the cross-subsidy policy of today is continued,
and government subsidies are not going to be increased. However, the rates
that would be charged would not be very high compared to available interna-
tional benchmarks.
The most important measures the JVA could take to limit the increase in
tariffs would be to increase billing and collection efficiency and ensure that all
farmers who use JVA water pay for the service. Other measures, such as
improved energy efficiency and cost efficiency, would also offer opportunities
to reduce tariff requirements, but would have less impact than improving bill-
ing and collection efficiency.
In view of the many uncertainties, including changes in energy subsidies
currently extended to the water sector, the upward risk for further O&M
cost increases seem higher than the downward risks. Although the tariffs
are much higher than the current irrigation water tariffs, a quick compari-
son with other countries shows that the proposed tariff scenarios are not
completely out of line with those in countries that have pursued a more
efficient allocation of water resources. Still, it also shows that the JVA will
have to lay out a roadmap for tariff increases that is accompanied by effi-
ciency improvements and other measures to make farmers aware of the
required tariff increases and, where possible, provide assistance to help
them make the transition to higher tariffs.
Notes
1. Some argue that the cost of regulation and other forms of administration should
also be included in the full cost of water services.
2. It is assumed that industry in the area served by the JVA will pay the JVA’s water
rates unless the cost of self-provisioning is lower than the rates that the JVA
charges.
The Cost of Irrigation Water in the Jordan Valley 63
Chapter 9
Impact of Cost Recovery on
Farm Incomes
To assess the effects of changes in tariffs on farmers’ incomes in the Jordan
Valley, farm models were constructed based on observed cropping patterns.
The impact of the different cost recovery tariffs on crop production costs and
farmers’ net revenues will be calculated.
Farm Models
Eight broad farm-type systems prevail in the Jordan Valley. Their distribution,
as discussed in Chapter 5, is as follows: citrus farms with surface irriga-
tion, citrus farms with drip irrigation, vegetables – open field, vegetables –
greenhouses, vegetables combining open field and greenhouses, banana
farms, dates, and mixed farming. For more details on the farm models, see
appendix C.
Apart from the production systems listed above, field crops and other fruit
trees constitute additional cropping patterns practiced in the Jordan Valley,
under mixed farming conditions in the same farm together with the other
predominant crops. In 2010, about 337,000 dunum were cultivated in the
Jordan Valley, with an irrigation intensity of 99 percent (which remained
quite stable during 2005–10).
Effect of Tariffs on Farm Incomes
Current Farm Incomes
Yield outputs are derived using surveys based on discussions with primary
informants and cross-checked with relevant secondary and other professional
sources (such as the Ministry of Agriculture, the National Center for
Agricultural Research and Extension, the Agriculture Credit Corporation,
and the private sector). Output farm gate prices are derived from multiple
primary informants. Sensitivity simulations have been attempted by using the
Department of Statistics’ average 2010 prices and by referring to FOB prices1
deducting marketing costs2 or by considering whichever best price is obtain-
able by the producers. Detailed crop budgets are presented in appendix C.
The effect of water tariffs is not negligible, but since many farmers in the
Jordan Valley are already suffering losses on the basis of current market prices,
they are often not able to generate sufficient revenues to offset their produc-
tion costs. Other than farmers who grow dates, none of the farmers are able to
generate profits (excluding numerations for labor and management).
Even farmers using greenhouse technologies are barely able to produce
64 The Cost of Irrigation Water in the Jordan Valley
positive net returns. Yet, when producer prices increase, the effect of a change
in irrigation water tariffs can mostly be easily offset. The Jordan Valley is strug-
gling with its profitability due to the political conflict in Syria, which has an
adverse impact on farmers’ ability to sell their produce outside the country.
An attempt has been made to project the economics of the above-described
production systems for the entire Jordan Valley (see tables 9.1 and 9.2), based
on their respective frequency and proportion, as pointed out by the World-
Bank commissioned 2012 survey.3 To that end, only two scenarios have been
used for calculations. The first scenario uses current market prices, and the
second scenario uses free-on-board (FOB) or best market prices.
With current irrigation water tariffs, and under current market prices,
farmers in the Jordan Valley suffer losses of about JD 13 million per year. If
producers are able to fetch best market prices and conditions, the farmers in
Table 9.1 Jordan Valley—Simulation at Current Market Prices
Jordanian dinar, millions
Vegetables mix Dates
Vegetables Vegetables Citrus Citrus
Indicator (open field and (open Banana
(open field) (greenhouse) surface drip
greenhouse) field)
Planted area (dunum) 116,310 41,427 39,389 10,101 32,925 32,925 18,434
Analysis of financial performance of planted area in the Jordan Valley
Revenue 197 130 95 30 12 25 32
Total costs 222 128 99 15 20 26 23
Net revenue –25 2 –4 15 –8 –1 9
Summary of financial performance of total planted area
Total revenues 521
Total costs 534
Net returns –13
Net returns –2.4%
Table 9.2 Jordan Valley—Simulation at Best Market Prices
Jordanian dinar, millions
Vegetables Vegetables Vegetables mix Dates Citrus Citrus
Indicator Banana
OF GH OF and GH (OF) surface drip
Planted area (dunum) 116,310 41,427 39,389 10,101 32,925 32,925 18,434
Analysis of Financial Performance of Planted Area in the Jordan Valley
Revenue 248 231 152 73 32 64 32
Total costs 222 128 99 15 20 26 23
Net revenue 26 102 53 58 12 38 9
Net revenue
Summary of Financial Performance of Total Planted Area
Total revenues 829
Total costs 534
Net returns 296
Net returns 55.5%
Note: OF = open field; GH = greenhouse.
The Cost of Irrigation Water in the Jordan Valley 65
the Jordan Valley are able to consolidate a net gain of about JD 296 million per
year using current irrigation water tariffs based on about 300,000 dunum of
planted area under irrigation. In either case, water costs make up no more
than 0.3 percent of the total costs farmers incur to produce their crops. It
shows that banana—a heavily sheltered crop due to import bans—is the most
productive crop in the Jordan Valley. The production of dates, a crop recently
introduced in the Valley, requires the trees to mature to generate positive net
returns. Vegetables are not very profitable as measured by net revenues,
although vegetables grown in greenhouses yield better net revenues than
those grown in open fields.
Farm Incomes under Different Cost Recovery
Scenarios
The impact of the different cost recovery scenarios are calculated for the differ-
ent farm models. We apply the three different tariffs to the different farm mod-
els based on 2013 prices, and calculate for each the effect on net revenues for
farmers and the change in water costs. Note that this is a static analysis since it
is likely that when the cost structure of the farmers’ uses, changes in cropping
patterns can be expected. Because of the change in cost structure, farmers may
decide to change the crops they cultivate in the medium to long term.
As can be seen in tables 9.3 and 9.4, the effect of producer prices is signifi-
cant. If farmer prices are high, the effect of any increases in irrigation water
tariffs is negligible. Water productivity, measured as the water used per gross
Table 9.3 Net Farm Incomes under Different Irrigation Tariffs at
Current Market Prices
Net returns Net returns as Water costs as
(JD, millions) % of total costs % of total costs
Current irrigation water tariff –13 –2.4 0.3
Scenario I (JD 0.066) –19 –3.6 1.8
Scenario II (JD 0.132) –29 –5.3 3.6
Scenario III (JD 0.162) –34 –6.1 4.3
Note: These scenarios are based on 100 percent billing and collection efficiencies.
Table 9.4 Net Farm Incomes under Different Irrigation Tariffs at Best
Market Prices under Different Cost Recovery Scenarios
Net returns Net returns as Water costs as
Price of irrigation water
(JD, millions) % of total costs % of total costs
Current irrigation water tariff 298 55.5 0.3
Scenario I (JD 0.066) 289 53.6 1.8
Scenario II (JD 0.132) 280 50.8 3.6
Scenario III (JD 0.162) 275 49.5 4.3
Note: These scenarios are based on 100 percent billing and collection efficiencies.
