37745 World Bank Analytical and Advisory Assistance (AAA) Program China: Addressing Water Scarcity Background Paper No. 3 Water Resources Management in an Arid Environment The Case of Israel __________________________________________________________________________ July 2006 Environment and Social Development East Asia and Pacific Region The World Bank World Bank Analytical and Advisory Assistance (AAA) Program The paper was prepared by Gangyan Zhou and edited by Jeremy Warford with the technical assistance of Xiangping Liu. The paper is one of the international experience background study papers of the World Bank's Analytical and Advisory Assistance (AAA) "China: Addressing Water Scarcity." The study is under the management of Jian Xie of the World Bank's East Asia Environment and Social Sector Unit. For more information on and other reports of the World Bank AAA Program "China: Addressing Water Scarcity", please contact Dr. Jian XIE, The World Bank, 1818 H Street, NW, Washington D.C, 20433, USA, Fax: 202-522-1666, Email: jxie@worldbank.org; or visit the program website at http://www.worldbank.org/eapenvironment/ChinaWaterAAA Environment and Social Development Department East Asia and Pacific Region The World Bank Washington, D.C. July 2006 This volume is a product of the staff of the International Bank for Reconstruction and Development / The World Bank. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202- 522-2422, e-mail pubrights@worldbank.org. ii China: Addressing Water Scarcity Background Paper No. 3 TABLE OF CONTENTS Chapter 1: Introduction 1 Chapter 2: Availability of Water Resources 2 Natural Water Sources 2 Produced Water Resources 3 Supply and Demand 4 Chapter 3: Legislative Framework for Water Resource Management 5 General Responsibilities and Principles 5 Water Law (1959) and Amendments 6 Other Laws and Regulations 8 Chapter 4: Organizational Structure for Water Resources Management 10 The State Government 10 Water Supply Companies: The Mekorot Water Supply Co. 13 Other Water Related Entities 14 Chapter 5: Strategies for Water Resource Management: Technical Approaches 17 Extensive Utilization of Recovered Water 17 Desalination 17 Importing Water 17 National Carrier 18 Demand Management: Technical Aspects 18 Chapter 6: Water Rights, Economic Instruments and Financing 19 Water Rights and Allocation 19 Fees and Prices 21 Financial Support 23 Water Trading 24 Private Sector Participation 25 Chapter 7: Concluding Remarks 27 References 28 List of Tables Table 1: Long Term Potential of Renewable Water from Major Sources Table 2: Water Supply by Source 1998-2020 (MCM/year) Table 3: Water Demand 1998-2020 (MCM/year) List of Boxes Box 1: Basic Principles of Israeli Water Legislation Box 2: The Water Commissioner Box 3: Partnership with Mekorot: The Hefer Valley Water Users Association Box 4: Irrigation Water Management iii China: Addressing Water Scarcity Background Paper No. 3 CHAPTER 1 INTRODUCTION Israel is a semi-arid country, and a The rest of the paper is organized as follows. significant increase in population combined The second section briefly discusses current with sustained economic growth now place water resource availability in Israel. Section enormous pressure on the country's scarce three discusses the legal framework for water resources. To date however, the water resources management. Section four Israeli government has been successful in reviews the role of water resources addressing this problem. Rigorous institutions. Section five summarizes major enforcement of policy, institutional and technical strategies for water resource legal measures has been very effective, and management. Section six discusses in many aspects the country is a worldwide economic instruments such as water tariffs, leader in water resource management. This subsidies, water trading, and private sector paper therefore reviews Israel's efforts in participation. Section seven contains this area in order to identify lessons that concluding remarks. may provide useful insights for developing countries ­ such as China ­ whose future economic growth is also threatened by water scarcity. 1 World Bank Analytical and Advisory Assistance (AAA) Program CHAPTER 2 AVAILABILITY OF WATER RESOURCES Natural Water Sources Table 1 Long Term Potential of Renewable Water from Major Sources Total annual available fresh water in Israel Source Replenishable is 1,800 million cubic meters (MCM), which Amount (MCM/year) is less than 300 cubic meters per capita The Coastal Aquifer 320 (Jerusalem: State Comptroller, 1990). In The Mountain 370 2005, approximately 45% of this was used Aquifer for municipal (primarily residential) Lake Kinneret 700 consumption, and 50% for agriculture. About 80% of the water potential is in the Additional Regional 410 north of the country and 20% in the south. Resources Normally, water supply fluctuates from Total 1,800 year to year in accordance with the annual Source: Ministry of National Infrastructure, rainfall. Groundwater provides 55-70% of the total water supply depending on the Surface Water ­ the Kinneret Basin prevailing climatic and hydrological The Kinneret Basin is in the northeast of conditions. Israel and covers 2,730 sq. km. The lake is Israel's main freshwater