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Farmers in the West Delta rely on groundwater for irrigation | In the past four years farmers in the Arab Republic of Egypt have started to see the next generation of sustainable irrigation take shape. As Egypt has lost agricultural land in the Nile Delta to urbanization, the government has supported commercial farmers in reclaiming desert through pumped groundwater irrigation. One such area, the West Delta region, on the fringes of the Delta, is home to 500,000 people and contributes hundreds of millions of dollars to Egypt’s economy every year. But this flourishing agricultural economy is now endangered by the continued reliance on groundwater irrigation. Groundwater depletion, eroding water quality, and environmental degradation all pose threats to the 250,000 jobs supported by agriculture in the region.
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West Delta agriculture supports 250,000 jobs | A New Paradigm for Egyptian Irrigation
Facing these problems, farmers asked the government to conceptualize a surface water irrigation system that would provide more reliable and better-quality water for the 110,000-hectare region. The government realized that the old model of heavily subsidized irrigation without cost recovery would leave it unable to meet service and maintenance obligations. So it made a bold move to a new paradigm of reform, with volumetric pricing, private participation, and sustainability through cost recovery.
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The West Delta region includes
nearly 300 square miles of farmland. | PPIAF Funding Helps Lay the Groundwork
Starting in 2004, Egypt sought PPIAF funding for two studies, one to develop atransaction model based on a private sector approach to irrigation, and another to come up with proposed regulatory and sector reforms to allow private participation. The first study laid the groundwork for a project that will provide water to 38,000 hectares of farmland over a total concession area of 75,000 hectares, incorporating the needs of farmers and allowing full cost recovery for a private operator. Working with stakeholders, the study came up with innovative approaches to both project financing and transaction design. The second study set an important benchmark for sector reform in Egypt. It also paved the way for a follow-on grant from the Netherlands to implement the regulatory framework and support capacity building in the Egyptian Ministry of Water Resources.
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The new project relies on the increased participation of stakeholders | Farmers in the Driver’s Seat
The project leaders sought a design that would be demand driven and reflect the input of the farmers it will eventually serve. A Water User Council was created to advise the project, with members from across the West Delta farming community. Farmers have voted on the project’s direction since the earliest stages, on questions ranging from what tariff model to use to where the initial water intake points would be located.
Farmers were also instrumental in the decision to go with a surface-piped system rather than open canals. While more expensive, the surface-piped system will reduce the land impact, cut down on water loss through theft and evaporation, and be easier to adapt to demand.
Farmers are hopeful that the project will create new opportunities. As the president of the Water User Council, Dr. El-Tatawy, put it, “The project brings back hope that the one billion dollars worth of investment in modern agriculture in the area will not go to waste and the thousands of people forming the work force will not go jobless.”
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The irrigation project also helps provide food to livestock | Cost Recovery Means Sustainability
Another way farmers are involved is through the demand-driven model of network design. Farmers sign connection agreements and pay security deposits before the network is built, cutting the demand risk for the operator and ensuring that the network will be built as efficiently as possible by serving the customers most interested in connecting. Once the network is built, farmers will pay a two-part tariff: a subscription fee based on the size of their land and a volumetric tariff to ensure efficient use of water. The government has taken on all currency risk for the project, eliminating that risk for the private operator and ensuring that farmers’ tariffs remain stable even as currency markets fluctuate.
The World Bank has provided $145 million in financing for the 30-year design-build-operate concession, and Agence Française de Développement $30 million. The private operator will meet another 15 percent of the initial construction cost, using revenue from the project to expand the initial network as needed. No budgetary subsidies from the government will be needed. Many companies have already signaled interest in bidding on the project—including Chinese, European, and local Egyptian operators. Construction is slated to begin by 2010.
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