66 The Cost of Irrigation Water in the Jordan Valley
Table 9.5 Water Costs as a Percentage of Total Costs, by Major Crop
under Different Cost Recovery Scenarios
Crop Current water tariff Scenario I Scenario II Scenario III
Vegetables, open field 0.2 1.2 2.4 3.0
Vegetables, greenhouse 0.1 0.8 1.5 1.8
Vegetables mix 0.2 0.9 1.9 2.3
Dates 0.3 1.6 3.1 3.8
Citrus surface 1.4 7.7 14.3 17.0
Citrus drip 1.1 6.0 11.4 13.6
Banana 1.1 6.3 11.9 14.2
crop revenue under current survey prices, is highest for vegetables grown in
greenhouses (JD 8.74 per cubic meter of water), followed by dates (JD 8.15),
and then vegetables (mixed: JD 6.72), and open field vegetables (JD 4.71).
Banana (JD 1.36, supported by an import ban), citrus drip (JD 1.00), and cit-
rus surface (JD 0.49) show much lower levels of water productivity. It is likely
that farmers will be more driven by net revenues; hence, the importance of
supporting measures that will increase revenues or decrease costs. Banana’s
water productivity is low, but it is an attractive crop for farmers in terms of net
revenues. Vegetables grown in greenhouses generate much higher levels of
water productivity, but with the currently low survey crop prices and high
costs, are not necessarily producing as much net revenues for farmers as
banana.
Table 9.5 shows how total water costs are affected by irrigation water tariff
increases in the farmers’ total cost of crop production. It is not surprising that
high-volume water crops such as banana and citrus are most affected by any
changes in water tariffs. In the case of banana and citrus crops that are irri-
gated by surface techniques, the farmers’ outlay for irrigation water will
increase significantly. However, for most other crops, the effect of increases in
the irrigation water tariff will be relatively limited.
Effect of Cost Recovery Scenarios for Poor Farmers
Profile of poor farmers. The survey conducted during December 2011–
January 2012 defined poor farmers as those who rated their family as income-
poor (Q6.6), which 39 farmers overall did (17 percent of the sample). About
56 percent of these poor farmers live in Karamah (while this region represents
31 percent of the full sample of surveyed farmers). Poor farmers are less likely
to live in the Middle Ghors; 8 percent of the poor live in this region (while 33
percent of surveyed farmers in the full sample live in this region) (table 9.6).
About 67 percent of the poor farmers run family farms and 33 percent run
entrepreneurial farms, compared to the full sample, in which 41 percent of the
farmers run family farms and 59 percent run entrepreneurial farms. The poor
farmers experience more water scarcity problems in general and tend to be
The Cost of Irrigation Water in the Jordan Valley 67
Table 9.6 Location of Poor Farmers in the Jordan Valley
Full sample Poor farmers
Region
Frequency Percent Frequency Percent
Northern Ghors 49 21 8 21
Middle Ghors 77 33 3 8
Karamah 74 31 22 56
Southern Ghors 36 15 6 15
Total 236 100 39 100
Source: Survey for the “The Cost of Irrigation Water in the Jordan Valley” study.
Table 9.7 Profile of Poor Farmers
Poor farmers Nonpoor farmers Mean test
Indicator
Mean (median) Mean (median) (significance)a
Number of farmers 39 197 n.a.
Farm size (dunum) 43 (34) 66 (35) n.s.
Irrigated area (dunum) 37 (30) 38 (32) n.s.
Share of irrigated area (%) 89 (100) 85 (100) n.s.
Distance to the water source (m)b 119 (50) 142 (50) n.s.
Estimated water use (m3/year) 12,252 (10,109) 15,648 (13,478) n.s.
Estimated per dunum water use (m /year) 3 c
340 (300) 485 (389) n.s.
Income category 1.15 (1) 2.54 (2) (***)
Expenditures (JD/year) 6,760 (3,525) 16,343 (9,550) (**)
Per dunum expenditures (JD/year/dunum) 205 (106) 395 (236) (*)
Crop revenues (JD/year) 16,553 (14,270) 30,598 (16,800) (*)
Per dunum crop revenues (JD/year/dunum) 487 (376) 666 (409) n.s.
Crop net revenues (JD/year) 6,674 (6,666) 15,001 (7,000) n.s.
Per dunum crop net revenues (JD/year/dunum) 212 (169) 295 (156) n.s.
Open field method exclusively (%) 92 65 (***)
Open field method in combination (%) 95 82 (**)
Drip irrigation exclusively (%) 85 81 n.s.
Drip irrigation in combination (%) 85 85 n.s.
Vegetables as main cropd (%) 64 66 n.s.
Banana as main crop (%) d
18 5 (***)
Citrus as main cropd (%) 15 17 n.s.
Farm value (JD/m ) 2
238 (200) 344 (200) n.s.
Source: Survey for the “The Cost of Irrigation Water in the Jordan Valley” study.
Note: n.a. = not applicable; a. n.s., *, **, *** = not significant, significant at the 10% level, 5% level, and 1% level, respectively.
b. The average distance to the water source is calculated from answers to Q3.2. We take the middle point of each interval and the
lower bound for the last interval (“more than 4 km”). A number of farmers did not answer this question. c. Calculated from answers
to questions Q3.7. d. Obtained from answers to question Q4.1.
mostly located in the Karamah area. About 62 percent of the poor farmers—
compared to 39 percent of the nonpoor farmers—consider “access to water for
crops” to be the most important problem the government should solve.
Table 9.7 reports some average (and median) characteristics for poor farm-
ers (column 2) and nonpoor farmers (column 3). Poor farmers are more likely
68 The Cost of Irrigation Water in the Jordan Valley
to use open field methods (either exclusively or in combination with other
methods) and grow banana than nonpoor farmers.
Notes
1. 2012 Global Trade Information Services, Inc.
2. Department of Statistics.
3. The World-Bank commissioned 2012 survey under the “The Cost of Irrigation
Water in the Jordan Valley” study.
The Cost of Irrigation Water in the Jordan Valley 69
Chapter 10
Conclusions
The analysis in the previous chapters reveals that the Jordan Valley Authority
(JVA) is unable to cover its basic operation and maintenance (O&M) costs
from the revenues it generates. In the last two decades, the JVA has been
unable to adjust its irrigation water tariffs at all, so they have remained
unchanged since 1994, whereas expenditures have increased. In 2012, the
JVA’s O&M deficit amounted to more than JD 6 million, equivalent to about
40 percent of total recurrent expenditures. The large operating deficits within
the context of increasingly aging infrastructure will and may already affect
the quality of the service provided (the decline in billing and collection effi-
ciency may reflect that the quality of the service is already being affected),
whereas it also results in a crowding out of investment programs (increas-
ingly diverting capital funding to pay for operational losses). Hence, the risks
are increasing that the current irrigation water infrastructure is increasingly
being compromised.
For the JVA, an eroding flow of revenues has resulted in an agency that has
become increasingly dependent on government transfers as O&M needs have
increased. The JVA has tried to deal with its lack of revenues while being faced
with increasing O&M costs by selling land assets and postponing mainte-
nance of its infrastructure assets, while using a more aggressive cross-subsidy
policy. However, these interventions have their limits: the income from land
sales is declining rapidly. The current cross-subsidy rate between industry
and irrigation water is huge (average water tariffs of JD 1.25 and JD 0.011,
respectively). Despite a rapid increase in revenues from industry, the price
elasticity of demand suggests there are limits to using this tool much longer.