resources are fed mainly by the Jordan River, whose three stored in one lake and two aquifers. Lake tributaries contribute to an average inflow Kinneret (the Sea of Galilee) is the largest of about 650 MCM/year. The lake of source of water in the country. The Kinneret has a surface area of about 170 sq. Mountain Aquifer, which is under the km and a total volume of 4,300 MCM. The central north-south (Carmel) mountain water level of the lake is regulated at the range, is the second main source of water. Deganya Gates, maintaining an operational The third one is the Coastal Aquifer that volume of 590 MCM, between -209 and -213 roughly parallels the coastal plain of the meters. Of the annual water storage, about Mediterranean Sea. The lake and aquifers 380 MCM (20 cum/sec) on average is provide about 80% of the country's fresh pumped out of the watershed, while the water. The remaining 20% is stored in other remainder is used by consumers within the smaller regional resources located in Upper watershed. Galilee, Western Galilee, the Beit Shean Valley, the Jordan Valley, the Dead Sea Rift, Underground Water - the Mountain Aquifer the Negev and the Arava. The long-term The Mountain Aquifer stretches for 150 km average quantity of replenishable water between Taninim in the north and Beer from major water sources amounts to about Sheva in the south under the Judea and the 1,800 MCM per year, as shown in Table 1. Samaria highlands. Natural outlets are the Yarkon and the Taninim springs with a possible outlet to the Mediterranean Sea. 2 China: Addressing Water Scarcity Background Paper No. 3 More than 300 deep boreholes are used to water supplies by developing non- pump about 340 MCM/year, including 40 conventional water sources. Efforts to do so MCM of brackish water, maintaining a have focused on the following: water table level at 16.5 meters. Artificial recharge using excess supply from the Reclaimed Wastewater Effluents Kinneret is practiced using single and dual Treated domestic effluents, estimated at 400 purpose deep wells connected to the MCM, form the largest potential water National Water Carrier. source. Currently, about 250 MCM of effluents, treated to varying degrees, are Underground Water - the Coastal Aquifer already utilized for irrigation. The rest is The Coastal Aquifer has a total area of discharged into watercourses and the sea about 1,800 sq. km and extends over some due to lack of treatment and reuse facilities. 120 km along the Mediterranean coast from At the end of 1999, an estimated 300 MCM Carmel in the North to the Gaza Strip in the (25%) of the total amount of water supplied south. The safe yield, which is fully utilized, for irrigation was in the form of reclaimed is estimated at about 300 MCM/year. A sewage effluent. This is expected to increase certain level of seawater intrusion is to about 600 MCM by the year 2020. allowed for optimal exploitation of the aquifer. The interface was stabilized at Intercepted Runoff and Artificial Recharge about 1500 meters from the coast. Being a Although surface runoff is sporadic, several sand aquifer with a large holding capacity, regional and local schemes have already the aquifer is used for short and long-term been established. The schemes divert storm storage, allowing a normal supply in flow from the rivers into surface reservoirs drought years. However, due to frequent from which they are pumped into the droughts and depletion of reserves supply system, or dispersed on spreading endangering the sustainability of the aquifer, grounds and left to percolate into the artificial recharge has to be intensified, underground aquifer (mainly along the while exploitation has to be carefully coastal plain). At present, approximately 40 monitored. MCM are intercepted, out of a potential of 135 MCM/year of stormwater. The main Underground Water - Other Aquifers intercepting installations operating today In addition to the two major aquifers, there are the Kfar Baruch, Dalia, Menashe, are several smaller and localized aquifers in Shikma and Bsor rivers. Other small various parts of the country. The most schemes include hundreds of small runoff significant is the Western Galilee Aquifer, interception projects amounting to about having a safe yield of about 60 MCM/year. 130 MCM. Produced Water Resources Artificially-Induced Rainfall - Cloud Seeding Cloud seeding with silver iodide crystals After exploiting nearly all of its available has been practiced in Israel for the last 30 natural water resources and promoting years on a countrywide basis, using ground vigorous conservation programs, Israel has incinerators and aircraft. Controlled long made it a national mission to enlarge 3 World Bank Analytical and Advisory Assistance (AAA) Program experiments conducted between 1960 and osmosis has been adopted as the leading 1975 pointed to a positive significant effect technique for brackish and seawater of seeding in increasing rainfall. It is desalination. The first seawater desalination estimated that a significant increase of 10- plant, with a capacity of 10,000 cum/day 15% in rainfall in the northern part of the was commissioned in 1997 and other country has been achieved. Internal and modules of various capacities are planned external