May
UNEP AdaptCost: Economics of climate
change adaptation in Africa’s water
sector
Jillian Dyszynski
The Stockholm Environment Institute (SEI) – Oxford Office
10
Table of Contents
AdaptCost: Water sector review ........................................................................... 4
Executive summary ............................................................................................... 4
Introduction and background: Water sector adaptation economics in Africa ......... 6
Biophysical impacts of climate change on water resources .................................... 6
Dinar et al., 2009, Strzepek and McCluskey, 2006 .............................................................................. 6
Implications for traditional water management ................................................................................. 7
Regional economic Impacts of climate change: ...................................................... 8
Kirshen et al.,/UNFCCC 2007:................................................................................................................... 11
World Bank, 2010 - EACC ........................................................................................................................... 13
Regional-level adaptation costs synthesis:........................................................... 14
Costing adaptation in Africa’s water sector: Berg River Basin case study............................ 16
Case 1  Costs and benefits of adaptation in the Berg River Basin, South Africa.............. 17
Development insights for adaptation entry points: adaptation economics in
context ............................................................................................................... 18
Water supply and sanitation: MDG investment needs for Sub-Saharan Africa .................. 18
Distributional, governance and investment issues: managing an urbanizing Africa
........................................................................................................................... 19
Banerjee et al., 2008 and Keener et al., 2009: .................................................................................... 19
Urban and rural water provision: Insights from rainwater harvesting.................. 22
Garrity et al., 2005 ......................................................................................................................................... 22
Links to agriculture: Senkondo et al., 2004 ....................................................................................... 23
Case 2  Investment costs for developing rainwater harvesting potential of Zanzibar,
Tanzania ............................................................................................................................................................ 25
Informed adaptation investments: investments in meteorological and hydrological
infrastructure and services, and linking to indigenous knowledge........................ 26
Case 3  Integrated water management at a glance: insights from Tunisia’s water
sector .................................................................................................................................................................. 27
Adaptive management: ways forward for economics ......................................... 28
AdaptCost recommendations: ............................................................................. 30
2
3
AdaptCost: Water sector review
The purpose of this AdaptCost study is to review assessments to date that
have attempted to cost adaptation to climate change in Africa’s water resources
sector, as well as development research relevant to adaptation. The study does
not aim to provide exhaustive inventories of all available impacts and adaptation
information. For further information on these subjects, see IPCC Fourth
Assessment Report, 2007 and Climate Change Adaptation in the Water Sector,
edited by Ludwig et al., 2009, among others. Note that water-energy and waterhealth impacts and adaptation issues are not covered in this analysis, and wateragriculture issues are largely addressed in the AdaptCost agricultural sector
analysis, although overlaps occur in relation to in-situ rainwater harvesting.
Executive summary
Climate change impacts in the form changing rainfall regimes and
increased evaporation under higher temperatures have far reaching implications
for traditional water managers. Increased demand from municipal, agricultural
and industrial consumers, and ecosystems, compounds these challenges. As a
result, basing future water management on past hydrological trends does not
protect against a range of uncertain and non-stationary future climates.
Hydrological modelling suggest that both low and high ranges of inter-temporal
stream flow will widen under climate change, increasing risks of more frequent
droughts and floods in many African countries.
Economics work investigating the costs of climate impacts and adaptation
options in Africa’s water sector is extremely limited. Initial global level studies
employ top down approaches and simplified economic methods using limited
information for Africa. Inevitable trade offs result, including significant
overgeneralizations and masking of important sub-regional characteristics in
Africa’s diverse biophysical and socioeconomic landscapes.
One key message from regional adaptation economics studies is that overall
adaptation investment needs are especially dependent on which cost categories
are included in the analysis. For example, comparison of two studies’ results
indicates that inclusion of flood protection increases adaptation costs
significantly. World Bank, 2010 estimates with flood protection and water
supply considerations reach between $6.2 and $7.1 billion annually by 2050
versus Kirshen/UNFCCC, 2007 estimating between $4.5 and $4.7 billion
annually, which does not include flood protection.
Case study work involving climate impacts and cost benefit analyses for
adaptation options has helped inform such top down studies to some extent. Cost
benefit analysis for South Africa’s Berg River Basin indicates that increased
storage capacity appears to meet future urban water demand more cost
effectively than using water markets and marginal cost pricing to allocate water
under climate change scenarios.
4
The AdaptCost study suggests that adaptation economics can be useful to
decision makers and water resource planners by taking into consideration
current development contexts. Achievement of Millennium Development Goals
(MDGs) for improved water closely align with adaptation options classified as
accelerated development to reduce present and future vulnerability to climate
change.
Recent African infrastructure assessments of the water sector carried out by the
World Bank provide a useful baseline inventory against which ‘hard’ or supplyoriented adaptation investments can be assessed. Current financing needs to
address the growing deficit in safe water provision are estimated between 0.7
and 1.3 percent of Africa’s GDP. An upper bound estimate to meet water MDGs
by 2015 is $3.3 billion annually, with 55 percent in O&M expenditures and the
rest in capital investment and sector management. A financing challenge,
particularly for O&M, was identified. A gap between investment needs and
available resources stands at about 0.3 percent of GDP, or about $1.6 billion in
2005 for O&M investments towards improved water. The financing problem can
help guide interventions that accelerate provision of safe water supplies and
adaptation. These estimates are less than half of estimated adaptation finance
needs for 2030 estimated by top down regional studies.
Adaptation economics assessments to date for Africa’s water sector are
important first steps towards managing effects of climate change on water
supplies. However, there is need for economic analysis involving comprehensive
methods capturing more holistic, adaptive management approaches. Particular
attention should be given to both soft and hard investment options. A range of
options are needed to address basin and floodplain-level planning, ecosystem
resilience, distributional and cross-sectoral issues at the heart of development
progress and climate adaptation.
Differentiating between different socioeconomic groups, the structure of formal
and informal water markets, and technological investments within urban and
rural contexts is also necessary for mapping vulnerability and prioritizing areas
for public and private intervention. Significant gaps in data, modelling and
overall understanding of potential climate impacts on Africa’s hydrologic
systems and future water resource supply and demand dynamics warrant more
investment in monitoring and basic research.
Tunisia’s approach to water management (Case Study 3) illustrates how adaptive
management imbeds responsiveness and flexibility into dynamic systems, based
on a combination of data collection, scenario modelling and close stakeholder
engagement to promote robust, process-based management. Given costing such
institutional arrangements and management approaches is difficult in most
African contexts, illustrative analyses would be of value to guide management
strategies.
Overall, a framework of adaptive management, supported by more local-scale
economics analysis and stronger development orientations, is suggested as a
way forward for adapting Africa’s water sector to climate change.
5
Introduction and background: Water sector adaptation
economics in Africa
Water scarcity and quality issues pose significant burdens to sustainable
development in Africa. Although the continent receives 3991 km3 of renewable
freshwater resources per year, 300 million people (a third of Africa’s population)
are living under conditions of water scarcity. By 2025, 12 more African nations
will be classified as water scarce, and the number of estimated people without
access to clean water on the continent will increase from 100 million to 400 million
(Garrity et al., 2005). A rapidly growing urban population fuels this increased
vulnerability. With average growth rates of 5 percent per year, the urban
population is set to double before 2030 (Kissedes, 2006). Where an estimated
56% of rural and urban populations in Sub-Saharan Africa have access to safe
drinking, this poses a large and growing challenge to sustainable development
(Banergee et al., 2008). In rural areas, inefficiencies of current practices are
illustrated by the fact that and estimated 40 billion working hours are lost each
year in Africa carrying water (Garrity et al., 2005).
Climate change impacts on hydrological systems and water resources compound
these challenges to human settlements in Africa. Increasing temperatures and
perturbed rainfall regimes coupled with growing and increasingly urbanized
populations, changing domestic, industrial and agricultural water consumption
make supply and demand interactions increasingly complex and deeply
uncertain. Probabilistic cost implications of these dynamics are further
complicated as the regulatory functions of ecological systems, societal policies
and preferences change, and new technologies are introduced.
Exploratory economics work investigating the costs of climate impacts and
adaptation options in Africa’s water sector is extremely limited. Initial global
level studies employ top down approaches and simple economic methods using
limited information for Africa. Inevitable trade offs result, including significant
overgeneralizations and masking of important sub-regional characteristics in
Africa’s diverse biophysical and socioeconomic landscapes. Few local-level
studies are available.
Biophysical impacts of climate change on water resources
Dinar et al., 2009, Strzepek and McCluskey, 2006
As part of the CEEPA-World Bank study work using Ricardian economic
analyses (also assessed in the AdaptCost agricultural sector report), Africa-wide
and some district-level hydrological modelling was carried out. However,
costing work related to demand or supply related adaptation options in response
to these changes was not undertaken. Climate impacts on the hydrological
system including stream flows, evaporation and regional water resources were
assessed using the Water Balance (WATBAL) model, based on climate and
biophysical parameters for the African continent. Results are a useful
6
background to changes in water availability at the regional level under climate
change.
Climate impacts from hydrology analyses across the African region are especially
pronounced. Visualizations of low and high flow changes as a percentage of the
1961-1990 base are presented in Figure 1.
Figure 1. Projected low and high stream flow by 2050 and 2100.
Source: Strzepek and McCluskey, 2006.
Although spatial variability in stream flow is already large, it will increase with
climate change in 2050 and become even larger in 2100. By 2050, impacts range
between a decrease of 15% to an increase of 5% above the 1961-1990 base, for a
range of 20%. By 2100, stream flow impacts range between a decrease of 19%
to an increase of 14%, for a range of 33%. Moreover, both low and high ranges
of inter-temporal stream flow will widen, increasing risks of more frequent
droughts and floods in many African countries.
Implications for traditional water management
Beek, 2009 in Ludwig eds., 2009 and Gleick et al., 2000:
7
The implications of wide-ranging climate change impacts in the form of
potentially high and low stream flow (above) and increased evaporation under
higher temperatures are far reaching for traditional water managers. Beek, 2009
illustrates this by giving an example from the Nile River Basin. Under an
estimated 10 percent increase in rainfall in the equatorial lake area and Ethiopia,
there will be an estimated 40 percent increase in annual flow in the Nile. In
contrast, a 10 percent decrease in rainfall will result in a 40 percent reduction in
Nile flows, which would be disastrous for Egypt and become unsustainable even
if water demand does not increase. As a result, simply basing future water
management on past hydrological trends does not protect against a range of
uncertain and non-stationary future climates.
Gleick et al., 2000 gives further arguments against reliance on traditional
management, calling for new, more flexible, approaches to risk management in
the sector:




