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Economic Structure of Water Management and Water Loss-Leakage Control in Turkey Bahar SEL Section Manager 10.03.2015.

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Presentation on theme: "Economic Structure of Water Management and Water Loss-Leakage Control in Turkey Bahar SEL Section Manager 10.03.2015."— Presentation transcript:

1 Economic Structure of Water Management and Water Loss-Leakage Control in Turkey Bahar SEL Section Manager 10.03.2015

2 Outline 2/22 WFD and its Economic Approach Economic Approach in Turkey Water Tariffs in Turkey Related Projects Natural Resource Valuation Water Loss and Leakage Control in Turkey

3 Economic Approach within the context of WFD 3/22 The Water Framework Directive clearly integrates economics into water management and water policy making processes. Directive requires the following to achieve the environmental objectives (i.e. good water status for all waters) in the most efficient manner:  Implemetation of Economical principles (i.e. Polluter Pays Principle)  Utilization of Economical approaches and Tools (i.e. Cost-Efficiency Analysis)  Considering Economical Tools (i.e. Water Pricing)

4 A sound economic analysis can help: Understanding the economic issues and trade-offs at stake in a river basin Evaluating the least-costly way for the economy or for specific economic sectors achieving well-defined environmental objectives for water resources. Assessing the economic impact of proposed Programmes of Measures aimed at improving water status Evaluating regions or water bodies where environmental objectives need to be made less stringent to account for economic and social impacts in a search for overall sustainability Supporting the development of economic and financial instruments which may be effective in reaching environmental objectives. 4/22 Role of Economic Principles within the Implementation of WFD

5 5/22 River Basin Characterisation River Basin District Significant Water Management Issues Report Program of Measures River Basin Management Plan Environmental Objectives Monitoring WFD Economy Components in the stages of RBMP WFD Art. 5 and 9 WFD Art.11 WFD Art.13 Stages of RBMP Process According to WFD

6 6/22 Economic Analysis of Water Uses Cost Recovery of Water Services Article 5: Characteristics of the river basin district, review of the environmental impact of human activity and economic analysis of water use according to Annex III An economic analysis of water uses must be conducted according to specifications in Annex III as part of the analysis of the River Basin characteristics. The economic analysis shall contain enough information in sufficient detail: Relevant calculations should be made necessary for taking into account cost recovery of water services, taking account of long term forecasts of supply and demand for water in the RBD and, where necessary: a)Estimates of the volume, prices and costs associated with water services. b) Estimates of relevant investment including forecasts of such investments. Judgements should be made about the most cost effective combination of measures in respect of water uses to be included in the Programme of Measures under Art.11 based on estimates of the potential costs of such measures.

7 7/22 Cost Recovery of Water Services Water Pricing Policies Article 9: Recovery of costs for water services Account of the principle of recovery of the costs of water services should be taken, including environmental and resource costs, according to the polluter pays principle. It shall be ensured in stated time frame that: Water pricing policies provide adequate incentives for users to use water resource efficiently, and thereby contribute to the environmental objectives of WFD. An adequate contribution of the different water uses, disaggregated into at least industry, households and agriculture, to the adequate recovery of the costs of water services.

8 8/22 Program of Measures Economic Analysis of Water Uses Article 11: Programme of measures according to economic and fiscal instruments in Annex VI Preparation of Programme of Measures linked to the analysis performed based on Article 5 and including as basic measures respected as appropriate for the purposes of Article 9 (i.e. recovery of costs for water services) Article 13: River Basin Management Plans according to Annex VII The River Basin Management Plans have to cover: A summary of the economic analysis of water use as required by Article 5 and Annex III.

9 9/22 Economic Aspects of WFD An economic analysis of water use in the river basin along with the technical inventory (Article 5) The principle of cost-recovery of water services and the need “that water pricing policies provide adequate incentives for users to use water resources efficiently…” (Article 9) The most cost-effective combination of measures in respect of water uses to be included in the programme of measures based on estimates of the potential costs of such measures (Article 11, Annex III) A Baseline-Scenario which takes “account of long term forecasts of supply and demand for water in the river basin…” (Annex III) Exemptions from the objective to achieve the Good Water Status (on time) based – among other criteria – on “disproportionate costs” (Article 4)

10 10/22 Cost Recovery in WFD Water related Environmental costs Non-water related Environmental costs Environmental costs (External) Scarcity costs Resource costs (External) Administrative costs Capital and O&M costs Other direct costs Financial Costs (incl. internalized environmental and resource costs) Economic Costs

11 Water Services include all services (public/private) of abstraction, impoundment, storage, treatment and distribution of surface water or groundwater, along with wastewater collection and treatment facilities. Recovery of the costs of water services have to be accounted according to Art.9. Some activities with no significant impact on water status are neither water services nor water uses. 11/22 Water Uses and Water Services Water Uses are all activities that have a significant impact on water status, according to the analysis of pressures and impacts developed in accordance to Art.5 and Annex III. Economic analysis must be performed for all water uses. It should be ensured that an adequate contribution of the different water uses, grouped into at least industry, households and agriculture, to the recovery of the costs of water services (Art.9) ACTIVITIES WATER USES WATER SERVİCES