sources (e.g. the World along the Red Sea and the Mediterranean Meteorological Organization) have cited the Sea coast. Israeli seeding program as one that has statistically been shown as a significant Supply and Demand success, although the limited cloud occurrence in drought years limits the As of 1998, annual water supply reached benefits of cloud seeding when it is most approximately 2,100 MCM, of which 75% needed. was potable (natural replenished surface and ground water and desalination) and the Desalination remaining was marginal (treated effluents, Israel has many small and medium size brackish water and runoff water), as shown desalination plants in operation, these being in Table 2. Projections to 2020 show the used to process brackish and seawater for growing importance of treated effluents and domestic water supply in the Arava Valley desalination. Table 3 shows a trend in and the Gulf of Eilat. The largest of these which urban uses of water are growing in facilities produces 44,000 cum/day of water comparison with the other major category, from brackish groundwater and seawater, irrigation, so that by 2020 they will each thus meeting most of the drinking water account for half of total water consumption requirements of the town of Eilat. Reverse in Israel. Table 2. Water Supply by Source 1998-2020 (MCM/year) Year Source Surface Ground Brackish Treated Desalination Total Water Water Effluents 1998 640 1050 140 260 10 2100 2010 (est) 645 1050 165 470 100 2430 2020 (est) 660 1075 180 565 200 2680 Source: Israel Water Commission, 1998 Table 3. Water Demand 1998-2020 (MCM/year) Year Population Urban Agricultural and Rural Use, by Source Total (million) Sector Natural Brackish Effluents Total 1998 6.0 800 920 120 260 1300 2100 2005 (est) 980 750 95 380 1225 2430 2010 (est) 7.4 1060 680 75 490 1245 2680 2020 (est) 8.6 1330 600 60 640 1300 2680 Source: Israel Water Commission, 1998 4 China: Addressing Water Scarcity Background Paper No. 3 CHAPTER 3 LEGISLATIVE FRAMEWORK FOR WATER RESOURCE MANAGEMENT General Responsibilities and Principles equivalent of discharge permits that require submission of sewage plans. The most The core of Israel's water management draconian is the power granted the legislation is the Water Law of 1959. The Commissioner to issue a "Stopping" Order, statute has been defined essentially as an which literally turns off the taps for "enabling act" that provides the basis for anything but drinking water (Water Law, the government to control water demand 1971). and charges for the water and related services it provides (Laster, 1976; Laster, The authority to promulgate regulations on 1980). Institutionally, the overall authority water quality, which had been under the for execution of the act is granted to the charge of the Agricultural Ministry, was Minister of Infrastructure (previously transferred in 1989 to the newly established Agriculture). A Water Commissioner, as the Ministry of Environment. Although there head of Israel's Water Commission, who has been a steady stream of new regulations reports to the Minister of Infrastructure, is on pollution control promulgated by the responsible for implementation of the act. Ministry (Tal, 2002), the requirement for The law denies private and riparian rights broad governmental agreement prior to to water and claims that water resources are adoption, as well as the advisory role of a a public property subject to control by the lethargic Water Council dominated by State (Water Law, 1959). agricultural interests have limited this process. The 1959 water law had few provisions that focused on improving water quality. Besides the laws that control water quality, However, the situation changed in 1971 as a there are also laws that address other issues comprehensive amendment on water related to water resources. Those laws are: quality expanded section 20A of the law the Water Drilling Control Law, the (Tal, 1994). The expanded section states that Drainage and Flood Control Law, the all water pollution, including all point and Streams and Springs Authorities Law, the nonpoint sources is prohibited. Local Authorities Sewage Law, the Public Health Ordinance and the Licensing of According to the law, the Water Businesses Law. The myriad of legislation, Commissioner has the right to issue a series originating from the period of the British of orders to reduce pollution problems. One Mandate, constitutes a patchwork quilt, of them requires consumers to restore a which covers the main environmental water resource to its original state. concerns and hydrological supply matters. "Allowing Orders" are the functional However, the past thirty years has seen 5 World Bank Analytical and Advisory Assistance (AAA) Program little fundamental change in Israel's The absence of private ownership of water statutory framework for regulation of water is further provided for in Section 4 of the resources. Law which states that: "A person's right in any land does not confer upon him a right in a Box 1 Basic Principles of Israeli Water water resource situated therein or crossing it or Legislation abutting thereon;..." · Water resources are public property and there is no private ownership of water resources; Contrary to legal concepts prevailing