Climate changes are likely to produce – at some places and some times –
hydrologic conditions and extremes of a different nature than current
systems were designed to manage;
Climate changes may produce similar kinds of variability, but outside of
the range for which current infrastructure was designed and built;
Relying solely on traditional methods assumes that sufficient time and
information will be available before the onset of large or irreversible
climate impacts to permit managers to respond appropriately;
Traditional approaches assume that no special efforts or plans are
required to protect against surprises or uncertainties.
Under unpredictable future climates, water managers “will have to look for
other options that are most likely more complicated and expensive to develop.”
Regional economic Impacts of climate change:
Across the diverse methodological disciplines for climate impact modelling and
research, some distinguishing features relating to the water sector can involve
different:





Temporal, geographic and sectoral scopes
AOGCM model projections of temperature and precipitation influencing
evaporation and rainfall dynamics
Emissions scenarios
Water supply and demand data
Key modelling assumptions including increases in future resource
use efficiency, linearity of system dynamics, etc.
8

Adaptation considerations (e.g. irrigation, improved management)
These parameters, among others, determine the magnitude and direction
(negative or positive) of climate change impacts, resulting in costs and benefits,
and associated adaptation responses for water resources explored in below
sections. Table 1 details some of these parameters for impact studies capturing
different approaches at the continental level for Africa, with Strzepek and
McCluskey, 2006 presented above.
9
Table 1. Comparison of different economic methods: Continental impact studies
Study
Geographic
distributio
n across
Africa
Time period
covered &
baseline year
Consumer
groups and
sectoral
scope (water
supply and
demand)
Climate
models,
emission
scenario
Economic method/s (mention of constant prices,
discounting, socio-economic change, etc)
Indicators
Strzepek
and
McCluske
y, 2006
Africa
regional
2050, 2100
Water runoff
and actual
evaporation
Biophysical (not economics) study. FAO’s
WATBAL model for hydrological analyses
NA. High and low
streamflow
Kirshen et
al., 2007
Global
(Africa
country
and
regional)
2030
analysis
period, with
2050
planning
period
Domestic,
industrial
and
agricultural
water supply
and demand
Uniform
scenarios
and CCC,
CCSR,
ECHAM,
PCM; A2 and
B2
SRES BI
(mitigation)
and A1b;
average of
AR4 models
Costs of changes in
reservoir storage,
wells, reclaimed
wastewater and
desalinization
25%
World
Bank,
2010
Global
(SubSaharan
Africa
regional)
SubSaharan
Africa
2050
Municipal
and
industrial
water supply
NCAR and
CSIRO; A2
Changes in Mean Annual Flow (MAF) at the
country level using 2000 baseline data for water
supplies and demand, projected to 2050 and
adjusted for climate change using generalized
cost functions from other world regions.
Adaptation costs for water quality and flood
control were not included. Changes ignore
within year variations and influences in changes
in snow melt upon water storage requirements.
O&M costs are not included.
Effects of climate change on the water cycle
assessed coupling the Climate and Runoff model
(CLIRUN-II) on a monthly time step with IFPRI’s
IMPACT model.
25%
Unclear.
Reference
paper
unavailable.
Urban water
storage,
wastewater
treatment
and
electricity
generation
Unclear.
Reference
paper
unavailable.
Net annual
adaptation costs for
water supply and
flood protection
($2005 prices)
% production losses
(global, regional)
Muller et
al., 2007
Unit cost assumptions applied to estimated
supply and demand changes under climate
change
% total
investment
needs
directly
attributable
to climate
change
NA
20%
10
Kirshen et al.,/UNFCCC 2007:
To estimate the potential cost of climate change in the water sector,
Kirshen et al., 2007 conducted a global analysis of changes in water supply and
demand that was updated for the UNFCCC 2007 report. Consumers included
domestic, industrial and agricultural groups. Methods involved investment and
financial flow analysis to calculate increased reservoir storage and ground water
use, water reclamation, desalination, and virtual water. Uniform average
temperature and precipitation changes were used based on scenario averages
from AOGCMs in the UNFCCC Fourth Assessment Report, while no detailed
hydrologic modelling was carried out.
A 20 year planning period was assumed for 2030, based on 2050 SRES B1
(mitigation scenario) and SRES A1b (significant economic growth) emissions
scenarios. Results report changes in internal water availability and variances in
mean annual flow (MAF), as a function of changes in supply and demand under
climate and socioeconomic change.
Africa regional results show generally increasing runoff in inland West Africa
and decreasing in coastal regions under A1B. However, decreases are indicated
in Southern regions, and increases in the Horn of Africa. Analogous changes
were found for in Northern and Central Africa, respectively. Water supply and
financing needs in terms of capital costs were calculated based on proxy costing
information collected from examples in the US and China (Table 2).
Table 2. Demand (2000, 2050) and total capital costs from incremental supply
sources (e.g. additional reservoir storage, additional wells, reclaimed
wastewater, desalinization, improved irrigation, unmet irrigation)
Region
West Africa
Estimated West
Africa
North, East,
Central, South
Africa
Estimated North,
East, Central,
South Africa
Total
2000
B1
MAF
MAF
Km3
Km3
1053.84 1106.43
2864.73 2936.81
A1B
MAF
Km3
1210.45
2912.30
A1B/
B1
Variance
>1
>1
2000
B1
Demand Demand
Km3
Km3
25.84
97.29
186.42
523.169
A1B/
Demand
B1 Cost
($)
A1B Cost
($)
105.711
5.24E+09
6.75E+09
2.39E+06
4.59E+06
1.26E+11
1.31E+11
7.78E+06
1.69E+07
587.58
1.31E+11
1.38E+11
Note: Costs were scaled using cost indices reported in Fischer et al., 2006 for regional irrigation
costs. Capital costs for groundwater and desalinization were taken from US references, and
surface water storage were based on Chinese and US references. Also note, the only improved or
unmet irrigation (km3/year) included in the capital costs is for Somalia, Zimbabwe, Swaziland,
and South Africa. Source: Adapted from Kirshen, 2007.
In terms of reservoir storage (10^6 m3), additional needs for 2050 under the
A1B scenario are dominated by Mauritania (3889), Mali (1163), Niger (958) and
Senegal (583). Additional reservoir storage needs in North, East, Central and
South Africa are dominated by Morocco (9032), Sudan (3311), Zimbabwe (690),
Egypt (565), Ethiopia (644), and Somalia (417). In the case of West Africa, 60%,
11
or 7.21 km3/yr, of additional wells required under the A1B scenario by 2050 are
needed by Nigeria, with the Democratic Republic of Congo requiring 24% (2.34
km3/yr), the majority of other regional needs.
Reclaimed wastewater, as well as desalinization (1 km3/yr), needs are entirely
accounted for by Mauritania (1.7 km3/yr) in West Africa. Egypt overwhelmingly
accounts for reclaimed wastewater needs (73% or 65 km3/yr) in other regions.