Postponing maintenance is also a strategy with limited validity, since lack
of maintenance tends to compromise the ability of infrastructure assets to
provide reliable service to farmers and industry.
The financial viability of the JVA can be improved by increasing revenues,
decreasing O&M costs, or both. There are several paths open to the JVA to
improve its financial and operational performance through increasing reve-
nues while reducing the costs of service delivery so as to improve O&M cost
recovery in the JVA. While the JVA aims to increase revenues, it also has room
to reduce its chronic inefficiencies. The most important potential efficiency
gains are related to staff employment, maintenance, and energy use in the JVA.
Improving Revenues
Irrigation tariff increases. The analysis shows that the JVA needs signifi-
cant tariff increases to become financially sustainable. Depending on the
level of cost recovery, the minimum required tariff increases for irrigation
water could be very large. If the JVA wants to at least cover its O&M costs
70 The Cost of Irrigation Water in the Jordan Valley
in 2013, it will require—assuming that the current cross-subsidies are main-
tained and JVA will be able to achieve 100 percent billing and collection
efficiencies—a tariff of JD 0.066 per cubic meter. If the government wants to
pursue its objective as stated in the 2009 Water Strategy that depreciation
should also be covered, the irrigation water tariff must be increased to JD
0.132 per cubic meter. If the electricity subsidies for water operators are
eliminated by 2017, irrigation water tariffs must be further increased to JD
0.162 per cubic meter to cover JVA’s operation and maintenance. Although
the proposed tariffs are much higher than tariffs currently in place, a quick
comparison with other countries shows that the proposed tariff levels are
similar to those of other countries for which data are available. Yet, the tariff
increases necessary to ensure JVA’s financial viability are large, especially
compared to current irrigation water tariffs, which have not been changed
since 1994, and will require time to implement.
The more efficient the JVA becomes in providing the service, the lower will
be the required tariff increases. The JVA has several routes to improving its
efficiency.
Improvement of Billing and Collection Efficiencies. The farmer survey
found that only 82 percent of farmers are actually billed for their water use. Of
the farmers that are billed, revenue collection is only 75 percent. Hence, by
improving efficiencies in revenue billing and collection, the JVA could
increase its irrigation revenues by more than 60 percent. It is the improve-
ment in efficiencies that will most effectively reduce the size of the required
tariff increases. With current billing and collection efficiencies, the required
tariff to cover O&M costs with 2013 electricity prices will be JD 0.108 per
cubic meter; with 100 percent billing and collection efficiency, the tariff drops
to JD 0.066 per cubic meter. Improvements in billing and collection efficien-
cies will also improve fairness of the system, because all who use the irrigation
infrastructure will pay for it. With higher tariffs, the fairness of the system
becomes significantly compromised if a large group of farmers are exempted
from paying irrigation water tariffs.
Change in billing practices. The JVA currently bills farmers on the basis of
quota allocations, whereas actual water supplied to farmers is often signifi-
cantly lower. It is likely that under a new tariff regime, farmers may not be
willing to pay for quota allocations they do not receive. There are many meth-
ods to measure and charge for actual water volumes used. Although new
technologies play a role, it is important not to neglect the institutional com-
ponent of improved billing practices. In 16 of the 20 registered water user
associations (WUAs), responsibility for the distribution of irrigation water
has been handed over to these associations. The WUAs could be put in charge
of billing and collecting from farmers, use the funds to pay for their opera-
tions, and hand over any surpluses to the JVA. Where needed, the WUAs
could implement awareness programs that aim to ensure that all farmers who
use irrigation water pay for the water they use.
Change in the ability of the JVA and WUAs to retain their revenues. The
JVA is a ministerial department that collects revenues but which then trans-
fers the revenues to the Treasury. To ensure that the JVA has incentives to
The Cost of Irrigation Water in the Jordan Valley 71
improve its billing and collection capacity, redirection of the revenue flow
from the Treasury to the JVA and WUAs could provide better incentives to
bill and collect tariffs from farmers. This may require the JVA to change its
status to one similar to that of the Water Authority of Jordan.
Increasing Efficiency in Service Delivery
Irrigation tariff increases and other measures aimed at increasing the reve-
nue-generating capacity of the JVA will improve its financial sustainability.
Yet, efficiency improvements in the JVA through increasing energy efficiency,
improvements in staff productivity, development of asset management, and
staff productivity increases can further help generate (future) cost savings and
reduce the size of the irrigation water tariffs.
Improvements in Energy Efficiency. Energy makes up a significant part of
the O&M costs of the JVA. With the dismantling of energy subsidies, and the
resulting increases in energy and electricity prices, the JVA is faced with
increasingly higher energy costs. Due to Jordan’s topography, water often has
to be pumped over large distances and lifted to overcome altitude differences,
which has made the water sector the largest electricity consumer in the coun-
try. More efficient electricity consumption is essential to improve the financial
performance of the JVA and should be a priority in its capital investment
program, especially since the water infrastructure managed by the JVA is
reaching or has reached the end of its economic life. The government’s effort
to use energy more efficiently will have a positive impact on cost recovery in
the JVA, but will also reduce the carbon footprint of the JVA by reducing
emissions, while making the JVA less vulnerable to the volatility of energy
prices.
The development and implementation of an asset management plan for
the JVA. Linked to the above-mentioned need for energy efficiency improve-
ments and a corresponding capital budget program, the JVA needs to develop
and implement an asset management plan. An asset management plan helps
the JVA, manage its infrastructure capital assets in such a way that it mini-
mizes the total cost while providing the optimum level of water services.
A high-performing asset management program incorporates detailed asset
inventories, operation and maintenance tasks, and long-term financial plan-
ning to develop and maintain JVA assets. Such a plan can help extend asset
life and assist in rehabilitation, repair, and replacement decisions through effi-
cient and focused operation and maintenance, and improve the security and
safety of assets, while reducing the overall costs for operations, maintenance,
and capital expenditures.
JVA’s role to change into bulk water supplier. In recent years, the JVA’s
mandate has been extended to also pump water to Amman. This additional
mandate has not been guided by explicit agreements about who pays the costs
for this service, or what costs are actually involved in pumping water to
Amman. It is implicitly agreed that the JVA receives treated wastewater in
return for pumping water to Amman, but it is not clear whether the costs
72 The Cost of Irrigation Water in the Jordan Valley
associated with water pumping (especially with lower energy subsidies) are
covering the cost of additional wastewater to be provided by the JVA. In 2012,
water pumping costs amounted to JD 2.7 million (located in the capital
budget)—making up 18 percent of total operating costs. The government
should ensure that explicit agreements are reached about the costs of water
pumping to Amman. With the increased importance of water pumping, the
JVA is moving more into the direction of becoming a bulk water supplier.
This move toward becoming a bulk water supplier would also explicitly rec-
ognize the increased role of water user associations in the maintenance of the
distribution systems.
Impact of Tariff Increases on Poor Farmers
The impact of the tariff increases on farmers’ incomes is in general moderate,
because water costs make up only a small part of the total cost of farming. Yet,
as can be expected, certain cropping patterns will be much more affected by
the tariff increases than others. It is especially crops that tend to consume
large volumes of water (citrus and banana), that will feel the impact of the
irrigation water tariffs. According to the cropping pattern simulations, citrus
is not a crop that generates profits even now, with very low irrigation water
tariffs. Increasing tariffs will make these crops even more economically unvi-
able to grow, as has begun to show in the declining citrus production and,
more recently, the decline in cultivated area. In the case of banana, which
benefits from import restrictions, only very large tariff increases (above JD
0.26 per cubic meter) will reduce the profit margin below 10 percent.