in · Every person has the right to use water for some other jurisdictions, land ownership in recognized purposes; Israel does not include the right to the water · The overall quantity of available water is flowing through the land, beneath it or scarce and a prioritization process has to take place in order to provide sufficient water, in drawn from wells situated thereon. Water quantity as well as in quality, to all users; may be drawn from a well situated on a · Only a centralized allocation of water person's property only in accordance with a resources can ensure an optimal use of the water production license, even if the water limited water resources; is intended solely for the landowner's own · Consumers, through their representatives, consumption. need to have a major input in the formation of the rules relating to the allocation of water quotas; While the Water Law de facto expropriated · Attempts must be made to increase the water any private ownership of water and water quantities available for utilization by the resources, the right to receive and use water consumers; has been "Every person is entitled to receive · Government has the right to take appropriate and use water, subject to the provisions of this action to prevent the pollution of water resources Law". Source: Israel's Water Economy - Thinking of The relationship between the public future generations, 10 Aug 2002 ownership of water and the private right of use is thus established. The right to water is Water Law (1959) and Amendments not an absolute one but always applies for one of the purposes recognized by the The Law makes it clear that all water Water Law. The purposes recognized by the resources belong to the public and are to be Water Law for private right of water uses allocated to the most urgent and efficient are domestic uses, agriculture, industry, uses only. The law also states that all handicraft, commerce, services and public sources of water in Israel are public services (Section 6). property and that every person is entitled to use water, as long as that use does not cause While the water source itself cannot be the salination or depletion of the water subject to private ownership, water resource. Therefore, national water production, pumping and supply planning should follow the principle of equipment may be, and is in many cases, maximum water conservation, optimum privately owned. Thus, once water is management of water resources and careful allocated the water is brought to the end water allocation. user through the private sector. 6 China: Addressing Water Scarcity Background Paper No. 3 Each and every water use requires a license. consumer of water vis-à-vis the bulk This includes well drilling, extraction producer/supplier and as a water supplier (production), supplying, consumption, vis-à-vis all of the consumers within the subsurface recharging and water treatment. municipal boundary. Before 1995, domestic All licenses are annually issued and, at least uses were subject to quota allocations. Since de jure, the license granted for one year that year quota allocations for domestic does not confer upon the recipient the right water use were abolished and a strict for a license in the following year although differential pricing mechanism took its in fact, absent compelling reasons to the place. The rules concerning municipal contrary, licenses are usually renewed. The supplies require that each consumer must license lists conditions that relate to have an individual water meter, and that quantities, qualities, procedures and water is charged for separately and not as arrangements for production and supply of part of the municipal levies. water, increasing the efficiency of water use, preventing pollution, etc. The license may Industrial uses are subject to quotas based be revoked by the Water Commissioner if on water use tables for the various the conditions are not fulfilled or if the industrial uses and annexed to the water use endangers the water source. Regulations. There are specific provisions relating to small consumers (i.e. up to 5000- The Law does not prescribe priorities in 10000 CM per annum). The water is water allocation though it can be found in supplied through the Municipalities. the Water Regulations (Water Use in a Rationing Area), which prescribe that in The water allocation system distinguishes Rationing Areas (geographic areas in which between allocations for planned and non- the demand exceeds the supply), water planned communities. Water allocations for allocation will be in the following order: (a) planned communities are based on the Domestic Uses; (b) Industrial Uses; (c) water needs defined in the agricultural plan Agricultural Uses; (d) Other Uses. Since for the community. Water allocations for most of the country has been declared as a non-planned communities are based on the Rationing Area the above order of priority type of agricultural growth, the growth is in fact the general order of priority for all stage of the plants/trees, and the water allocation in Israel. The amount of geographical location of the plants/trees. the water allocated in each calendar year is The allocations are based on water needs in fixed by the Water Commissioner for each the