Egypt (30 km3/yr), Tunisia (27 km3/yr), Algeria (15 km3/yr) and Morocco
(10.5 km3/yr) account for the largest desalinization needs in North, East,
Central, and South Africa by 2050 under A1B.
Overall, Egypt’s future demand needs stand out due to acute shortages in the
present allocation scheme, for which it desalinates for 50% of industrial,
commercial, urban water, uses its surface and ground waters to meet the rest for
irrigation. West Africa typifies climate influences with anticipated increases in
flows, flow variances and demands in A1B conditions. However, sensitivity to
costs of climate change vary on a nation by nation basis, requiring more detailed
spatial and temporal analysis for planning purposes.
The difference between the A1B and B1 total capital costs is approximately $6.52
billion ($2000), with the majority of financing coming from public sources and
increased ODA. For developing countries globally, Kirshen, 2007 assumes 50%
of ODA investments are for water supply. Moreover, current annual investments
of $3 billion will need to be doubled to meet the extra water production costs
due to climate change.
Under the UNFCCC, 2007 study, adjustments were made to the original Kirshen,
2007 estimates to account for more expensive sites and unmet irrigation
demands. For global results, the UNFCCC estimated Africa would need $233
billion ($4.7 billion/yr) under A1b and $223 billion ($4.5 billion/yr) under B1 to
2030, or 20% and 30% of the estimated global needs, respectively.
A quarter of global, and African regional, investment and financial
flows are assumed to be attributable to climate change alone by
2030.
A review by Parry et al., 2009 summarizes reasons why estimates based on the
top-down, IFF approach by Kirshen/UNFCCC, 2007 are likely to be considerable
underestimates of actual adaptation costs. Some of these reasons, many
mentioned by Kirshen, 2007, include:



Assumption of perfect adaptation
Bias introduced by use of averaged AOGCM scenario results, unrealistic
assumptions regarding water transfers within large countries
Use of empirical relationships between annual runoff and its variability,
and reservoir capacity that cannot incorporate runoff changes through
the year due to climate change
12

Lack of consideration of residual damages, or operation and maintenance
costs.
Other issues include the use of generalized functional relationships to estimate
the costs of adaptation responses, adjusted from data derived in US or China and
applied to Africa.
World Bank, 2010 - EACC
A recent study by the World Bank on the Economics of Adaptation to
Climate Change (EACC) assessed the costs of adaptation management options for
water supply for industrial and municipal consumers. In contrast to
Kirshen/UNFCCC, 2007, flood protection measures were included while
agriculture sector demands excluded over a 2050 time horizon for two AOGCM
models. Ecosystem services were also not considered. Methods involved
running the Climate and Runoff model (CLIRUN-II) on a monthly time-step,
including the 10-year and 50-year maximum monthly runoff. Results were
aggregated to the food production units of the IMPACT model developed by
IFPRI.
• Adaptation cost definition:
Cost of providing enough raw
water to restore future
industrial and municipal water
demand to levels that would
have existed without climate
change.
• How is supply increased?
By increasing the capacity of
surface reservoir storage.
Withdrawals exceeding 80% of
river runoff are met by water
recycling, harvesting and
desalinzation.
Flood protection
Water Supply
Some key definitions and assumptions regarding water supply and:
• Adaptation cost definition:
Cost of providing flood
protection against the 50-year
monthly flood in urban areas
and 10-year monthly flood in
agricultural areas. Costs
increase by the same
percentage in magnitutde of
the monthly flood event.
• What protection is provided?
A system of dykes and polders
in both urban and agricultural
areas.
Comparisons of water supply and flood protection adaptation investment needs
show the drier (CSIRO) climate scenario to be greater than the wetter (NCAR)
scenario, given higher reservoir storage capacity needs under CSIRO to meet
equivalent yield demands among industrial and municipal consumers. Despite
drier mean conditions, higher magnitude monthly flood events also result in
greater relative costs for riverine flood protection under the CSIRO scenario.
Total net annual costs of water supply and flood protection needs under NCAR
and CSIRO are $6.2 billion and $7.1 billion, respectively (See Table 3).
Table 3. Net annual adaptation costs for water supply and riverine flood
protection, 2010-2050 ($ billions at 2005 prices, no discounting).
Global climate model
Water supply
Flood protection
Total
13
NCAR (wettest scenario)
CSIRO (driest scenario)
5.9
7.3
0.3
-0.2
6.2
7.1
Source: World Bank, 2010.
Note: Net costs are the pooled costs without restrictions on pooling across
country borders (positive and negative values are treated symmetrically).
Regional-level adaptation costs synthesis:
Although different top down approaches were employed in investment
and financial flows work by Kirshen/UNFCCC, 2007, and hydrological modelling
from the World Bank, 2010, both are biased towards ‘hard’ or infrastructurebased adaptation options. While efficiency increases are incorporated to some
extent, ‘soft’, adaptation policy options (e.g. floodplain management) and
investments in ecosystem resilience are not factored into costing analyses. Study
results may therefore be considered underestimates (or overestimates) of actual
demand and supply-side, and ecosystem related, investments needed to adapt to
climate change.
Economic results of the two reviewed studies are compared in Table 4 below.
Estimates from Muller, 2007 study work for urban water infrastructure
adaptation costs are also included. However, methods of the latter study could
not be analyzed or compared as the original work derived from Muller, 2006 was
not accessible through the information provided in Muller, 2007.
Table 4. AdaptCost synthesis of adaptation costs in the water sector
Economic method
Scope
Time horizon
Investment and
financial flows
(Kirshen/UNFCCC,
2007)
Hydrologic modelling
(World Bank, 2007)
Water supply
(domestic, municipal,
and agricultural
consumers)
Water supply and flood
protection (municipal
and industrial
consumers)
Urban infrastructure
for water storage,
wastewater treatment,
electricity generation
2030 with 20 year
planning period,
2050 time horizon
Unclear (Muller,
2006 citation link
unavailable)
Estimated annual
investment needs
($ billion)
$4.7 (AR4, A1b)
$4.5 (AR, B1)
2050
$6.2 (NCAR, A2)
$7.1 (CSIRO, A2)
Cost of adapting
present
infrastructure
$1.05 to $2.65
Cost of adapting
future infrastructure
$0.990 to $2.55
Source: Compiled by author.
14
Key messages from the AdaptCost analysis are detailed in Table 5 below.
Table 5. Some key issues, messages, and challenges relating for regional level
adaptation economics studies of Africa.
Key issue
Overall message
Critiques and challenges
Scope of analysis
Adaptation investment needs are
especially dependent on what cost
categories included in the analysis.