In 2012 and 2013, Jordan registered negative growth in the agricultural sec-
tor, while the productivity per worker also declined. To increase resilience
among farmers to deal with irrigation water tariff increases, the agricultural
sector will have to address issues related to, among others, the marketing of
crops, and provide support to introducing new technologies that reduce the
risks for farmers to transition to other cropping patterns, since the effect of
increases in irrigation water tariffs does affect farmers who grow vegetables
much less than those who grow citrus and banana.
When planning for irrigation water tariff increases, the government should
evaluate the distributional impact of such increases. The farmer survey found
that 17 percent of survey respondents could be classified as poor. Propoor
farm policies can come in different forms, ranging from cross-subsidies in the
irrigation tariff structure to direct income support to poor farmers. Because
the number of farmers in the Jordan Valley is small, and the number of poor
farmers even smaller, it is relatively easy for the government to provide income
support to poor farmers in the Valley.
The Cost of Irrigation Water in the Jordan Valley 73
Appendix A
Allocation of Water in the
Jordan Valley
Quotas are set according to water availability and demand patterns. Given
that competition for water has increased, the quota system is reviewed on a
regular basis, according to water availability. In 2004, the Jordan Valley
Authority (JVA) established new quotas to better match supply of water and
crop water requirements. Under current water policy directives, agriculture
occupies third place in priority of allocation of freshwater, after municipal
and industrial requirements, and first place in allocation of treated wastewa-
ter. As a consequence, freshwater has been increasingly transferred from irri-
gated agriculture to urban uses. In exchange, agriculture in Karamah is
increasingly supplied with blended water (combining fresh surface water and
treated wastewater (Venot et al. 2007).
The current annual quotas correspond to 3,600 cubic meters per hectare for
vegetables, 7,650 cubic meters per hectare for citrus, and 12,550 cubic meter
per hectare for banana. The new allocation implied a reduction of about 20 to
25 percent of previous quotas. The resulting water savings, about 20 million
cubic meters per year, are reallocated for domestic water use in Amman
(Venot et al. 2007). Details of the quotas per period of the year and crop is
presented in table A.1.
The number of farms registered by the Control Centers at the JVA
(Northern, Middle, and Karamah Directorates, and Southern Ghors) is about
10,000 units with a total area of 40,000 ha, of which 36,000 hectares are irri-
gable. The average size per farm is 3.9 hectares, and each farm has an irrigable
area of about 3.5 hectares.
Table A.1 Current Annual Quota System, 2004
Quotas (m3/ha/day)
Period of the year
Vegetables Citrus Banana
March 16–31 15 On demand but <= 20 On demand but <= 20
April 1–5 15 20 30
April 16–30 20 20 30
May 1–June 15 20 30 50
June 16–August 15 On demand but <=10 40 70
August 16–September 15 10 40 70
September 16–October 15 15 38 50
October 16–October 31 20 38 50
November 1–December 15 20 On demand but <= 20 On demand but <= 20
December 16–March 15 10 On demand but <= 20 On demand but <= 20
Source: Venot et al. 2007.
74 The Cost of Irrigation Water in the Jordan Valley
Appendix B
Water User Associations in
the Jordan Valley
In 2001, the Jordan Valley Authority (JVA) launched1 a participatory water
resources management project, with the aim of responsibility sharing
between the authority and the farmers. Water user associations (WUAs) have
been established through a democratic process, including definition of
responsibilities, duties, and management structure. The WUAs are now fully
recognized by the JVA. Contracts with the WUAs regulate tasks transfer,
where the associations are responsible for the distribution of water for irriga-
tion. Although only 12 WUAs out of 23 have formally completed their con-
tracts with the JVA (March 2012), the program encompasses 75 percent of
the irrigated area (see table B.1 and map B.1). Eventually, full coverage of the
Jordan Valley is expected. The WUA system is generally acknowledged as a
positive achievement by the majority of the farmers who have been involved
in the program. Attentive monitoring of the process and system is, however,
warranted, to avoid disputes and to guarantee good management and overall
sustainability.
Table B.1 Irrigated Area Covered by the Water User
Association Program
Area Size in dunum
North Jordan Valley 94,313
Middle Jordan Valley 72,298
South Jordan Valley (north of Dead Sea) 59,539
Southern Ghors 46,860
Total 273,010
Source: JVA.
The Cost of Irrigation Water in the Jordan Valley 75
Map B.1 Geographic Distribution of Water Users Associations
Adasiya P.S 2
Irrigated area: 4.232 du
No.of farms: 121
Manshiah P.S. 14
North Irrigated area Irrgated area: 10,287 du
No. of farms: 314
Jordan Vally Area in Number of
Donum Farm unit
Tell Ei-Arbein P.S. 22.2
Participative Irrigated area: 1,134 du
46672 1231 No. of frams: 29
Area
Sheik Hussein P.S. 28
Total Area 94313 Irrigated area: 7,146 du
2549
Participative No.of farms: 205
Area Coverage 49% 48% Mashare P.S. 33
Irrigated area: 9,635 du
No. of farms: 217
Wadi El-Rayyan P.S. 36
Irrigated area: 8.797 du
No. of farms: 230
Wadi El-Rayyan P.S. 41
Irrigated area: 5,457 du
No. of farmes: 115
Abu-Sido P.S. 50
Irrgated area: 9.000 du
Middle Irrigated area No. of farms: 230
Jordan Vally Area in Number of
Donum Farm unit Kraimeh P.S. 55
Irrigated area: 10,654 du
Participative No. of farms: 268
44825 1170
Area
Turn Out 22
Total Area Irrigated area: 16.295 du
72298 1954 No. of farms: 426
Participative
Ghor Kabed P.S. 78
Area Coverage 62% 60% Irrigated area: 9,800 du
No. of farms: 246
Gohar Kbed P>S. 81
Irrigated area: 13,972 du
No. of farms: 352
Gohar Kabed P.S. 91
Irrigated area: 13,801 du
South Irrigated area No. of farms: 373
Jordan Vally Area in Number of
Donum Farm unit
Ghor Kabed P.S. 95
Participative Irrigated area: 10,925 du
59539 1778 No. of farms: 303
Area
Total Area
59539 1778
Participative Wadi Sheib/ S. Shouna
Irrigated area: 1,500 du
Area Coverage 100% 100%
Karein
Irrigated area: 8,897 du
No. of farms: 234
Rama
Irrigated area: 10,444 du
No of farms: 316
Mazraa, Hadith
Irrigated area: 14,670 du
No. of farms: 489
Irrigated area
South
Ghors Area in Number of
Donum Farm unit
Participative 46860 1560
Area
Total Area Safi
46860 1560 Irrigated area: 26,700 du
Participative
No. of farms: 890
Area Coverage 100% 100%
Feifa
Irrigated area: 3,630 du
No. of farms: 121
Khunezira
Irrigated area: 1,650 du
No. of farms: 53
Note
1. With the Deutsche Gesellschaft für Internationale Zusammenarbeit’s (GIZ’s)
support and assistance.