various regions of the country and of the aforementioned categories. In normally water will not be allocated to principle, the allocations are annually regions where a particular growth pattern is adjusted to reflect the changes in water considered to be inefficient. availability and water needs. In 1991 the Water Law was amended with a Water allocation to domestic users is supplementary chapter on water pollution. through the Municipalities. The The new rules reflect the growing Municipality serves a dual function, as a importance that environmental protection 7 World Bank Analytical and Advisory Assistance (AAA) Program takes in the use of water resources. Article Water Drilling (Control) Law (1955) 20 of Chapter Two of the law directly The law aims to preserve subsurface water relates to prevention of water pollution. The sources and prevent water pollution, Article states: "A person shall refrain from depletion or salination due to over- any act which directly or indirectly causes, exploitation. The law requires the parties to or may cause, immediate or subsequent obtain a license from the Water water pollution; and it shall be immaterial Commissioner for every drilling of a well or whether or not the water resource was every change within a well. In the case of polluted before the act." The law sets fine well-drilling or changing a well without a levels, establishes personal liability, license, the Water Commissioner may order empowers courts to impose cleanup the parties to stop the installation and expenses on polluters or to undertake restore the sites to their original state. A cleanups, and enables citizens to initiate drilling license is required even if the well is legal proceedings against offenders. The designed for personal consumption only. Minister of the Environment is authorized to protect water quality, to prevent water Local Authorities (Sewerage) Law (1962) pollution, and to promulgate regulations on This law clarifies the rights and duties of these issues. Section 1 of the Water Law lays local authorities in the designation, down the underlying philosophy of Israel's construction and maintenance of sewerage approach to its water resources by systems. It requires a local authority to providing that: maintain its sewerage system in proper condition. New sewerage systems must be "The water resources of the State are public approved by regional planning property; they are subject to the control of commissions and by health and the State and are destined for the environmental authorities. The law also sets requirements of its inhabitants and for the out sewerage system charges and fees. development of the country." Streams and Springs Authorities Law, 1965 Other Laws and Regulations This law empowers the Minister of the Environment, after consultation with local Water Measurement Law (1955) authorities and the Minister of the Interior, A fundamental provision in the law is the to establish an authority for a particular obligation to provide a measured amount of river, spring or any other water source. water to each consumer. Payment for water Those authorities take steps to protect and used is based on water meter readings. conserve the stream and its banks, to abate nuisances and prevent pollution. The law grants the Water Commissioner the right to prohibit the supply and Prevention of Water Pollution (Rinsing of consumption of water if a water meter is not Containers for Spraying) Regulations, 1991 installed, and to install a water meter on the The regulations prohibit anyone from account of whosoever was obliged to install emptying or rinsing chemical and/or one. biological substances or their residues from sprayers, collection tanks or any other 8 China: Addressing Water Scarcity Background Paper No. 3 installations into a water source, either to a reservoir, with some exceptions for directly or indirectly. They set specific specific cases. requirements on the siting, construction and operation of rinsing installations. Prevention of Water Pollution (Usage of Sludge) Specifications are set forth on size, sealing, Regulations, 2004 operation and maintenance of the reinstated These regulations, prepared by the Ministry collection tanks and evaporation ponds. of the Environment in collaboration with the Ministry of Health and the Water Prevention of Water Pollution (Spraying Near Council, aim to prevent water pollution and Water Sources) Regulations, 1991 environmental degradation caused by The regulations prohibit aerial spraying of improper disposal of sludge from municipal biological and/or chemical substances for sewage treatment plants. The regulations, agricultural purposes near a water source, which came into effect at the beginning of including Lake Kinneret (Sea of Galilee), the 2005, require wastewater treatment plants open sections of the National Water Carrier, to stabilize and treat the sludge they the Upper Jordan River and its tributaries, generate to be suitable for agricultural use streams in the Kinneret drainage basin and and avoid soil deterioration. The other water sources used for drinking water. regulations establish maximum limits for The regulations set limits on aerial spraying heavy metal and pathogen concentrations according to wind velocity