‘Hard’ versus ‘Soft’
adaptation investments, and
focus on supply-side
interventions
Adaptation costing studies show a
dominant bias towards ‘hard’, capitaloriented, versus ‘soft’, socioinstitutionally-oriented adaptation
investments. ‘Soft’ investments may
be both more affordable and effective
than ‘hard’, capital oriented
adaptation strategies.

In the African context, adaptation and
development baselines are difficult if
not impossible to distinguish between
with analytical rigor. Some studies
count adaptation and development
financing needs together, while others
do not.

Significant synergies exist between
both ‘hard’ and ‘soft’ adaptation and
development investments. Effective
adaptation may arguably be to
accelerate and augment some current
development strategies.

Although many synergies exist between
adaptation and development, important
exceptions exists, particularly in the use of
water for hydroelectric production and
irrigation (not assessed in this work).
River basins as units of
analysis
The hydrological delineation of river
basins is not reflected in regional
adaptation economics studies to date.

Uncertainty in impacts on the
hydrological cycle under
climate change
High levels of uncertainty
surrounding future climate makes
economic estimates of impact and
adaptation costs only indicative, and
should be used with caution.

Water resource issues are fundamentally based
on river basins as a unit of analysis. Holistic
adaptation management and economics
analyses must take this into consideration for
more comprehensive analyses.
Scenario averaging techniques can mask trends
and extremes in projections.
High and low climate scenario techniques
capturing extremely wet or dry futures are
potentially more robust (e.g. World Bank,
2010).
Baselines for adaptation
costing
Adaptation and development
synergies




For example, exclusion of flood protection in
Kirshen/UNFCCC, 2007 result in possible
underestimates of impacts and adaptation
costs.
This bias is illustrated by emphasis on supplyside infrastructure investments, often
excluding operations and maintenance costs
Ecosystem resilience investments, awareness
raising and training investments warrant more
quantitative focus.
Moreover, overall adaptation costs depend on
the comprehensiveness of categories covered.
Study comparability is hindered by use of
different baseline approaches and adaptationdevelopment costing considerations.
Practically, distinguishing between adaptation
and development is useful for national and
international planning and budgeting purposes.
Source: Author.
The first key message is that overall adaptation investment needs are especially
dependent on what cost categories included in the analysis. Comparison of study
results indicates that inclusion of flood protection costs increases adaptation costs
significantly. World Bank, 2010 estimates with flood protection and water
supply considerations reach between $6.2 and $7.1 billion annually versus
Kirshen/UNFCCC, 2007 estimating between $4.5 and $4.7 billion annually, not
including flood protection. Also notable are assumptions regarding operations
and maintenance costs which were only included in World Bank analysis, albeit
modestly, and not Africa-specific. The latter concern is partially addressed by
more bottom-up approaches, such as case study examples from South Africa
below.
Overall, the high levels of uncertainty surrounding climate change impacts on the
hydrological cycle, namely precipitation and evaporation, underscore the only
15
indicative nature of adaptation economics estimates and should be used with
caution.
Costing adaptation in Africa’s water sector: Berg River Basin case study
In contrast to climate change mitigation, adaptation considerations are
largely local in scale. Local-level information is therefore necessary for accurate
assessments of the costs of climate change adaptation options. In the case of the
water sector, basin-level analyses are particularly important as basins make up
the fundamental hydrological unit. Such local, basin-focused adaptation
economics is demonstrated by cost benefit analysis for the Berg River Basin in
South Africa carried out by Callaway et al., 2009.
16
Case 1  Costs and benefits of adaptation in the Berg River Basin, South
Africa
In order to assess the costs and benefits of different climate change adaptation options for South Africa’s
recently completed Berg River Basin dam, Callaway et al., 2009 developed a policy-planning tool based on
welfare impacts. Options involved either increasing maximum storage capacity of the dam and/or policy
interventions introducing a system of efficient water markets. Four policy scenarios and management
options were tested across three time horizons including a reference (1961-1990, applied to 2010-2039),
near future (2010-2039) and distant future (2070-2099, applied to 2010-2039) scenarios. The WatBal
model was used to create these climate-hydrology scenarios using CSIRO SRES B2 emissions projections.
Policy scenarios and options explored:
Policy scenarios and options
Description
A. Fixed farm allocations and free
water policy to households
No Berg Dam
Lower bounds are placed on summer and winter diversions by the seven regional farms as
in Louw (2000 and 2001) and on household urban water consumption, consistent with the
government’s current “free water” policy. The capacity of the Berg River Dam storage
reservoir was set at zero.
B. Efficient water markets, no free
water policy
No Berg Dam
Allocation and free water constraints in Option A are removed, but not the zero capacity
constraint on the Berg River Dam, to simulate the economically efficient allocation of water
to both urban and agricultural users, without the Berg River Dam.
C. Fixed farm allocations and free
water policy to households
Optimal storage for Berg Dam (103 m3)
D. Efficient water markets, no free
water policy
Optimal storage for Berg Dam (103 m3)
Using the same allocation and free water constraints as in Option A, we allowed BRDSEM to
find the economically efficient storage capacity of the Berg River Dam.
Allocation and free water constraints were removed to estimate the partial welfare
contributions of water markets, with no Berg Dam, and optimal storage capacity to the Berg
River storage reservoir in addition to water markets.
Benefits
• Willingness-to-pay by the six urban consuming sectors in Cape Town and
basin municipalities.
• Long-term farm income for the seven regional farms
Costs
• The costs of operating the reservoirs and delivering water to both
municipal consumers and the seven regional farms and pumping and
transactions costs.
• Long-term (investment) and short-run (variable) costs for the seven
regional farms, including water delivery and on-farm pumping costs.
• The capital cost of the Berg River Dam and Berg Supplemental Site (when
the capacities are determined endogenously by the model).
Results of welfare cost comparisons indicate that climate change:

Will reduce total water availability by 8058 m3 (or 11%) in the near future (NF) case and 16,609
m3 (or 17%) in the distant future (DF) case.

