Closed Compact Report: Jordan Compact | September 2018
Water Network Restructuring and Rehabilitation Project
- $102,570,000Original Compact Project Amount
- $88,604,173.94Total Disbursed
|Estimated benefits 1||Estimated Economic Rate of Return over 20 years||Estimated beneficiaries over 20 years||Estimated net benefits over 20 years (present value)|
|At the time of signing||19%||1,633,400||2005 PPP $207 million|
|At compact closure||13%||National population exceeding 9 million 2||2012 constant $103 million (approximately 2005 PPP $164 million) 3|
The original economic rate of return (ERR) was based on three main benefit streams. First, there is an estimated addition to household income that would come about as people shift demand away from expensive water sources (e.g. tanker water), to the less costly network water supply. Second, this shift was expected to also generate health benefits as a result of increased access to clean water. And third, the investment was expected to lead to lower water production costs as a result of reducing physical losses in the rehabilitated water network.
The closeout ERR is estimated at 13 percent, lower than the original rate, but still above MCC’s 10 percent threshold. This number was driven by benefits realized from lower water production costs. However, the other two benefit streams did not take shape as projected at the beginning of the compact, resulting in a close-out ERR that declined below the original estimate. In the case of the first benefit stream, households in Zarqa were actually spending more on water that does not come from the network, like tanker and bottled water, at the end of the compact than they were before the compact began. While it was too soon to know whether this reflects the impact of the project (the new system had only been operational for a few months when the surveys that informed the closeout ERR were conducted), it means that households had not yet started to save money on water at the end of the compact.
This case highlights the potential significance of perceptions of people within the theory of change that underpins ERR estimates. Social perception, for example, trust in public services, is often not explicit and may not inform the project logic. But such perception can be a major determinant of investment performance that influences the level of use of a public service. Particularly when public demand is sensitive to the public’s trust in service quality, perceptions may change slowly. In the future, the use of social networking might be a necessary tool to deploy in design of similar projects.
Additional data on how the project impacted the amount households spend on water is now available and may be used to generate an evaluation-based ERR 4 . For the second benefit stream, while it was originally thought that the project would generate economic benefits through improved hygiene and water consumption, research that emerged during the compact period indicated that water borne diseases are not driving health costs in Jordan.
At the time of compact development, an estimated 50 percent of potable water supply in the Zarqa Governorate was lost through a combination of physical leaks, water thefts and administrative mismanagement. The water transmission and distribution network suffered from substantial disrepair, with parts comprised of cheap, flexible pipes that ran above ground through residential streets, where they were subject to puncture, wear and tear. Nearly 10,000 leaks were reported each year. The Water Network Project represented the largest investment in the water sector in the Governorate at the time. The objectives of the project were to (i) improve the efficiency of network water delivery and the condition of home water systems, and (ii) decrease certain costs that households in Zarqa Governorate incur to satisfy their basic water needs.
Through the Infrastructure Investment Activity, the project reduced high water losses by repairing and upgrading transmission and distribution pipes throughout Zarqa. The activity rehabilitated 864.7 kilometers of water pipes, built a new pump station, and installed 41,650 household water meters. It established clearer and more efficient district metering areas (DMAs), laying the foundation for better operation and management of the entire water utility. The activity also contributed to a decline in commercial and physical water losses from 61.6 percent to 50.7 percent across the Zarqa Governorate during the life of the compact, helping the Government manage increased pressure on water resources due to endemic water scarcity, population growth and the influx of Syrian refugees. The reduction of physical losses improved the cost recovery of the Zarqa water utility. The utility expected to achieve full cost recovery of operations and maintenance by 2019. (see “Evaluation Findings” for the challenges faced in this effort). In addition to reducing physical leaks, the project established the transition from periodic distribution under high pressure to more frequent gravity-fed distribution that improved customer service, reduced wear and tear on critical infrastructure, and extended the lifespan of the network.
The Water Smart Homes Activity improved the quality of plumbing and water storage in the homes of 3,958 poor families in Zarqa as well as in 22 public schools. The overall objective of the activity was to improve the condition of home water systems and decrease the water costs of households, particularly poor households. The activity used a two-prong approach: an outreach campaign on in-house water management of water quality and water conservation; and an infrastructure component that replaced or improved the plumbing and water storage systems of poor households. As a result, 3,958 households were supplied with improved water and wastewater. In addition, thirty women received training and tools to become self-employed as plumbers in response to a need within the community to sustain water improvements and proper management of resources. Some of these women worked as plumbers for construction companies responsible for implementing household water repairs under the compact, including replacing water tanks.