12 12/22 Analysing existing water uses, impacts and pressures Identifying potential measures Justifying potential derogations Identifying Programmes of Measures Implementing Programmes of Measures Evaluating the impacts of programmes Assessment of costs/ benefits of packages of measures Designation of HMWB Definition of less stringent objectives Justification of time derogation Justification of proposed cost recoverylevels Identification of a cost effective set of measures Assessing role of pricing as a measure Assessment of unitary costs of measures Assessment of effectiveness of measures Assessment of cost- effectiveness of measures Economic importance of water uses Trends in supply and demand Assessment of current levels of cost recovery for water services Defining Penalties Environmental Objectives WFD Policy Decision and Management Cycle Economic components should be linked and integrated.

13 13/20 Water Tariffs in Turkey Primary Legislations Environmental Law (service charges for the water, waste water and solid waste will be collected and this income will be re-used only for these services. Legislation on the Prosecures and Principles Regarding the Tariff Determination of Water Infrastructure and Domestic Solid Waste Disposal Plants Sub Legislations Tariff Legislations of the Water and Sewerage Administrations Irrigation Unions Law (General Directorate of State Hydraulic Works enforces this Law for the irrigation water and bases on the investment and operating costs)

14 14/20 Water Tariffs in Turkey Most of the water administrations within the municipalities do not have a special budget for water services. Generally operation and management, amortization, maintenance and repair, enlargement costs are taken in consideration to determine drinking water and waste water tariffs..  Negative Side: Environmental and resource costs are not taken account in real terms.  Bright Side: A lot of municipalities identify a cost for the wastewater to cover treatment expenses. This practice fits to the “polluter pays” principle. Pricing of wastewater also can be regarded as a approach that includes environmental costs.

15 In Turkey, water tariffs for the domestic, industrial and other type of usages are determined by each municipality at local level. Municipal Councils are administrative units to decide these water tariffs. Basic Rules: (1)Tariff calculation is made on the basis of real values. (2) Toplam sistem maliyetleri tarifelere yansıtılır. (3) Water and wastewater tariffs include management and opertaion costs, amortization costs and also minimum %10 profit. (4) Produced and measurable water sale quantity (after the water losses are deducted) is the main factor. 15/20 Tariff Determination

16 16/20 Tariff Components a)Management and Operation Costs; energy, equipment, staff, others (rent, communication, tax and fees, court costs, expropriated price, insurance, training, transportaion, security, service procurement), water supply and distribution b)Amortisations c)Renewal, rehabilitation and enlargement costs unelligable for capitalisation d) Profitability ratio

17 17/20 Re-used water tariff: for the customers using treated water Untreated water tariff: for the customers using unprocessed water and it is 50% of this customer’s own tariff. Other Tariff Types Removal of used water tariff: for the customers not using network and supply water from the well, catchment, pool etc. or transported water by tanker. These users are responsible paying for the usage of sewage system. It is 50% of this customer’s own tariff.

18 18/20 Water Unit Prices TL/ m 3 (VAT except)06.03.2013 Settlements /Domestic3,53 Business offices7,47 Public Institutions with general and annexed budgets5,41 Industry and Industrial Construction Sites7,77 House Construction Sites4,38 Re-used water0,61 Total water (to municipalities)3,48 Rural (houses)0,96 Rural (Offices)2,35 Water Prices According to the User Types İSKİ 2013 Data

19 19/20 Graduated Water Tariffs Objective: saving incentive to provide social welfare for the low-users Some Examples for Graduated Tariffs CityUser Type M³ / MonthTariff (TL) İZMİR House 0~203,43 ≥218,03 KOCAELİHouse 0-102,39 ≥10 4,33 GAZİANTEPHouse 0-123,54 13-2005,97 ≥20110,29

20 Municipality Council Water and Sewerage Administration Data, 2014 Water Prices - Examples Unit prices increase 90% after the 10 m 3 consumption in BUSKİ Unit prices increase 130% after the 20 m 3 consumption in İZSU

21 21/20 Sewage truck service price Canal cleaning service Heavy construction equipment rental Design review and comment fees Wastewater canal connection Rehabilitation projects design review and approval fees Maintenance costs of water and wastewater plants Licence fees Watermeter costs Subscription assurance etc. Extra Service and Assurance Price and Fees

22 22/20 Enforcement Prices Delay penalty Opening-closing cost İllegal usage Block of metering Breaking the seal of meter İllegal intervention Change of user type Unauthorized canal connection Damage the environment etc.