Reduces basin-wide welfare for all four of the policy scenarios, between 6.3% and 8.4% for the NF
climate scenario and between 11.5% and 15.6% for the DF climate scenario.
Contrary to initial research expectations, increased storage capacity in the basin produces larger welfare
benefits than varying allocation and pricing policies across each of the three climate scenarios.
Results of the cost benefit analysis for the Berg River Basin indicate that
“adding storage capacity is a better strategy for coping with climate
change (at this level of urban water demand) than using water markets
and marginal cost pricing to allocate water.”
Source: Callaway et al., 2009.
17
Development insights for adaptation entry points: adaptation
economics in context
Adaptation economics can be useful to decision makers and water
resource planners by taking into consideration current development contexts.
Issues of adequate, affordable, and reliable water resource provision to both
urban and rural consumers are especially relevant for locally appropriate
adaptation planning. Differentiating between different socioeconomic groups,
the structure of formal and informal water markets, and technological
investments within these contexts is also necessary for mapping vulnerability
and prioritizing areas for public and private intervention.
Cross-sectoral linkages between water resources and agriculture, energy, health,
ecosystem services and other key development areas are also necessary for
effective and efficient investment in adaptation investments. Efforts to create
integrated strategies to climate, environment and socioeconomic changes that
drive water system dynamics should be research and planning priorities.
Towards this end, the AdaptCost study highlights key issues related to costs of
achieving the MDGs, urban water supply and sanitation, the high potential of
rainwater harvesting development, information investments and integration
with disaster risk reduction for urgent adaptation efforts.
Overall, a framework of adaptive management, supported by more local-scale
economics analysis and stronger development orientations, is suggested as a
way forward for adapting Africa’s water sector to climate change.
Water supply and sanitation: MDG investment needs for Sub-Saharan Africa
Currently, an estimated 56% of the population of Sub-Saharan Africa has
access to safe drinking water. As part of Africa’s Millennium Development Goals
(MDGs), Africa committed to reducing the number of people without sustainable
access to safe drinking water by half (MDG 7). High rates of urbanization,
estimated at 3.6 percent per year, and population growth of 2.15 percent per
year have caused Sub-Saharan Africa to lag behind other regions in progress
towards achieving the MDGs (Banergee et al., 2008). Changing precipitation and
increased temperatures under climate change pose additional challenges to
progress.
As part of the World Bank’s Africa Infrastructure Country Diagnostic (AICD),
current financing needs to address this growing deficit in safe water provision
were estimated between 0.7 and 1.3 percent of Africa’s GDP. An upper bound
estimate to meet the MDG goal by 2015 is $3.3 billion annually, with 55 percent
in O&M expenditures, and the rest in capital investment and sector management
(Mehta et al., 2005). Evaluation of water sector financing in Sub-Saharan Africa
indicates that:
“The financing gap does not appear to be a problem in capital
expenditure, but the gap between O&M needs and available
resources stands at about 0.3 percent of GDP…This translates to about
$1.6 billion in 2005 for O&M investments.”
18
Figure 2. Financing needs and public spending in Africa’s water supply and
sanitation sector for achievement of water MDG.
Source: Briceno-Garmendia and Smits (2008), Mehta et al. (2005), cited in
Banergee et al., 2008.
The financing problem highlighted for operations and maintenance, as opposed
to capital investments, can help guide interventions that accelerate provision of
safe water supplies. Achievement of MDG water goals closely align with
adaptation options classified as accelerated development to reduce current
deficits, which increase vulnerability to future climate change. In the case of
Africa’s largely rural, but rapidly urbanizing settlements, the need for improved
water supplies for sustainable development and climate adaptation is urgent and
rising. At present, it is unclear whether these financing needs can be
distinguished from one another. Setting aside this issue, the scope of
interventions needed to achieve goals of improved water provision extend
beyond capital and operational considerations. Below, distributional,
governance and investment issues related to provision of improved water
supplies are explored, along with questions linking development with adaptation
needs.
Distributional, governance and investment issues: managing
an urbanizing Africa
Water resource pressures facing Africa’s urban populations are expected
to increase dramatically over the coming decades. Estimated urban population
growth averages an unprecedented 5 percent per year. At this rate, Africa’s
urban population will double before 2030. Where less than half of urban
residents have access to improved water, this poses a large and growing
challenge to sustainable development, and is compounded by climate change
(Kessides, 2006).
Banerjee et al., 2008 and Keener et al., 2009:
Important insights into development and adaptation planning for urban
water provision are available from the large-scale World Bank analysis (AICD) of
19
water sector infrastructure and management systems covering 32 countries.
These countries account for 85 percent of GDP, population and aid flows for
infrastructure in Sub-Saharan Africa.
Contributions by Banerjee et al., 2008 and Keener et al., 2009 assessed the extent
of and type of coverage, key suppliers and consumers in formal and informal
urban water markets. Detailed analysis revealed that the urban poor pay
significantly more for water and face low-quality and unreliable supplies. These
and other distributional, governance and investment issues are summarized in
Table 6 below, along with possible questions and challenges relating to climate
adaptation. Addressing these issues may help identify early urgent actions that
support MDG achievement, and the adaptive capacity of Africa’s urban water
sector.
As noted in the MDG assessment above, a key AICD study finding is the problem
of adequate financing of operations and maintenance for improved urban water
supplies, more so than capital costs on average. Strategies to address this rising
challenge might include cost recovery efforts and/or public-private investment,
use of climate adaptation funds for investment in accelerated development and
social protection programs, particularly targeting the urban poor facing water
insecurity and poverty compared to households with piped connections. This
work also highlights that sectoral monitoring, regulation and investment
strategies will need to be in place if adaptation financing (let alone current
development financing) is going to be effective and sustainable.
20
Urban water supply and sanitation issue
Distribution:



39% of the urban population of SSA is connected to a piped
network, and this is declining with urban growth. Wells,
boreholes and (increasingly) surface water make up the remaining
portion.
55% of the unconnected urban market relies on standpipes as a
primary water source.
Households with standpipes and alternative water sources in the
informal market pay water prices 1.3 to 5 times higher than
households with private connections or yard taps.
Governance:








African utilities operate in some of the highest cost environments.
Only 10 percent of countries surveyed have achieved private
sector investment in the sector, and even then at a very low level.
Collection efficiency is estimated around 70%. Hence, 30% of
water supplied is “non-revenue” or cannot be billed.
“Quasi-fiscal deficits” (QFD) constitute hidden operating costs
including underpricing by utilities and operating inefficiencies
amount to 0.6% of GDP in surveyed countries.
On average there is no major shortfall to capital spending. O&M
costs face a significant shortfall of 0.2% of GDP or about US$ 1
billion per year, broadly equivalent to the magnitude of the hidden
(QFD) costs of utility inefficiencies in collection and distribution.
How can access to more
affordable improved water
services be increased among periurban populations to build
resilience to changing supplies?
What indicators might help
monitor vulnerability and priority
groups?
Ways forward?





Which institutional and
management models are more
efficient or accountable:
centralization or decentralization?

