111 KB - Green Water Credits

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Green Water Credit: Cost Benefit

Analysis of Soil and Water

Conservation Practices in the Upper

Tana Catchment

Off Site

Cost Benefit Analysis

Esther Njuguna, Davies Onduru, Fred Muchena

Introduction

The small-scale land users in the Tana catchment’s basin are the potential suppliers of water.

There are big waters users down stream of the Tana basin who are potential private funders of green water credits conservation activities. They include:

Kenya Electricity Generating Company (KenGen)

Irrigators (Kakuzi, Delmonte and Yatta canal farmers)

Nairobi City Water and Sewerage Company

Objective

In consultation with the main water users, the objectives of the off site cost benefit study were to:

Conduct an off site economic evaluation of hydrological benefits of green water measures as identified in various

Green Water Credits reports

Estimate the avoidable costs that green water management could save the government of Kenya in disastrous dry and wet years (El Nino and El Nina effects) in terms of flooding reduction, reduction of productivity losses, enhancing food security, scope for carbon credits etc.

Methodology

Literature review and development of data collection tools

Discussions with large water users

Data collection

Data entry and analysis; and

Report preparation.

Data collection

Water user

Yatta (WACO and

Min of Water)

KenGen

Nairobi Water

Interviews with water user representative

Yes

Yes

Yes

Delmonte

Kakuzi

Yes

Yes

Data received by research team

Yes

Yes

Yes

No

No

Yatta case study

Yatta district is in the Eastern Province of Kenya

Irrigation potential in Yatta district is estimated at

4,450 hectares but only 1,000 hectares have been exploited (water shortage), supporting approximately 1000 households

The Yatta Water and Sewerage Company (Yatta-

WASCO) draws water from the Yatta furrow

Water flow in the Yatta canal

The Yatta furrow is 60km long

During a very wet rainy season, the Yatta furrow has water flowing through the 60 km of its length

During a dry year, only about 26-28km of the canal has water flowing

Potential impact of Green Water Credit on the Yatta canal

GWC 4 “Increase ground water recharge from cropland by 4-57% (16-160mm per year) a potential annual gain of accessible water of 160-

1600m3 per ha”

higher flows into the Yatta canal extending water availability to the 60km mark and for longer periods of the year; flow rate higher than 1.1m3 per sec

Assumptions for Cost Benefit Analysis

The total number of hectares under irrigation in the area

The number of domestic consumers (317 to 717) and irrigators (600 to 1000) that would be served by Yatta

WASCO

The savings Yatta WASCO would make from avoided

tankering costs for emergency water supply to institutions

(e.g. the hospital) and other consumers

The savings Yatta WASCO would make from de-silting activities of the Yatta canal.

Benefits of the Green Water Credit to the

Yatta community

-

A: Total revenue gains to Yatta community 37 Million Ksh

Reduction in costs by Yatta WASCO of emergency water supply to institutions during drought

-

Revenue to Yatta WASCO from higher numbers of irrigators

-

Revenue to Yatta WASCO from higher numbers of water users provided with piped water

-

Higher benefits to Yatta small scale irrigators from farms under irrigation (based on gross margins for sukuma wiki; could be higher if high value vegetables are irrigated and marketed)

Benefits of the Green Water Credit to the

Yatta community

B: Total costs increase for the Yatta community

12 million Ksh

Change in costs of water treatment (assumed to increase to level of flooding)

Change in costs of de-silting the canal

Costs Benefits Results for YATTA

Net benefits Ksh 25million

Benefit cost ratio 3.1

Net benefits discounted at

12%

Ksh 170 million

Nairobi City Water Sewerage Company

Figure 1: The population of Nairobi City from 1906 to 2009

Population In Nairobi Expon. (Population In Nairobi)

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0 y = 8.9208e

R

2

0.2841x

= 0.993

1906 1911 1921 1926 1929 1931 1939 1944 1948 1955 1957 1960 1962 1965 1969 1979 1989 1995 1999 2005 2009

Year

Ndakaini Dam reservior

80,000.00

70,000.00

60,000.00

50,000.00

40,000.00

30,000.00

20,000.00

10,000.00

-

Fig 2: Water level in Million Cubic Meters at Ndakaini Dam from 1997 to 2001

Year

Annual costs of providing water

Annual budget costs for NCWSC

(Ksh)

Costs of Water treatment chemicals

Costs of water and conservancy

Costs of licensing, lease and levy

Percentage of water treatment costs to total costs

Year 2009 Annual costs with GWC-1

Annual costs with GWC-2

1,428,535,299 1,291,905,174 1,360,220,236 1,315,254,026 1,288,049,621

158,196,028

5,658,450

520,571,124

Year 2010

203,780,440

266,333

526,227,562

Average annual budget

180,988,234

2,962,391

523,399,343

13.31

136,022,023

2,962,391

523,399,343

10.34

108,817,618

2,962,391

523,399,343

8.45

Potential of impacts of Green Water Credit on

Nairobi CWSC.

Cost of providing water for one resident in the city of Nairobi

Cost of treating water for one resident in Nairobi

Ksh. per resident without GWC

433

Ksh. Per resident with GWC - 1

419

Ksh. per resident with GWC – 2

410

58 43 35

Net benefits discounted at 12%

NPV in Ksh

398,903,604

NPV in USD (100 to

USD)

3,989,036.04

Soil and Water Management can benefit the off site users like Nairobi Water Company and the small scale irrigators

Proposed: Offsite beneficiaries to compensate the smallholders to conserve the catchments

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