76 The Cost of Irrigation Water in the Jordan Valley
Appendix C
Crop Budgets
Crop budget - TOMATO/GREENHOUSE*/DRIP IRRIGATION
* (half dunum)
Scenario 1 Scenario 2 Scenario 3
A. REVENUE: Units Survey price DOS price Farmgate prices
derived from
FOB/best prices
Yield ton/0.5 10.0 10.0 10.0
dunum
Price farmgate JD/ton 147 168 365
Revenue per half
dunum JD 1,470 1,683 3,648
B. COSTS:
B.1 Operating costs
unit price, JD quantity subtotals, JD
a) Labor 594.0
Permanents (crop Unit 1,800 0.33 594.0
proportion per
season)
Temporary JD/day — — —
b) Plant production &
protection 508.0
Land preparation Unit/dunum 25 0.5 12.5
Cost of seed/plant Seedlings 0.130 1,400 182.0
material
Fertilizers, mineral Unit 75 1 75.0
Fertilizers, organic Unit 45 1.5 67.5
Pesticides & Unit 150 1 150.0
treatments
Synthetic threads Unit 2 8 16.0
Black mulch Unit/dunum 10 0.5 5.0
c) Management
cost 72.1
Management cost Lump sum 103 0.7 72.1
d) Other costs 151.1
Land rental Dunum 143 0.5 71.5
Water JD/m3/ 0.035 180 6.3
season
Electricity JD/m3 of 0.06 180 10.8
water
Packaging material Unit 0.5 125 62.5
B.2 Investment 228.2
costs
table continues next page
The Cost of Irrigation Water in the Jordan Valley 77
Scenario 1 Scenario 2 Scenario 3
Depreciation of Plastic 0.33 430 141.9
plastic film (3 y) house unit
Depreciation of Plastic 0.03 2,500 75.0
green houses house unit
structure (30 y)
Irrigation system JD/dunum 0.5 22.60 11.3
and farm
equipment (annual
proportion)
Total costs: 1,553.4
C. RETURNS:
Net returns JD –83 130 2,094
Net returns (%) % –5 8 135
Source: Fileccia and Punda 2012.
Note: — = not available.
78 The Cost of Irrigation Water in the Jordan Valley
Crop budget – TOMATO/OPEN FIELD/DRIP IRRIGATION
Scenario 1 Scenario 2 Scenario 3
A. REVENUE: Units Survey price DOS price Farmgate prices
derived from
fob/best prices
Yield Ton/ 4.0 4.0 4.0
dunum
Price farmgate JD/ton 147 168 365
Revenue per dunum JD 588 673 1,459
B. COSTS:
B.1 Operating costs
Unit price, JD Quantity Subtotals, JD/
dunum
a) Labor 180.0
Permanents (crop Unit 1,800 0.1 180.0
proportion per
season)
Temporary JD/day — — —
b) Plant production &
protection 505.0
Land preparation Unit/ 25 1 25.0
dunum
Cost of seed/plant Seedlings 0.1 1,250 125.0
material
Fertilizers, mineral Unit 150 1 150.0
Fertilizers, organic Unit 45 1 45.0
Pesticides & Unit 150 1 150.0
treatments
Synthetic threads Unit — — —
Black mulch Unit/ 10 1 10.0
dunum
c) Management cost 103.0
management cost Lump sum 103 1 103.0
d) Other costs 511.8
Land rental Dunum 143 1 143.0
Water JD/m3/ 0.270 360 97.2
season
Electricity JD/m3 of 0.06 360 21.6
water
Packaging material Unit 0.5 500 250.0
B.2 Investment costs 47.6
Depreciation of Plastic — — —
plastic film (3 y) house unit
Depreciation of Plastic — — —
green houses house unit
structure (30 y)
Plastic tunnel (winter JD/dunum 25 1 25.0
months)
Irrigation system JD/dunum 23 1 22.6
and farm equipment
(annual proportion)
Total costs: 1,347.4
C. RETURNS:
Net returns JD –759 –674 112
Net returns (%) % –56 –50 8
Source: Fileccia and Punda 2012.
Note: — = not applicable.
The Cost of Irrigation Water in the Jordan Valley 79
Crop budget - CUCUMBER/GREENHOUSE*
* (half dunum)
Scenario 1 Scenario 2 Scenario 3
A. REVENUE: Units Survey price DOS price Farmgate prices
derived from
FOB/best prices
Yield Ton/0.5 6.0 6.0 6.0
dunum
Price farmgate JD/ton 250 197 498
Revenue per half JD 1,500 1,181 2,985
dunum
B. COSTS:
B.1 Operating costs
Unit price, JD Quantity Subtotals, JD
a) Labor 594.0
Permanents (crop Unit 1,800 0.33 594.0
proportion per
season)
Temporary JD/day — — —
b) Plant production & 461.6
protection
Land preparation Unit/ 25 0.5 12.5
dunum
Cost of seed/plant Seedlings 0.113 1,200 135.6
material
Fertilizers, mineral Unit 75 1 75.0
Fertilizers, organic Unit 45 1.5 67.5
Pesticides & Unit 150 1 150.0
treatments
Synthetic threads Unit 2 8 16.0
Black mulch Unit/ 10 1 5.0
dunum
c) Management cost 72.1
Management cost Lump sum 103 0.7 72.1
d) Other costs 430.9
Land rental Dunum 143 0.5 71.5
Water JD/m / 3
0.270 180 48.6
season
Electricity JD/m3 of 180 0.06 10.8
water
Packaging material unit 0.5 600 300.0
B.2 Investment costs 228.2
Depreciation of Plastic 0.33 430 141.9
plastic film (3 y) house
unit
Depreciation of Plastic 0.03 2,500 75.0
green houses house
structure (3 y) unit
Irrigation system JD/dunum 0.5 22.6 11.3
and farm equipment
(annual proportion)
Total costs: 1,786.8
C. RETURNS:
Net returns JD –287 –605 1,199
Net returns (%) % –16 –34 67
Source: Fileccia and Punda 2012.
Note: — = not applicable.
80 The Cost of Irrigation Water in the Jordan Valley
Crop budget - POTATO/OPEN FIELD
Scenario 1 Scenario 2 Scenario 3 Scenario 4
A. REVENUE: Units Survey price DOS price FOB prices Farmgate
prices
derived
from FOB/
best prices
Yield Ton/0.5 3.5 3.5 3.5 3.5
dunum
Price farmgate JD/ton 800 211 332 800
Revenue per JD 2,800 739 1,162 2,800
half dunum
B. COSTS:
B.1 Operating costs
unit price, quantity subtotals,
JD JD
a) Labor 276.0
Permanents Unit 1,800 0.1 180.0
(crop proportion
per season)
Temporary JD/day 0.8 120 96.0
b) Plant
production &
protection 1,780.0
Land preparation Unit/dunum 25 1 25.0
Cost of seed Seedlings 1 1,000 1,000.0
potato
Fertilizers, Unit 400 1 400.0
mineral
Fertilizers, Unit 45 1 45.0
organic
Pesticides & Unit 300 1 300.0
treatments
Synthetic threads Unit — — —
Black mulch Unit/dunum 10 1 10.0
c) Management
cost 103.0
Management Lump sum 103 1.0 103.0
cost
d) Other costs 400.8
Land rental Dunum 143 1 143.0
Water JD/m3/ 0.170 360 61.2
season
Electricity JD/m3 of 0.06 360 21.6
water
Packaging Unit 0.5 350 175.0
material
B.2 Investment 47.6
costs
table continues next page
The Cost of Irrigation Water in the Jordan Valley 81
Scenario 1 Scenario 2 Scenario 3 Scenario 4
Depreciation of Plastic — — —
plastic film (3 y) house unit
Depreciation of Plastic — — —
green houses house unit
structure (3 y)
Plastic tunnel JD/dunum 25 1 25.0
(winter months)
Irrigation JD/dunum 22.6 1 22.6
system and
farm equipment
(annual
proportion)
Total costs: 2,607.4
C. RETURNS:
Net returns JD 192.6 −1,869 1,445 192.6
Net returns (%) % 7 −72 −55 7
Source: Fileccia and Punda 2012.