and wind and odor limits on sludge designated for direction. Spraying from an airplane within agricultural use, set recording and 300 meters of a water source, or within 200 laboratory testing requirements, define meters of certain specified rivers or within specific uses for different classes of sludge 50 meters of any other river is prohibited. (A and B), set limitations on areas of sludge use, and prescribe requirements for Prevention of Water Pollution (pH Values of warning signs, transport and storage. Industrial Sewage) Regulations, 2003 Requirements for class A sludge, which is Promulgated in November 2003 and virtually pasteurized and highly stabilized, coming into effect in May 2004, the will come into force three years after the regulations aim to eliminate water pollution regulations come into force. Following are from corrosion generated by industrial the maximum permitted values for heavy sewage through establishing pH values. The metal concentrations in treated sludge (in regulations prohibit an industrial plant mg/kg of dry material): cadmium 20, from discharging sewage with pH value copper 600, nickel 90, lead 200, zinc 2500, below 6.0 or above 10.0 to the sewerage mercury 5, and chromium 400. system, or with pH below 6.0 or above 9.0 9 World Bank Analytical and Advisory Assistance (AAA) Program CHAPTER 4 ORGANIZATIONAL STRUCTURE FOR WATER RESOURCES MANAGEMENT Institutional arrangements for water Moreover, the ministries and entities that resource management have much to do with make and implement policy are themselves the management and decision-making special interest groups, while other private culture. In Israel, the agency that is officially and community interest groups also play an in charge of water policy-making is the important role. Ministry of Infrastructure, although this responsibility has historically rested largely The State Government with the Ministry of Agriculture, which continues to play an important role, along Responsibilities of agencies at State level are with other agencies such as the Ministries of briefly summarized below. Finance, Environment, Health, Infrastructure, Ministry of Infrastructure Interior, Foreign Affairs, Defense, Trade and The Minister of Infrastructure is in charge of Industry, and Tourism Responsibility for implementing the Water Law (1959), and managing water systems lies with the Water other basic water resource management Commissioner, who sets the rules for water legislation. In order to implement these allocations. Mekorot is the company that laws, the minister promulgates secondary responsible for allocating available water to legislation such as: rules on the width and consumers. Consumers are represented by a area of protective strips around water Water Council. The Prime Minister is also resources, approving orders by the Water involved in national and security decisions Commissioner to reduce water diversion directly or indirectly related to water due to from a depleted water resource and the extreme sensitivity of this issue. determining norms for the usage of water, Decision-making and management in the its quantity, quality, price, and terms of arena of water resources are impacted by supply. many factors which ultimately determine the By virtue of these powers, the Minister of allocation of those resources. Management is Infrastructure has established norms for the greatly influenced by special interest groups, use of water in fish farms, gardens, which can impose pressure on the industrial plants, fish stores, chicken coops government. For example, in principle the and swimming pools. The minister first priority for water allocation is domestic regulates the supply and demand of water consumption, then industry and only after in a certain area and sets maximum water that, agriculture. However, in practice, consumption levels and priorities. It priorities tend to be, first, agricultural empowers corporations to act as water consumption, then domestic consumption authorities to plan, establish and operate and finally industrial consumption. water factories, and is authorized to take 10 China: Addressing Water Scarcity Background Paper No. 3 measures against water authorities that do the local authority establishing this facility not carry out their functions. The minister (Goldman, 1996). can even appoint water institutions such as the Committee for Water Planning and Ministry of Agriculture Consumer Representation. The Ministry of Agriculture represents the largest water consumer group, namely the Box 2 The Water Commissioner farmers (Soffer, 2002). This representation typically involves a conflict of interest since Operating within the Ministry of Infrastructure is water, which belongs to the entire the office of the Water Commissioner, who is responsible for designing and implementing the population, is also a tool used by the policies of the Minister of Infrastructure and Ministry to satisfy the interests of the responding to all events, including conflicts and farmers. The Minister of Agriculture's top disputes that are related to water management and priority is to supply farmers with largest allocation. The mandate of the Water Commissioner is comprehensive, namely possible amount of water at the