Yemens Water Sanitation Sector Selected Key Sector Issues

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Yemen’s Water & Sanitation Sector Selected Key Sector Issues Update January 2006 Gerhard Redecker

Yemen’s Water & Sanitation Sector Selected Key Sector Issues Update January 2006 Gerhard Redecker Kf. W-Office Sana’a January 2006

Contents Some reminders - Water and poverty in the PRSP - Water and relevance

Contents Some reminders - Water and poverty in the PRSP - Water and relevance in MDGs - Water sector benchmarks - Water demand supply pattern Sector finance - Real cost of water and the Yemeni scenario - NWSSIP investment plan and finance needs - MDG financial needs assessment - NWSSIP & MDG sub-sector finance allocation - NWSSIP & MDG annual funding requirements - MWE draft investment budget 2006 - Present vs. NWSSIP & MDG urban unit costs Agriculture – what is at stake? - Employment and economy - Land distribution - Cropping and productivity - Water use

Water and poverty in the PRSP … poor water management creates poverty… (World Bank

Water and poverty in the PRSP … poor water management creates poverty… (World Bank CWRAS, Jan 2005) …efficient and equitable water resources management is critical to poverty reduction… Urban water and sanitation q scarcity of water resources q low service coverage q water pollution Agriculture / Irrigation q water resource capture unsustainable q water mining practices anti-poor q water rights pattern exacerbate inequalities q agricultural water use key to reduce poverty 3 Environment q environmental degradation (erosion) drives poverty q water pollution affects the poor more q climate change affects the poor more, since they much depend on rain-fed agriculture q environmental health problems affect the poor most … all these “externalities” are hidden costs imposed by the better off on the poor… Note: The PRS progress report for 20032004 makes little or no reference to respective achievements

Water and relevance for MDGs 4

Water and relevance for MDGs 4

Targets in service coverage Urban Water Coverage Achievement 47% Urban Sanitation Coverage Achievement 23%

Targets in service coverage Urban Water Coverage Achievement 47% Urban Sanitation Coverage Achievement 23% 5

Water demand supply pattern (NWSSIP) Minimum health impact threshold 6

Water demand supply pattern (NWSSIP) Minimum health impact threshold 6

Sector finance (1) Real cost of water and the Yemeni scenario 7

Sector finance (1) Real cost of water and the Yemeni scenario 7

Sector finance (2) NWSSIP investment plan and finance needs 8

Sector finance (2) NWSSIP investment plan and finance needs 8

Sector finance (3) MDG financial needs assessment 9

Sector finance (3) MDG financial needs assessment 9

Sector finance (4) NWSSIP & MDG sub-sector finance allocation 10

Sector finance (4) NWSSIP & MDG sub-sector finance allocation 10

Sector finance (5) NWSSIP & MDG annual funding requirements 11

Sector finance (5) NWSSIP & MDG annual funding requirements 11

Sector finance (6) MWE draft investment budget 2006 vs. NWSSIP Mixed emotions • Urban

Sector finance (6) MWE draft investment budget 2006 vs. NWSSIP Mixed emotions • Urban bias continues with 79% of sector investment share, rural water grossly neglected • No recurrent budget information available • Go. Y share as per NWSSIP was USD 85. 8 mn p. a. , this budget only allocates USD 83. 8 mn, thus the USD 111. 8 mn annual finance gap is not addressed at all; in addition, inflation is not factored in • However, MWE budget is not inclusive of public investment outside MWE (such as MAI), so total sector related budget is definitely higher, but not known • Specified donor contributions (external finance) is incomplete; donor MTEF is not finished 12

Sector finance (7) Present vs. NWSSIP & MDG urban unit costs MDG and NWSSIP

Sector finance (7) Present vs. NWSSIP & MDG urban unit costs MDG and NWSSIP finance needs scenario unrealistic 13 1) Includes 1% pa inflation on USD basis to the 2009 horizon, differentiates geographic and density 2) No inflation for the full 2015 horizon 3) Gross cost incl. consultants and 20% technical / financial contingencies

Agriculture (AG) and irrigation – what is at stake? (1) Employment and economy •

Agriculture (AG) and irrigation – what is at stake? (1) Employment and economy • AG value added share in GDP declining from 21. 4% in 1993 to 15% in 2004 • AG value added growth rate increasing from 4. 4% in 1993 to 5. 9% in 2003 • AG economically active population share declining from 60. 1% in 1993 to 50. 4% in 2003 • AG represents 54. 1% of total employment in 2004, and supports 2/3 of rural livelihood • AG female employment share increased from 39. 9% in 2003 to 42. 9% in 2003 • Average annual production value of the agricultural rural household was USD 1. 270 in 2002 • High value crops are not labor-intensive: 1990 -1999 labor productivity increase marginal, but land productivity increase > 50% (mainly due to irrigation) 14

Agriculture (AG) and irrigation – what is at stake? (2) Land distribution • Agriculture

Agriculture (AG) and irrigation – what is at stake? (2) Land distribution • Agriculture in Yemen is undertaken on some 1. 08 million hectares; average size of operational holding was 1. 36 has in 2002 • Concentration process of land holdings: more land for less, crowding out the small marginal farmers; From 1993 – 2000, average holding size decreased by 28. 5%, and arable land person has dropped 35% from 1985 to 2000 (Ø 900 sqm in 2000) • Size of used land correlates with food insecurity of households: at < 1000 sqm holding, food insecurity is highest (23%); some sources indicate general food insecurity above 50% for all • In 2004, 11% of cultivated land is under Qat 15

Agriculture (AG) and irrigation – what is at stake? (3) Cropping and productivity •

Agriculture (AG) and irrigation – what is at stake? (3) Cropping and productivity • From 2002 -2004, 24% growth of agricultural products added value was recorded • Cereal production volume share still above 50%, but declining at an Ø 2. 4% per year since 1995; share in added value insignificant; meanwhile, > 80% of cereals imported • Aggregate citrus production increased 20% pa between 1991 and 2003 • In 2004, Qat stands for 25% of AG labor force, 41% (USD 1. 6 bn) of overall AG products added value (COCA) • Lion’s share of AG added value produced by water intensive crops (for each kilo of bananas, Yemen exports 24 liters of virtual water) 16

Agriculture (AG) and irrigation – what is at stake? (4) Water use • Most

Agriculture (AG) and irrigation – what is at stake? (4) Water use • Most of cultivated area still directly rain-fed (55%), but on a declining path (since 1975 its share reduced to almost half), and with little or no sector support • Share of (rain-fed) spate and spring-fed irrigation low, but mostly stable • Groundwater irrigation share exploded from 5 – 45% • Lift irrigation monetized agricultural economy in detriment of marginal farmers • Non-food crop Qat consumes 30% of irrigation water • Overall irrigation efficiency low (< 40%) • Small holdings most affected by water poverty, since in Yemen water rights follow land rights • Declining water tables boost investment cost for pumping, favoring the larger farmers • Traditional water management practices acceptance on the decline 17