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Yemen’s Water & Sanitation Sector. Selected Key Sector Issues Update January 2006. Gerhard Redecker KfW-Office Sana’a January 2006. Contents. Some reminders - Water and poverty in the PRSP - Water and relevance in MDGs - Water sector benchmarks - Water demand and supply pattern
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Yemen’s Water & Sanitation Sector Selected Key Sector Issues Update January 2006 Gerhard Redecker KfW-Office Sana’a January 2006
Contents Some reminders - Water and poverty in the PRSP - Water and relevance in MDGs - Water sector benchmarks - Water demand and 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 CWRAS, Jan 2005) • …efficient and equitable water resources management is critical to poverty reduction… • Urban water and sanitation • scarcity of water resources • low service coverage • water pollution • Agriculture / Irrigation • water resource capture unsustainable • water mining practices anti-poor • water rights pattern exacerbate inequalities • agricultural water use key to reduce poverty • Environment • environmental degradation (erosion) drives poverty • water pollution affects the poor more • climate change affects the poor more, since they much depend on rain-fed agriculture • 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 2003-2004 makes little or no reference to respective achievements
Targets in service coverage Urban Water Coverage Achievement 47% Urban Sanita-tion Coverage Achievement 23%
Water demand and supply pattern (NWSSIP) Minimum health impact threshold
Sector finance (1)Real cost of water and the Yemeni scenario
Sector finance (4)NWSSIP & MDG sub-sector finance allocation
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 • GoY 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
Sector finance (7)Present vs. NWSSIP & MDG urban unit costs • MDG and NWSSIP finance needs scenario unrealistic • Includes 1% pa inflation on USD basis to the 2009 horizon, differentiates geographic and density • No inflation for the full 2015 horizon • Gross cost incl. consultants and 20% technical / financial contingencies
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)
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 per 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
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)
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