82 The Cost of Irrigation Water in the Jordan Valley
Crop budget - MELON/GREENHOUSE*
* (half dunum)
Scenario 1 Scenario 2 Scenario 3 Scenario 4
A. REVENUE: Units Survey DOS price FOB prices Farmgate
price prices
derived from
FOB/best
prices
Yield Ton/0.5 1.0 1.0 1.0 1.0
dunum
Price farmgate JD/ton 1,750 274 598 1,750
Revenue per half JD 1,750 274 598 1,750
dunum
B. COSTS:
B.1 Operating
costs
Unit Quantity Subtotals,
price, JD JD
a) Labor 594
Permanents (crop Unit 1,800 0.33 594
proportion per
season)
Temporary JD/day — — —
b) Plant
production &
protection 387
Land preparation Unit/d u 25 0.5 12.5
Cost of seedlings/ Seedlings 0.113 1,200 135.6
nurseries
Fertilizers, mineral Unit 75 1 75.0
Fertilizers, Unit 45 1.5 67.5
organic
Pesticides & Unit 75 1 75.0
treatments
Synthetic threads Unit 2 8 16.0
Black mulch Unit/ 10 0.5 5.0
dunum
c) Management
cost 72
Management cost Lump sum 103 1.0 72.1
d) Other costs 131
Land rental Dunum 143 0.5 71.5
Water JD/m3/ 0.270 180 48.6
season
Electricity JD/m3 of 0.06 180 10.8
water
Packaging Unit —
material
B.2 Investment
costs 228
Irrigation system JD/dunum 22.6 0.5 11.3
& farm eq.
depreciation
Depreciation of Plastic 430 0.33 141.9
plastic film (3 y) house unit
Depreciation of Plastic 2,500 0.03 75.0
green houses house unit
structure (3 y)
Total costs: 1,412
C. RETURNS:
Net returns JD 338 −1,138 −814 338
Net returns (%) % 24 −81 −58 24
Source: Fileccia and Punda 2012.
The Cost of Irrigation Water in the Jordan Valley 83
Crop budget - BANANA/Drip Irrigation
A. REVENUE: Units Avg. unit Year 1 Years 2–5
price, JD
qty subtotals qty subtotals
Output JD/ton 450 — — 4.75 2,138
B. COSTS:
B.1 Operating costs
a) Labor 104.00 292.00
Pruning Person/day 10.00 0.40 4.00 1.00 10.00
Pesticides application Person/day 10.00 2.00 20.00 6.00 60.00
Crop harvesting Person/day 10.00 3.00 30.00 7.20 72.00
Other Person/day 10.00 5.00 50.00 15.00 150.00
b) Plant production & 540.10 607.40
protection
Seedlings Seedlings 1.50 167.00 250.50 — —
Fertilizers, organic Unit 45.00 3.00 135.00 7.20 324.00
Fertilizers, ammonium Kg 0.80 96.00 76.80 144.00 115.20
sulphate
Fertilizers, triple super Kg 0.80 16.00 12.80 32.00 25.60
phosphate
Fertilizers, potassium Kg 0.80 — — 72.00 57.60
sulphate
Fertilizers, other Kg 20.00 2.00 40.00 3.00 60.00
Pesticides & treatments 50.00 0.50 25.00 0.50 25.00
Mulching (plastic) Unit 10.00 — — — —
c) Rented machine work 45.00 20.00
Land preparation and Dunum 25.00 1.00 25.00 — —
solarization
Plowing & scarifying Dunum 10.00 1.00 10.00 1.00 10.00
Pesticides application Dunum 10.00 1.00 10.00 1.00 10.00
d) Management cost 103.00 103.00
Management cost Lump sum 103.00 1.00 103.00 1.00 103.00
e) Other cots 281.05 281.05
Land rental Dunum 143.00 1.00 143.00 1.00 143.00
Water JD/m /season
3
0.04 1,255.00 50.20 1,255.00 50.20
Electricity JD/m of water
3
0.07 1,255.00 87.85 1,255.00 87.85
Packaging material Unit 0.03 — — — —
B.2 Investment costs 18.40 18.40
Irrigation system and Dunum 18.40 1.00 18.40 1.00 18.40
farm equipment (annual
proportion)
Total costs: 1,091.55 1,321.85
C. RETURNS:
Net returns JD –1,091.55 815.65
Net returns (%) % –100 62
Source: Fileccia and Punda 2012.
Note: — = not applicable.
84 The Cost of Irrigation Water in the Jordan Valley
Crop budget - DATES/DRIP IRRIGATION
A. REVENUE: Units Avg. unit Years 1–5 Years 5–10 After 8 Years
price, JD
qty subtotals qty subtotals qty subtotals
Output JD/ton 1,019 0 25 0.80 815 3.50 3,567
Output Medjool 1st JD/ton 2,500 0 63 0.80 2,000 3.50 8,750
class (at farm gate)
B. COSTS:
B.1 Operating costs
a) Labor 110.00 195.00 245.00
Pruning JD/day 20.00 1.00 20.00 2.00 40.00 2.00 40.00
Fertilizers & JD/day 10.00 2.00 20.00 3.00 30.00 3.00 30.00
pesticides
application
Crop harvesting JD/day 10.00 5.00 50.00 7.00 70.00 12.00 120.00
Other (pollination, JD/day 10.00 2.00 20.00 5.50 55.00 5.50 55.00
weeding)
b) Plant production 917.00 404.50 404.50
& protection
Seedlings Seedlings 40.00 14.00 560.00 — — — —
Fertilizers, organic Unit 45.00 1.00 45.00 1.50 67.50 1.50 67.50
Fertilizers, mineral Unit 1.60 70.00 112.00 70.00 112.00 70.00 112.00
Pesticides & Unit 200.00 1.00 200.00 1.00 200.00 1.00 200.00
treatments
Pollination Lump sum 25.00 — — 1.00 25.00 1.00 25.00
Mulching (plastic) Unit/ 10.00 — — — — — —
dunum
c) Rented machine 45.00 72.50 125.00
work
Land preparation Dunum 25.00 1.00 25.00 — — — —
Plowing & scarifying Dunum 10.00 1.00 10.00 1.00 10.00 1.00 10.00
Pesticides Dunum 10.00 1.00 10.00 1.00 10.00 1.00 10.00
application
Harvesting Dunum 105.00 — — 0.50 52.50 1.00 105.00
(hydraulic lift)
d) Management cost 206.00 206.00 206.00
Management cost Lump sum 206.00 1.00 206.00 1.00 206.00 1.00 206.00
e) Other costs 179.70 257.20 527.20
Land rental Dunum 143.00 1.00 143.00 1.00 143.00 1.00 143.00
Water JD/m3/ 0.035 360.00 12.60 360.00 12.60 360.00 12.60
season
Electricity JD/m3 of 0.06 360.00 21.60 360.00 21.60 360.00 21.60
water
Packaging material Unit 0.50 5.00 2.50 160.00 80.00 700.00 350.00
(boxes)
B.2 Investment costs 35.00 35.00 1,688.00
investment Dunum 35.00 1.00 35.00 1.00 35.00 1.00 35.00
depreciation
table continues next page
The Cost of Irrigation Water in the Jordan Valley 85
Financial losses for 1,653.00
(non/less productive
years)
Total costs: 1,492.70 1,170.20 3,195.70
C. RETURNS:
Net returns JD –1,467.22 –354.90 371.23
Net returns % –98 –30 12
Net returns (Medjool) JD –1,430.20 829.80 5,554.30
Net returns (Medjool) % –96 71 174
Source: Fileccia and Punda 2012.
Note: — = not applicable.