Are public or private utilities
better equipped to absorb
adaptation financing?
How can adaptation financing be
used to better incentivize private
investment in Africa’s water
sector, particularly to offset
existing inefficiencies and O&M
deficits, and promote increased
formal access to the urban poor?
Almost half of surveyed countries, some degree of private sector
participation has been adopted.
There is evidence that standard reforms (corporatization, creation
of regulatory bodies, decentralization) have higher collection
ratios and are better at recovering operating costs.
Direct verses delegated management models with community or
private operators have mixed success in different country contexts
making generalizations about ‘best’ institutional models difficult.
Investment:


Key developmentadaptation
question/challenge…

Publish formal water prices: Increase the transparency of pricing mechanisms
through intensive publication and enforcement of formal water prices.
Social protection for urban poor: Direct social protection resources to
improving access of urban poor in informal markets.
Mapping and monitoring: Map urban market structures and record market
information such as water points, service quality, etc. Establish service
monitoring systems using ICT and spatial information platforms (e.g. online
systems (e.g. Google Earth, GIS).
Possible indicators: 1) Number of (formal or informal) water sources
depended on. The greater number of sources relied upon, the greater water
insecurity and prices faced. 2) Monitor formal and informal prices, particularly
standpipes which are widely used by the unconnected poor.
 Compare management models: Expand empirical cross-country research on
management models (and costs), particularly for public standpipes that provide
water to unconnected households.
 Consumer feedback mechanisms: Improve efficiency, and potentially reduce the
amount of resources “captured” by middlemen by: providing feedback
mechanisms for consumers (e.g. through ICT technology); conduct beneficiary
assessments to assess consumer awareness of operator responsibilities and
consumer rights



Pre-paid standpipe model: Consider implementing a “pre-paid” standpipe
model, currently being implemented in Lesotho, South Africa and Namibia. This
has promise to reduce management costs for the utility (despite high upfront
costs for equipment) and pass on lower tariffs to end consumers.
Local partners: Utilities might explore contracts with small-scale independent
providers (SSIPs), which are a fast-growing segment of the water market,
particularly in peri-urban areas and often offer good water pressure and flexible
hours. These providers could be useful for managing ‘rational’ rationing systems
in times of drought and over extraction through increasing borehole drilling.
Cost recovery: Direct adaptation investments towards social protection
programs to subsidize operation and maintenance costs for peri-urban areas
where total cost recovery for formal market services or connections is not
possible.
Source: Synthesis of results and recommendations from Banerjee et al., 2008 and Keener et al., 2009.
21
Urban and rural water provision: Insights from rainwater
harvesting
Limited investment in improved water supplies in Africa makes
identification of promising technologies across the sector a priority for
development and adaptation. In Africa’s semi-humid and semi-arid areas,
rainwater harvesting techniques have great potential to provide reliable water
supplies to both urban and rural populations facing erratic and highly variable
rainfall. As part of Africa’s Water Vision 2025, increasing “water wisdom” and
“drought-proofing” crop production are key rationales behind rainwater
harvesting and other investment commitments. Rainwater harvesting
technologies not only meet needs of surface and soil water scarcity, but also
mitigate against flash flood events and reduce often high costs of water provision
under large, centralized schemes in areas even with high average rainfall.
Rainwater harvesting also diminishes the burden of water hauling, which affects
mostly women, by supplying water closer to home.
“It is estimated that 40 billion working hours are lost each year in
Africa carrying water.” – Garrity et al., 2005
Moreover, various rainwater harvesting technologies increase the resilience and
coping capacity of populations facing uncertain climate futures, and warrant
attention as a priority area for robust adaptation investments. These
investments illustrate strong synergies between development and climate
adaptation activities in Africa.
Significantly, management approaches should be developed and investments
prioritized based close engagement by local stakeholders. Mapping and
monitoring of climate risks in the context of livelihoods and associated income
distributions is a possible entry point for prioritizing adaptation investments
appropriate for local development circumstances.
Garrity et al., 2005
In GIS work carried out by ICRAF and UNEP in 2006, the rainwater
harvesting potential of Africa was mapped. The project aimed to provide spatial
databases that convey the huge potential for rainwater harvesting for advocacy
and decision support. Rainwater harvesting technologies selected included
rooftop harvesting and storage, surface and flood runoff collection (blue water),
and in-situ water collection and storage for crop production (green water).
Below are two of the mapping results showing the potential for rooftop and insitu rainwater harvesting in Africa:
22
Figure 3. Rooftop (left) and in-situ (right) rainwater harvesting potential for
Africa. Source: Garrity et al., 2005.
Among the technologies explored, rooftop harvesting covers the largest areas in
terms of extent, because of its application in both rural and urban settlements.
This technology is particularly appropriate in Africa’s semi-humid and semi-arid
areas with low average rainfall. The study estimated that areas receiving just
200 mm annual rainfall have as much potential (and more priority) for rooftop
harvesting as areas with higher averages. Presence of roofs to provide
catchment areas is the primary requirements for installation. Observations of
area rooftop coverage can be cross-referenced with ground-level data to exclude
households with piped water. As an example of this potential, a roof area of 36.5
m2, and 200 mm of rainfall per annum, could supply annual per capita water
consumption of 20 litres/day or 7.3 m3 per person per year.
While the cost of realizing the above potential was not estimated, numerous
detailed assessments carried out at national and sub-national levels provide
insight into investment needs for rainwater harvesting. Case study 2 presents
estimated investment needs for developing Zanzibar’s rainwater harvesting
potential, while benefits in mainland agriculture are also highlighted below.
Links to agriculture: Senkondo et al., 2004
Gross Margin (GM) and cost-benefit analyses of in-situ technologies for
maize and rice farmers in mainland Tanzania also indicate the considerable
benefits of rainwater harvesting in semi-arid areas experiencing erratic and
variable rainfall. Study results find rainwater harvesting improves gross margin
and returns to labor, particularly for maize and onion farmers. Where markets
are available, rainwater harvesting enables farmers to switch to high value crops,
with very significant benefits to incomes and livelihoods. For maize production
23
using diversion canals for rainwater harvesting, the benefit cost ratio (net
present value) was greater than one with an internal rate of return (IRR) of 57
percent. Rice paddy production also had a positive NPV and IRR of 31 percent.
Moreover,
“Due to existing potential and profitability of rainwater harvesting, it
is recommended that rainwater harvesting be prioritized in Tanzania,
particularly in the semi-arid areas.” – Senkondo et al., 2004
Further analyses of agricultural interventions that improve climate resilience for
adaptation are detailed in the AdaptCost Agriculture report.
24
Case 2  Investment costs for developing rainwater harvesting potential of
Zanzibar, Tanzania
In study work commissioned by the MDG Centre, facilitated by UNDP and carried out in partnership with ICRAF and the
Government of Zanzibar, the rainwater harvesting potential for Zanzibar was assessed. Despite the enormous volume of
water received (4 km3), Zanzibar faces water scarcity challenges and does not meet global minimum requirements of
1500 m3 per capita per year. A wide variety of technological interventions in rainwater harvesting tailored to rural and
urban livelihoods and water availability contexts would address this situation. To achieve annual water storage per capita
of 1624 m3 per capita per year, Zanzibar would need to invest US$ 6,420,000 over a period of eight years. These costs
include capital investments and training of community members for operation and maintenance.
Summary of investment cost for initiating rainwater harvesting activities in Zanzibar:
Public and private investment and close community involvement in scheme design, implementation and management
were also assessed for various in-situ, runoff and roof catchment systems detailed below. Positive impacts include
reliable access to improved water, employment generation from construction and maintenance, reduction of flash
flooding risks, ground water recharge and ecosystem benefits, improved agricultural yields, reduced burden on women
and girls for water hauling, among others.
Three key components needed for evaluation of the sustainable design of rainwater harvesting structures include:

Hydrogeology of the area, including the nature and extent of aquifer, soil cover, topography, depth of water
levels and chemical quality of ground water.