lowest management of the nation's water resources to possible price. The Ministry has historically ensure a reliable water supply to all of Israel's held many of the responsibilities for water residents for their domestic, industrial, agricultural resource management that are now under and other uses. The Water Commissioner is therefore responsible for formulating water the control of the Ministry of Environment. policies, preventing water pollution, regulating In view of the political importance of the streams and flood prevention, utilizing overflow agricultural sector, on whose behalf it is an water, exploiting new water sources, and advocate, it continues to play a central role promoting efficient water use. In particular, water in Israel may only be extracted under a license in key decisions such as the intersectoral issued by the Commissioner. allocation of water and other water management and policy issues. Source: Goldman, M D.,Managing the Water Systems ­ the Legal Framework in Israel Ministry of Finance (Jerusalem: The Florsheimer Institute for Policy The Ministry of Finance is responsible for Studies, 1996). the overall budget and for disbursement to the various entities involved in water Through its authority to establish rules for resource management. For years, calculating water fees, the Minister of representatives of this ministry have been Infrastructure sets water rates for the local opposing the establishment of desalination authorities, including Eilat, and the rates for facilities and instead support a policy of water supplied by Mekorot. Under the raising water prices for farmers as a means Drainage and Flood Prevention Law (1957), of saving water and making effective use the Minister has the right to determine thereof (Zaslavsky, 2001). which areas will be drainage areas and the Ministry of the Environment need to establish a drainage authority. The Ministry of Environment is responsible Under the Local Authorities Law (Sewage) for preventing water pollution. The (1962), the Minister's approval is required ministry is authorized to promulgate for any plan to establish a purification and regulations, prohibitions and restrictions on sewage removal facility outside the limits of the location and establishment of polluting 11 World Bank Analytical and Advisory Assistance (AAA) Program facilities; use of certain materials or handle the sanitary quality of water, the production process methods, including Minister of Health appoints one of his agricultural cultivation, fertilization and employees as a "health authority" (as in the spraying; production; importation; case of the Ministry of the Environment). distribution and marketing of materials and The ministry may instruct the holder of a products; regulation of vehicular traffic over water source to take the measures required and near water resources; and determining to prevent a health hazard or to improve the the quality of water required for various quality of the water. purposes including the quality of floodwater and sewage. By virtue of this authority, the The Ministry has created sewage and Minister of the Environment has effluent water regulations that require large promulgated regulations that almost sewage producers (public authorities or completely prohibit the use of cesspools and factories) to treat sewage in a purification septic tanks, regulations that limit the use of facility, so that it reaches the quality level salt in factory freshening processes, and prescribed by the regulations. The Minister regulations which prohibit, among other of Health may, in conjunction with the things, spraying and dumping and rinsing Minister of Agriculture, determine rules for methods in spraying facilities which are the purification of sewage water designated liable to cause penetration of the spraying for irrigation or other economic purposes. materials into a water source. Under the These rules prohibit the use of drainage Streams and Springs Authorities Law, 1965, water without a permit from the minister. the minister is authorized to establish stream This permit will not be granted unless it has authorities and to determine their functions been proven that the water has been and responsibilities. Under the Local sufficiently purified. The Ministry has Authorities Law (Sewage), 1962, activities promulgated regulations prohibiting related to sewage (maintenance of the irrigation of agricultural crops by water that system or the selling of sewage water by the has not been treated in a purification system local authority) must be performed such that approved by the Ministry of Health's they satisfy the health authority, by a person district sanitation engineer. Effluent water is appointed by the Minister of the permitted for use only for those agricultural Environment (Goldman, 1996). crops not designated for human consumption (such as cotton) or for crops Ministry of Health which undergo industrial processes which The Ministry of Health is in charge of prevent transmission of microorganisms implementing the National Health (such as grains and sugar beet). Pursuant to Ordinance (1940). To implement this law, the the Local Authorities Law (Sewage), 1962, a minister is authorized to promulgate plan for the establishment