In addition to the original activities included in the compact, unused budget identified during implementation allowed MCA-Jordan and MCC to reallocate $1,617,145 to fund construction of a new water utility administration building, intended to enhance the utility’s operation and maintenance activities by placing staff in the same location and creating more space for customer service.
Key performance indicators and outputs at compact end date
|Activity/Outcomes||Key Performance Indicators||Baseline||End of Compact Target||Quarter 1 through Quarter 20 Actuals||Percent Compact Target Satisfied|
|Infrastructure Investment ActivityOutcome: Reduce water losses, improve continuity of water service and improve overall efficiency and use of network water delivery leading to household substituting network water for costly alternatives||NRW -Network Wide||61.6||46.6||50.7||72%|
|NRW – MCC DMAs||19.3||35.5||62%|
|NRW – Non-MCC DMAs||—||70.4||—|
|Continuity of Supply – Network Wide||36||70||51.5||45%|
|Continuity of Supply – MCC Areas||—||42.5||—|
|Continuity of Supply – Non-MCC Areas||—||48.0||—|
|Kilometers of pipelines that are expanded, reinforced or rehabilitated||0||741||864.7||117%|
|Replacement of customer meters||0||36,168||41,650||115%|
|Water Smart Homes ActivityOutcome: Reduce water losses, improve continuity of water service and improve overall efficiency and use of network water delivery leading to household substituting network water for costly alternatives||Number of National Aid Fund households with improved water and wastewater network||0||4,494||3,958||88%|
|Number of people who attended the awareness sessions||0||52,200||64,002||123%|
Explanation of Results as of Compact End Date
The Water Network Project replaced more pipes and customer meters than planned at the beginning of the compact. At the end of the compact, non-revenue water and continuity of water supply remain higher than their end of compact targets. The higher than expected level of these outcome measures reflects the complex nature of the water network in Zarqa and the challenge of accurately measuring the benefits of the project to how the network functions.
Non-Revenue Water (NRW) measures the water that is pumped and then lost or unaccounted for, and is challenging to capture in Zarqa due the sprawling water network that must serve a rapidly growing population. Measuring NRW accurately requires reading nearly 170,000 customer meters on a consistent basis. While Miyhauna-Zarqa (the water utility) continues to make operational improvements, reading every customer’s meter regularly is a long term goal, rather than a short-term reality. In recognition of this fact, MCA-Jordan and MCC worked with Miyahuna-Zarqa to measure NRW in areas where the compact improved the network and a selection of areas that were not improved. Areas with the improved network have a NRW of only 35.5 percent as compared to 70.4 percent in areas where the old network remains, reflecting the significant reduction in the amount of water leaked from the pipes in compact areas.
While this represents a significant improvement, NRW in compact areas is still not as low as the end of compact target. NRW is a combination of the amount of water lost from the pipes and commercial losses at the utility. At the beginning of the compact, MCC and MCA-Jordan assumed that the majority of the measured NRW was water leaked from the pipes, which was measured at zero in pressure tests performed on compact constructed pipes. Seven years later it is apparent that commercial losses are a bigger challenge in Zarqa than previously understood. USAID is building on the compact and working with the utility to reduce its commercial losses in order to reduce NRW even further.
MCC and the Government of Jordan originally expected that the investments would increase the hours of available water to customers. This expectation changed with improved understanding during the compact of how hours of supply were allocated and measured on the network. The utility in Zarqa reports the scheduled number of hours that engineers plan to allow water to flow to the network, not the continuity of supply. This means they capture the expectations of the network managers for how much water will be needed to service the demand in different areas, not how many hours of water different parts of the network actually receive. In recognition of this measurement challenge, MCC and MCA-Jordan worked with Miyahuna-Zarqa to record the actual numbers for water serving compact areas and non-compact areas at the end of the compact.
Given this, the lower number of hours of water supplied to the network in compact areas reflects the reduction in physical losses in those areas of the network. When determining how many hours of supply to offer, the engineer watches the speed of the flow of water out of the reservoir. Miyahuna engineers report that when serving the areas improved by the compact, fulfilling customer demands requires fewer hours of supply and, thus, less water due to the reduction of leaks in compact areas.