Area contributing for runoff, i.e. how much area and land use pattern, and whether industrial, residential or
green belts and general built up pattern of the area

Hydro-meteorological characters viz. rainfall duration, general pattern and intensity of rainfall.
These biophysical assessment priorities underscore the need for accurate data collection and monitoring systems to be in
place to ensure the viability and appropriateness of various technologies for different locations, and applications. Close
community cooperation and training are also key elements to scheme sustainability and maintenance.
Source: The Revolutionary Government of Zanzibar, 2007.
25
Informed adaptation investments: investments in
meteorological and hydrological infrastructure and services,
and linking to indigenous knowledge
Data and information needs for assessing rainwater harvesting potential
in different African contexts highlights the general importance of high quality
data and information for adaptation planning. Currently low-levels of
investment in meteorological and hydrological infrastructure and services pose a
challenge to understanding changing system dynamics of water resources.
Development needs and high levels of exposure key economic sectors face from
present and future climatic risks more than justify increased investment in these
areas.
For example, according to the World Meteorological Organization (WMO),
Africa’s meteorological network is eight times below WMO observation
requirements, maintaining hundreds compared to several thousand each in
Europe, North America, and parts of Asia (WMO, 2010,
http://www.wmo.int/pages/africaconf/). While commitment to installing and
maintaining higher density networks in African countries is currently under
consideration, costs of improved systems are unknown. Investment costs for
corresponding early warning and disaster risk reduction information
dissemination systems (e.g. flood and landslide warnings) are also needed.
A similar situation characterizes other hydrological monitoring systems across
Africa for surface and ground water quantity and quality. However, given the
long history of water resource management experience among Africa’s rural
populations, strategies to understand and integrate indigenous knowledge into
climate adaptation planning is also critical (Nyong et al., 2007).
Below, a best-practice example is illustrated by water resource planning in
Tunisia. Tunisia’s systems of inter-basin transfers, aquifer recharge, metering,
and waste water reuse, among others. This management system underscores
the importance of investing in data and information systems, but also technical
and institutional measures critical to integrated resource management.
26
Case 3  Integrated water management at a glance: insights from Tunisia’s
water sector
Tunisia’s national water management system provides valuable insights into how locally appropriate systems
can be integrated into a process of adaptive management at the national level.
One of the least well-endowed countries in the Mediterranean basin, Tunisia has developed a sophisticated integrated
water management and monitoring system. To cope with variable and declining surface and groundwater resources,
Tunisia balances supplies originating in the north and interior of the country and with the majority demand from coastal
populations and industries, and agriculturalists throughout.
Management fundamentals:


Data gathering, information systems, and measures to store and transfer water: Nationally established
hydrological monitoring, scenario modelling systems based on supply and demand relational databases, detailed
agricultural and GIS mapping, and surface and groundwater mapping are integrated with these guiding
principles:
o
Allowing inter-annual storage to enable supplies to be regularized
o
Taking into account the historical frequency of drought, from year to year
o
Allowing water to be transferred from dams in one catchment to dams in another both to balance
stock levels in periods of regional drought and to improve water quality in particular reservoirs.
Supplementing scarce water supplies: Generating nonconventional water and innovative investments.
o
Reuse of treated wastewater, particularly in agriculture
o
Desalination of salt and brackish water
o
Artificial recharge of aquifers, e.g. through channeled floodwater
Technical measures: An illustration of water conservation for small and medium-sized water consuming areas in central
Tunisia. Programme aims involve restoration and modernization of public supply networks, promotion of on-farm watersaving equipment, and transfer of management to farmer groups. Activity areas include:



Construction of concrete canals or laying underground PVC piping, and, installation of a drainage system to
remove excess water and leach salts.
Modernize old irrigation areas.
Water conservation for public drinking water networks and facilities: Installing new equipment for
o
Metering and regulation
o
Tracing leaks
o
Renovating old meters and connections
o
Regulating pressure in the system
Institutional measures: In order to develop public water resources, construct, maintain and use public water works, and
irrigate and decontaminate farmland, regional committees were established to assess and ensure the implementation of a
water conservation program. Committees ensure that areas irrigated by boreholes and large dams are under the same
management arrangements and regulatory standards and conservation in Tunisia’s small and medium-sized irrigated
areas.
Management transformations in overall management of Tunisia’s water sector are characterized by: movement from
traditional practices, large government led infrastructure investment, and finally, “institutional engineering” focused on
rational allocations and demand-side management as expanded supplies are unavailable.
• Individual,
farmer
management
Traditional
practices
Physical
engineering
• Large,
governmentled supply
investments
• Monitoring,
demand-side
investments
Institutional
engineering
Source: Author
Examples of key management indicators:



Regulation indices to measure the effectiveness of dams in regulating flow: Defined for any specific year as the
ratio between the volume of regularized flows in that year and the average annual irregular water flow.
Monitoring of water use with meters for water conservation
Efficiency of transfer networks
Source: Jagannathan, Mohamed and Kremer, 2009. Water in the Arab World: Management
Perspectives and Innovations. World Bank
27
Adaptive management: ways forward for economics
To date, adaptation economics studies in Africa and other world regions
have followed methodologies largely characterized by quantified supply-side
investments, and qualitative suggestions for demand-side interventions.
Frequently covered options are summarized in Table 7.
Table 7. Supply and demand side adaptation options for the water sector. Most
frequently costed options are indicated with a  symbol.
Supply side
Demand side
 Prospecting and extraction of groundwater (e.g.
boreholes)
 Increasing storage capacity by building reservoirs and
dams; and decommissioning
Removal of invasive non-native vegetation from riparian
areas
Water transfer (e.g. inter-basin transfers)
Improvement of water-use efficiency by recycling water
or water saving technologies
Reduction in water demand for irrigation by changing the
cropping calendar, crop mix, irrigation method and area
planted
Reduction in water demand for irrigation by promoting
agricultural products, i.e. virtual water
Promotion of indigenous practices for sustainable water
use
Expanded use of water markets to reallocate water to
highly valued uses
Improved efficiency of waste water treatment
Rainwater harvesting
Importing water intensive products
Use of low-grade water (e.g. industry)
Greater use of water markets (price incentives to use less)
Catchment source control to reduce peak discharges
Reduced leakage
Increased flood protection (e.g. levees, reservoirs)
Curb floodplain development and early warning
 Desalination of sea water
Expansion of rain water storage
Source: Adapted from Kundzewicz et al., 2007 and IPCC 2007; based on citations
in UNFCCC 2007; OECD, 2009; Kirshen, 2007.
Increased water supplies are critical for meeting consumption demands of
Africa’s rapidly growing population, and mitigating accelerated hydrological
cycles anticipated under climate change. However, more comprehensive
adaptation economics is required to provide a holistic and flexible adaptation
management options. A focus on adaptive management provides a useful
framework for decision making under high levels of biophysical and
socioeconomic uncertainty influencing the water sector.
Figure 4 below illustrates an adaptive management framework whereby
controllable measures (e.g. regulation of water use) are prioritized in situations
of high uncertainty, as opposed to probabilistic approaches used in optimization
modelling or hedging. Scenario planning is also a valuable management tool in
the context of uncontrollable variables, including population growth, providing a
robust compliment to adaptive management strategies.
28
Figure 4. Different management approaches for dealing with uncertainty in
information and the controllability of outcomes. Source: Adapted from Ed.
Molden, 2007, and adapted originally Peterson, Cumming and Carpenter, 2003.
Tunisia’s approach to water management (Case Study 3 above) illustrates how
adaptive management imbeds responsiveness and flexibility into dynamic
systems, based on a combination of data collection, scenario modelling and close
stakeholder engagement promote robust, process-based management. Given
costing such institutional arrangements and management approaches is difficult
in most African contexts, illustrative analyses would be of value to guide
management strategies.
Figure 5 provides a framework for adaptive management in the water sector that
may be of use in directing adaptation investments, with examples suggested in
bullet points:
Figure 5. Stylized adaptive management framework for Africa’s water sector.
Source: Adapted from Molden ed., 2007.
Using this framework, recommendations can be made for improved costing
estimates of water sector investment needs not yet covered in analyses to date.
29
Table 8. Examples of entry points for economics analyses in adaptive
management processes for Africa’s water sector; addressing gaps in analyses to
date and highlighting development synergies.
Focal
distributional
issues
Potential scope for
adaptive
management entry
points
Potential economics component for
adaptation interventions
Climate and development
synergies?
1. Gender
1. Working hours saved from water carrying
by women and girls
2. Livelihoods and welfare benefits of
affordable, improved and reliable access to
water
3. Market structure analyses to target water
poverty