23 Example Bill Calculation for the 20 m 3 Consumption ASAT (ANTALYA) BİLL CALCULATION 23 Water Price TariffConsumptionPrice 2,15 TL 20 m 3 43 TL Atıksu Parası Hesabı Water QuantityCalculation PercentageWastewater Price 43 m 3 %3012,90 TL VAT Water + Wastewater PriceVAT %VAT Price 55,90 TL %84,47 TL Environmental Tax Consumption Environmental TaxPrice 20 m 3 23 (kr/ m 3 ) 4,60 TL Genel Toplam 64,97 TL

24 24/22 Projects Technical Assistance on Economic Analyses within River Basin Management Plans and Water Efficiency Aspects in 3 Pilot River Basins in Turkey Financing Contract with European Commission is signed under the IPA-1 components. Projects’ period is 3 years and 4.500.000 Euro of budget is reserved for this project. Yeşilırmak, Akarçay and Batı Akdeniz Basins will be the working basins. Additionally it is planned to make quick scanning for Meriç-Ergene, Konya, Büyük Menderes, Susurluk Basins. ToR of the Project is at the stage of preparation.

25 25/22 Projects With in the scope of the Project; Economical Analysis of RBMPs will be completed at EU standarts, Cost Recovery level covering the environmental costs and resource costs of water services at actual situation will be evaluated, Capacity regarding the economical principles and applications of economical tools for RBMPS will be improved, Program of Measures will be developed and capacity improvement actions on evaluation of costs and efficiencies will be operated, Technical studies on increasing the water efficiency will be done, Studies on reuse of wastewater in agricultural irrigation will be done, Studies on the management and removal of water loss and leakages in the drinking water supply systems will be done.

26 26/22 Natural Capital Accounting and WAVES Natural capital are the resources which are recognizable and measurable such as minerals and energy, forest timber and water. It also includes ecosystems producing services that are often invisible such as air and water filtration, flood protection, carbon storage, pollination for crops, and habitat for fisheries and wildlife. They are not internalized in markets, how much they contribute to the economy is not exactly known. The concept of natural capital accounting has been known for several decades but progress in has been little. A big development along this concept is made by UN Statistical Commission through System for Environmental Economic Accounts. SEEA gives a method accounting for material natural resources like minerals, timber, and water. Demonstration of this method to prove its benefits is essential. The Wealth Accounting and Valuation of Ecosystem Services (WAVES) is a global partnership, supporting a number of countries as they prepare to implement natural capital accounting based on the SEEA methodology. WAVES intends to promote sustainable development by integrating natural capital in development planning and national economic accounts. Natural Resource Valuation

27 27/22 Natural Resource Accounting Technical Assistance Program Turkey signed on to the Communique on Natural Capital Accounting as Supporter of NCA Initiative. Since the beginning of NCA component September 2014, it was observed that good progress was achieved. In addition, World Bank with the WAVES regional workshop held on 9-11 March 2015 in İstanbul is working to ensure international accounting expertise and valuation on water. Water sector for the first phase of the study will include analysis of the status of institutional arrangements and data availability in the water sector at the national and local levels. It is also aimed at the first phase to help World Bank and related institutions to understand the current situation for the better development of the domains and issues of institution and data in Turkey. A draft report will be prepared for opinion in April 2015 and it will be finalized in June 2015 Natural Resource Valuation

28 28/22 Natural Resource Accounting Technical Assistance Program With this works conducted in cooperation with General Directorate of Water Management, Ministry of Development, Turkey Statistical Institute and the World Bank, a natural resources valuation methodology will be developed within the context of Natural Resource Accounting. In addition, this methodology will make significant contributions to the process of internalizing the external environmental and resource costs which is an important step in Natural Resource Valuation. Natural Resource Valuation

29 29/20 Water Loss and Leakage Control in Turkey Supporting Instruments: Water Framework Directive Programme of Measures A Blueprint to Safeguard Europe’s Water Resources (2012) National Plan and Programmes 10. th Development Plan

30  Supplied drinking and usage water from the source = 4,9 billion m 3  Distributed (revenue) water by network = 2,8 billion m 3 ’ü  Non-revenue water :%43, (including losses and un-billed consumption as public spaces; park, garden, house of prayer etc.) Türkish Statistical Institude – 2012 data 30 Water Loss Levels in Turkey

31 Legislation on the Control of Water Loss and Leakage in the Drinking Water Supply Systems issued in 8 May 2014 Legislation Works

32 Legislation on the Control of Water Loss and Leakage in the Drinking Water Supply Systems Legislation Works Reducing of Water Losses ARTICLE 9 – (1) Water administrations have to decrease the water loss levels to max. 30% in 5 years and to max. 25% in following 4 years for metropolitan municipalities; max. 30% in 9 years and max. 25% in following 5 years for the other municipalities. Obligation to give information ARTICLE 10 – (1) Water administrations have to report their annual activities and improvements to the Ministry in every February of each year.

33  Continuous monitoring of network and supply system – SCADA system  Traininig of the technical staff  To prevent the illegal uses  Rehabilitation and renewal of network  Renewal of old and non-sensitive meters  Standardization of the related equipment 33 Main Measures to Reduce Water Losses

34  The Technical Procedure Communication to detail the methods required in the Legislation to guide the administrations İs prepared and will be send to the approval  The Draft Legislation on the Water Loss Control in the Irrigation Systems to save irrigation water in the pipeline 34 Other Legislation Works

35 46/46 35/22 THANKS…

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