86 The Cost of Irrigation Water in the Jordan Valley
Crop budget - CITRUS/DRIP IRRIGATION
A. REVENUE: Units Avg.unit Years 1–3 Years 4–7 After 8 Years
price, JD
qty subtotals qty subtotals qty subtotals
Gross output JD/ton 230 — — 2.00 460 4.00 920
Gross output (farm JD/ton 248 — — 2.00 496 4.00 992
gate) at DOS
prices
Gross output (farm JD/ton 581 2.00 1,163 4.00 2,326
gate) at FOB/best
prices
B. COSTS:
B.1 Operating
costs
a) Labor 50.00 93.00 176.00
Pruning JD/day 20.00 1.00 20.00 2.00 40.00 3.00 60.00
Pesticides JD/day 10.00 1.00 10.00 1.30 13.00 2.60 26.00
application
Crop harvesting JD/day 10.00 — — 2.00 20.00 7.00 70.00
Other (weeding, etc.) JD/day 10.00 2.00 20.00 2.00 20.00 2.00 20.00
b) Plant production 234.00 237.00 330.00
& protection
Seedlings Seedlings 2.50 56.00 140.00 — — — —
Fertilizers, organic Unit 45.00 1.00 45.00 2.40 108.00 3.40 153.00
Fertilizers, Unit 0.80 30.00 24.00 60.00 48.00 100.00 80.00
ammonium
sulphate
Fertilizers, triple Unit 0.80 — — 40.00 32.00 60.00 48.00
super phosphate
Fertilizers, Unit 0.80 — — 30.00 24.00 30.00 24.00
potassium
sulphate
Pesticides & Unit 50.00 0.50 25.00 0.50 25.00 0.50 25.00
treatments
Mulching (plastic) Unit/ 10.00 — — — — — —
dunum
c) Rented machine
work 28.50 3.50 3.50
Land preparation Dunum 25.00 1.00 25.00 — — — —
Plowing & Dunum 2.00 1.00 2.00 1.00 2.00 1.00 2.00
scarifying
Pesticides Dunum 1.50 1.00 1.50 1.00 1.50 1.00 1.50
application
c) Management
cost 103.00 103.00 103.00
Management cost Lump sum 103.00 1.00 103.00 1.00 103.00 1.00 103.00
d) Other costs 219.68 221.68 223.68
Land rental Dunum 143.00 1.00 143.00 1.00 143.00 1.00 143.00
Water JD/m3/ 0.035 765.00 26.78 765.00 26.78 765.00 26.78
season
Electricity JD/m3 of 0.06 765.00 45.90 765.00 45.90 765.00 45.90
water
table continues next page
The Cost of Irrigation Water in the Jordan Valley 87
Packaging Unit 0.10 — — — — — —
material (boxes)
Other Lump sum 2.00 2.00 4.00 3.00 6.00 4.00 8.00
B.2 Investment
costs 22.60 22.60 22.60
Irrigation system JD/dunum 22.60 1.00 22.60 1.00 22.60 1.00 22.60
and farm
equipment (annual
proportion)
Total costs: 657.78 680.78 858.78
C. RETURNS:
Net returns JD –658 — –221 61.23
Net returns % –100 –32 7
Net returns at DOS JD 133
prices
Net returns at DOS % 15
prices
Net returns at JD 1,467
FOB/best prices
Net returns at % 171
FOB/best prices
Source: Fileccia and Punda 2012.
Note: — = not applicable.
88 The Cost of Irrigation Water in the Jordan Valley
Crop budget - CITRUS/SURFACE IRRIGATION
A. REVENUE: Units Avg. unit Years 1–3 Years 4–7 After 8 Years
price, JD
qty subtotals qty subtotals qty subtotals
Gross output JD/ton 270 — — 0.80 216 2.00 540
Gross output (farm JD/ton 248 — — 0.80 198 2.00 496
gate) at DOS prices
Gross output (farm JD/ton 581 — — 0.80 465 2.00 1,163
gate) at FOB/best
prices
B. COSTS:
B.1 Operating costs
a) Labor 50.00 93.00 176.00
Pruning JD/day 20.00 1.00 20.00 2.00 40.00 3.00 60.00
Pesticides JD/day 10.00 1.00 10.00 1.30 13.00 2.60 26.00
application
Crop harvesting JD/day 10.00 — — 2.00 20.00 7.00 70.00
Other (weeding, etc.) JD/day 10.00 2.00 20.00 2.00 20.00 2.00 20.00
b) Plant production &
protection 127.60 109.80 133.80
Seedlings Seedlings 2.50 31.00 77.50 — — —
Fertilizers, organic, Unit 24.00 1.00 24.00 2.40 57.60 3.40 81.60
non-treated
Fertilizers, mineral Unit 43.00 0.50 21.50 1.00 43.00 1.00 43.00
Pesticides & Unit 4.60 1.00 4.60 2.00 9.20 2.00 9.20
treatments
Mulching (plastic) Unit/ 10.00 — — —
dunum
c) Rented machine
work 42.00 17.00 17.00
Land preparation Dunum 25.00 1.00 25.00 — — — —
Misc operations Dunum 17.00 1.00 17.00 1.00 17.00 1.00 17.00
d) Management cost 103.00 103.00 103.00
Management cost Lump 103.00 1.00 103.00 1.00 103.00 1.00 103.00
sum
e) Other costs 215.68 215.68 215.68
Land rental Dunum 143.00 1.00 143.00 1.00 143.00 1.00 143.00
Water JD/m3/ 0.035 765.00 26.78 765.00 26.78 765.00 26.78
season
Electricity ID/m3 of 0.06 765.00 45.90 765.00 45.90 765.00 45.90
water
Packaging material Unit 0.10 — — —
(boxes)
B.2 Investment costs 11.30 11.30 11.30
Irrigation system JD/ 11.30 1.00 11.30 1.00 11.30 1.00 11.30
and farm equipment dunum
(annual proportion)
Total costs: 549.58 549.78 656.78
table continues next page
The Cost of Irrigation Water in the Jordan Valley 89
C. RETURNS:
Net returns JD –549.58 –333.78 –116.78
Net returns % –100 –61 –18
Net returns at DOS JD –161
prices
Net returns at DOS % –24
prices
Net returns at FOB/ JD 506.08
best prices
Net returns at FOB/ % 77
best prices
Source: Fileccia and Punda 2012.
Note: — = not applicable.
90 The Cost of Irrigation Water in the Jordan Valley
Appendix D
Subsidy Principles
Principles for access to government subsidies need to be established, such as
the following.
•• Subsidies should be predictable.
It is important to ensure that water and wastewater systems are realisti-
cally financed, regardless of affordability and whether alternative sources
can be used. Fiscal transfers can be provided in the form of investment
subsidies,1 operation and maintenance subsidies, or both. These fiscal
transfers should be agreed in advance to ensure that the utility does not
end up in a vicious circle of inadequate maintenance, low service quality,
low willingness to pay, and insufficient revenues for basic maintenance.
To determine the amount of fiscal transfers needed, tariff levels need to be
predictable, and a clear process for tariff revisions needs to be in place.
The Bank can use tools like Water Public Expenditure Reviews to address
the question of the role of government subsidies in the sector and how
this will affect the development of the sector over time.
•• Subsidies should decline over time.
The path to full cost recovery should involve a phased approach, with
tariffs increasing in importance and in stages to cover (a) operation and
maintenance costs, which ensures that the utility is capable of serving the
current customer base in the short term; (b) depreciation of assets, so that
the utility will be able to replace worn-out assets and can serve the cur-
rent customer base in the medium term; (c) new investment to enable the
utility to expand its customer base; (d) and eventually, where needed, the
environmental and resource costs of water.
•• Subsidies should be transparent.
Subsidies should be reviewed continuously to ensure they provide suffi-
cient incentives to improve the performance of utilities with respect to
operational efficiency and investment costs.
•• Subsidies should take affordability concerns into consideration.
Subsidies should be reviewed continuously to ensure that they target the
intended beneficiaries. Government subsidies can be provided to fund
capital and operation and maintenance costs to utilities. Yet, how individ-
ual affordability can be ensured depends, to a large extent, on tariff levels
(affected by investment costs and operational efficiencies), their struc-
ture, and the process of tariff setting.