Supports achievement of
MDGs
1. Investment and financial flows needed for
improved meteorological and hydrological
observation systems.
2. Comparing the costs and benefits, and cost
effectiveness of modern verses traditional
management practices.

Builds long-term
adaptive capacity,
knowledge sharing and
awareness at local and
national levels
1. Strategic short-term investment reviews
based on changing circumstances
2. Use of scenario resource planning models to
inform ‘hard’ and ‘soft’ investment needs
across a range of futures
3. Cost-benefit analyses based on selected
scenarios
4. E.g. costing investment in increased
reservoir size as a hedging strategy

Provides robust
management options
under uncertainty
Allows for crossreferencing of multiple
lines of evidence
1. Identify priority adaptation investments
based on economic and/or vulnerability
analyses
2. Mainstream investment needs with existing
budgetary frameworks and line ministries
3. Monitor efficiency and effectiveness of
investments (in part) with economic indicators

Promotes rational
management and
accountability for
adaptation measures at
national and sub-national
levels
1. Determine implementation costs and
benefits for pilot actions
2. E.g. Reduced transaction costs from use of
cell phones in water point service management

Captures local-level costs
often masked in national
assessments
Entry point for private
sector actors and
innovation
2. Urban-rural
3. High-low income
Assessment
of knowledge
and
uncertainties
1. Observation and
monitoring systems
Management
tools
1. Adaptive/
integrated
2. Scenario planning
2. Indigenous
knowledge
3. Optimization
4. Hedging
Policy
synthesis and
screening
1. Sectoral
investment
Experimental
management
1. Pilot actions
2. Development and
livelihoods focus
3. Efficiency and
effectiveness
2. E.g. ICT and
community based
management


Source: Author.
AdaptCost recommendations:
Adaptation economics assessments to date are important first steps
towards managing effects of climate change on water supplies in Africa.
However, because these studies rely on highly uncertain assumptions, and are
limited in scope and development-context, results are of limited use to policy
makers and resource managers. This highlights the need for economic analysis
involving more comprehensive methods capturing more holistic, adaptive
management approaches including both soft and hard investment options, basin30
level planning, and incorporation distributional and cross-sectoral issues at the
heart of development progress, and climate adaptation planning.
Economics studies to date have not taken into account the following issues,
which make up priority recommendations for future research and management:

Adaptive management: As a method of coping with the uncertainty
inherent in water sector impacts of climate change, an adaptive
management approach provides a potentially valuable strategic
framework. Adaptive management treats policy as hypothesis and
management as experiments, emphasizing learning and evaluation of
interventions as part of an iterative process of adaptation. Percentage
markup or hydrological modelling driving estimated adaptation costing
studies are not representative of dynamic or adaptive strategies that may
lower overall costs.

Technological change: Introduction of new technologies will almost
certainly continue to transform water management (e.g. desalinization,
waste water treatment, rainfall generation, etc.) and have significant
economic implications. Timing and cost of changes is, however, is highly
unpredictable but should be noted in adaptation analyses.

River basins as key management units: River basins are the basic
ecological unit for water resources. There is need for basin-level
management of water resources, coupled adaptive management, to
support sustainable development and adaptation strategies. Basin-level
approaches maintain the resilience of river ecosystems, which are largely
fragmented by interruption and interception of natural river flow and
management systems delineated by political instead of natural
boundaries.

Investment in observation and monitoring systems: Establishment of
meteorological and hydrological monitoring (e.g. metering), flood
protection and early warning systems are urgent priorities for supporting
accelerated development and adaptation of water resources.

‘Soft’ verses ‘hard’ adaptations options: Studies including
Kirshen/UNFCCC, 2007 and World Bank, 2010 focus on ‘hard’,
infrastructure-based, supply side adaptation options with little or no
economic consideration for ‘soft’ or policy oriented supply and demand
side options. Consideration should also be given to adaptations based on
investment in ecosystem resilience and management policies (e.g. use of
water markets by Callaway et al., 2009 for the Berg River Basin in South
Africa) are often less costly and more sustainable than harder options
(e.g. dam building).

Cross-sectoral water issues: Water resource management is a crosssectoral issue. Fundamental sectoral linkages between water and health,
energy, agriculture, ecosystems and infrastructure need to be taken into
31
consideration in economic assessments of integrated management
options.

Governance issues: Governance issues related to institutional
management models and formal and informal market dynamics are key to
addressing issues of water poverty, scarcity and quality issues that
increase vulnerability to climate change.

Stakeholder engagement: At the heart of effective water management is
the close engagement and, where necessary, training of local
stakeholders.

Development and livelihoods focus: Achievement of MDG water goals
closely align with adaptation options classified as accelerated
development to reduce current deficits, which increase vulnerability to
climate change. Financing shortfalls highlighted for operations and
maintenance, as opposed to capital investments, in achieving water MDGs
can help guide joint development and adaptation interventions that
accelerate provision of safe water supplies and build adaptive capacity.

Account for urban-rural differences: There is a great need to account
for urban-rural differences in water resource needs, and trends in
vulnerability related to water poverty and insecurity over time. These
have implications for the financial, social and environmental
sustainability of water resources presently and over coming decades.

Rainwater harvesting for robust management: Assessment of
rainwater harvesting potential for urban and rural settlements illustrates
a robust climate adaptation investment that mitigates challenges of
accelerated water shortage and excess under current and future climates.
This also highlights the significant potential of lower-cost interventions
compared to large-scale infrastructure investments (e.g. reservoir
construction).

Focus on women: Gender issues are at the heart of water management
in Africa. Women in Africa make up an estimated 90 percent of the
informal labor market and bear disproportionately high burdens in the
water sector. Targeting of women and women’s groups should be a
priority of adaptation interventions.

Supply and demand-side financial sustainability: Financial
sustainability of water provision is necessary for addressing investment
shortfalls towards achieving MDGs (e.g. caused by hidden costs or quasifiscal deficits).
32
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