Note
1. When investment subsidies are provided, it is important that their operation and
maintenance implications are considered to avoid overdesign.
The Cost of Irrigation Water in the Jordan Valley 91
Appendix E
Irrigation Pricing Systems
Can assure Stability
Ease of
Impact on supply- and pre-
Type Detail Equitable administra-
demand* demand dictability
tion
balance? of revenue
Area-based A fixed rate per hectare of farm, No No Moderate Good Good
unrelated to the area irrigated,
type of crop, or volume of water
received. This type of charge
is commonly part of a “two-part”
tariff—with the area-based
charge designed to cover the
fixed costs of the service.
A fixed charge per hectare Small No Moderate Moderate Good
irrigated, unrelated to type
of crop or volume of water
received.
Crop- A variable rate per irrigated Small No Moderate Moderate Moderate
based hectare of crop, i.e., different
charges for different crops,
where the service charge is
not related to the actual volume
of water received, although
the type of crop and area
irrigated serve as proxies for
the volume of water received.
Time- A fixed charge based on the Positive Yes Good Good Moderate
based amount of time irrigation is
provided to each user. It is
often used in supply-based
irrigation where the flow of a
canal is rationed to users on
the basis of time.
Volumetric A fixed rate per unit of water Positive Very difficult Good Low Low
received, where the service
charge is directly related and
proportional to the volume of
water received.
A variable rate per unit of water Positive Difficult Good Low Low
received, where the service
charge is directly related to the
quantity of water received but
not proportionately (for example,
a certain amount of water per
hectare may be provided at
a low unit cost and additional
water at a higher unit cost). This
method is also referred to as a
rising block tariff.
Quota or Entitlement to water is defined Controlling Yes Good Not relevant Low
rationing (absolutely or qualified by
actual availability).
Tradable Entitlement to water is defined Controlling Yes Good Not relevant Low
water rights (absolutely or qualified by
actual availability) and may be
sold to other users seasonally
or in perpetuity.
Sources: Bowen and Young 1983; Cornish et al. 2004.
Note: *Small: essentially no impact, except at extreme (and unlikely) charging levels. Positive: impact will be in desired direction,
with magnitude dependent on level of charge. Controlling: specifies the maximum demand that will be available.
92 The Cost of Irrigation Water in the Jordan Valley
Appendix F
Jordan Valley Authority Staffing
Level 1 Level 2 Level 3 Total
Corporate
Office of the Secretary-General 3 0 1 4
Directorate of Human Resources 12 6 31 49
Directorate of Commercial 2 8 19 29
Directorate of Public Relations 4 1 5
Department of Transportation 1 1 27 29
Directorate of Finance 17 11 8 36
Tenders and Procurement Directorate 7 4 4 15
Total 46 30 91 167
Land
Directorate of Land 17 19 30 66
Directorate of organization 3 5 7 15
Unit 2 4 2 8
Total Land 22 28 39 89
Water
Directorate of Dams 47 17 178 242
Directorate of Water Harvesting 2 0 0 2
Directorate of Irrigation 7 3 4 14
Directorate of Water Resources 5 0 0 5
Directorate of Laboratories 5 7 12 24
Directorate of Attribution 4 2 59 65
Directorate of Underground Drainage 4 1 16 21
Directorate of the North Valley 11 19 194 224
Directorate of Central Valley 9 8 137 154
Directorate of Karamah 6 4 90 100
Directorate Water Management and Control 7 5 54 66
Unit Water Users Associations 2 1 1 4
Directorate of the South Valley 12 19 157 188
Total Water 121 86 902 1,109
Other Administration
Directorate of Workshops and Equipment 2 0 4 6
Unit of Internal Oversight 4 1 0 5
Unit development and institutional 3 — 1 4
performance
Business Planning Unit 6 3 1 10
Unit investment 4 — 1 5
Advisors 5 — — 5
Total other administration
TOTAL JORDAN VALLEY AUTHORITY 213 148 1,039 1,400
Note: — = not applicable.
The Cost of Irrigation Water in the Jordan Valley 93
Appendix G
Risk Analysis
Required irrigation tariff to cover Operation and maintenance cost with
2013 electricity prices and including cross-subsidies
Forecast:
Summary:
Entire range is from 0.012 to 0.208
Base case is 0.155
After 10,000 trials, the standard error of the mean is 0.000
360
330
0.03 300
270
240
Frequency
Probability
210
0.02
180
150
120
0.01
90
60
30
0 0
0.030 0.040 0.050 0.060 0.070 0.080 0.090 0.100 0.110
Statistics: Forecast values
Trials 10,000
Base case 0.155
Mean 0.070
Median 0.069
Mode —
Standard deviation 0.015
Variance 0.000
Skewness 0.6570
Kurtosis 5.71
Coeff. of variation 0.2151
Minimum 0.012
Maximum 0.208
Range width 0.196
Mean Standard error 0.000
94 The Cost of Irrigation Water in the Jordan Valley
Forecast: (cont’d)
Percentiles: Forecast values
0% 0.012
10% 0.052
20% 0.058
30% 0.062
40% 0.066
50% 0.069
60% 0.072
70% 0.076
80% 0.081
90% 0.089
100% 0.208
Forecast:
Required irrigation tariff to cover Operation and maintenance and depre-
ciation cost with 2017 electricity prices and including cross-subsidies
Entire range is from 0.090 to 0.363
Base case is 0.263
After 10,000 trials, the standard error of the mean is 0.000
(AO31)
360
330
0.03 300
270
240
Probability
Frequency
210
0.02
180
150
120
0.01
90
60
30
0 0
0.090 0.100 0.110 0.120 0.130 0.140 0.150 0.160 0.170 0.180 0.190 0.200 0.210
Statistics: Forecast values
Trials 10,000
Base case 0.263
Mean 0.153
Median 0.150
Mode —
Standard deviation 0.022
Variance 0.000
The Cost of Irrigation Water in the Jordan Valley 95
Skewness 1.45
Kurtosis 9.10
Coeff. of variation 0.1443
Minimum 0.090
Maximum 0.363
Range Width 0.273
Mean Std. Error 0.000
Forecast:
Percentiles: Forecast values
0% 0.090
10% 0.129
20% 0.136
30% 0.141
40% 0.146
50% 0.150
60% 0.155
70% 0.161
80% 0.168
90% 0.180
100% 0.363
End of Forecasts
Assumptions
Assumption: Billing Efficiency
Minimum extreme distribution with parameters: Billing efficiency
Likeliest 0.95
Scale 0.04
Probability
0.76 0.78 0.80 0.82 0.84 0.86 0.88 0.90 0.92 0.94 0.96 0.98 1.00 1.02
Assumption: Collection Efficiency
Minimum extreme distribution with parameters: Collection efficiency
Likeliest 0.90
Scale 0.06
Probability
0.60 0.63 0.66 0.69 0.72 0.75 0.78 0.81 0.84 0.87 0.90 0.93 0.96 0.99 1.02
96 The Cost of Irrigation Water in the Jordan Valley
Assumption: Energy Efficiency
Minimum extreme distribution with parameters: Energy efficiency
Likeliest 80%
Scale 10%
Probability
30% 40% 50% 60% 70% 80% 90% 100%
Assumption: Maintenance Improvements
Minimum extreme distribution with parameters: Maintenance improvements
Likeliest 100%
Scale 10%
Probability
50% 60% 70% 80% 90% 100% 110% 120%
Assumption: Staff Productivity
Minimum extreme distribution with parameters: Staff productivity
Likeliest 100%
Scale 10%
Probability
50% 60% 70% 80% 90% 100% 110% 120%
The Cost of Irrigation Water in the Jordan Valley 97
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SKU K8697