of a sewage regulations that define the sanitary quality system requires the approval of the Minister of potable water, determine the sanitary of Health (Goldman, 1996). conditions of water sources designated as potable water sources, and regulate the Ministry of the Interior sanitary aspects of planning, installation and The Ministry of the Interior is in charge of operation of potable water systems. To the local authorities. By controlling their 12 China: Addressing Water Scarcity Background Paper No. 3 budgets, the ministry supervises the local its borders. authorities' water and sewage activities. Under the Local Authorities Law (Sewage), Water Supply Companies: The Mekorot 1962, the ministry can obligate local Water Supply Co. authorities to install a sewerage system. Under the Water Law, 1959, the Minister of Mekorot is Israel's national water company. Agriculture must consult with the Minister Founded in 1937, its objective was to of the Interior and obtain his approval for develop the country's water supply systems. determining rates for water supplied to the Mekorot controls the water system local authorities and for water produced by nationwide according to the Water Law the local authority, for any agreement to (1959). As a state-owned company, relocate a water factory to which a local Mekorot operates independently under the authority is party and to appoint a local supervision of the Government Companies authority or association of municipalities as Authority but is affiliated to the Ministry of a regional water authority. Under the Infrastructure and the Ministry of Finance, Drainage and Flood Prevention Law, 1957, and supplies water in bulk to municipalities, the Minister of the Interior must be farmers, and industry. consulted before the Minister of Health can The company currently provides 65% of the determine the extent of the local authorities' water consumed in Israel and serves 4,800 representation in a drainage authority, and customers, which include municipalities, all matters pertaining to drainage taxes. local councils, moshavim, kibbutzim and The Minister of the Interior is in charge of regional associations. In 1998, the company implementing the Regulation of Public supplied 1501.9 million cubic meters of Bathing Places Law (1964), under which he water. Of that amount, 794.0 went to the determines the areas at the beach, rivers and agriculture sector, 89.8 to industry, 618.1 to lakes where swimming is permitted. He is domestic consumption and the remaining also responsible for rulings, which 27.9 cubic meters was introduced into the determine the methods of maintaining biological system. sanitation conditions in authorized bathing In financial terms, Mekorot accounts for areas. 80% of the water industry's activity in Israel. Costs are relatively high since it transmits Ministry of Foreign Affairs and Ministry of water over long distances and pumps water Defense to high places. Most other associations and The Ministry of Foreign Affairs is involved private manufacturers supply local water in the political and security aspects of Israel's demand at lower costs. In the past, all of water policy vis-à-vis neighboring and Mekorot's expenses were passed on to its remote countries. The Ministry of Defense, consumers and the government. Since 1993, as a consumer and as a party to the water prices are no longer controlled by Mekorot but are determined by the protection of the country's water facilities government. This cost arrangement has and the water that reaches Israel from changed the nature of the company's neighboring countries, has a vested interest activities and forced it to become more in water-related activities occurring outside business-oriented. The arrangement has 13 World Bank Analytical and Advisory Assistance (AAA) Program resulted in an improvement in the efficiency However, Mekorot is still the only entity of its energy use, a significant increase in with significant financial and operational investments in water facilities, and capability in the field of water resources, renovation of existing equipment. The and it remains a monopoly with too much company has also been forced to attempt to enter new fields in order to expand and power. The water associations and private diversify its business. producers are small businesses with limited financial capability. Mekorot remains the leader in the water sector, and it operates Box 3: Partnership with Mekorot: The Hefer Valley Water Users Association without proper supervision. Its size intensifies the centralization of water The Afikey Emek Hefer Association is a resource management which continues to voluntary agricultural cooperative, which brings augment its financial strength. together member farms in the Hefer Valley. Established in 1984 it consists of 26 member settlements of kibbutz's and Moshavs. The Although there are many good examples of Association is an independent unit and how Mekorot has worked in partnership represents the Hefer Valley Regional Council in with others to improve water management water and sewage issues, and is in charge of efficiency (see Box 3), it is feared that the maintaining water sources in the valley. The Association undertakes operations to ensure water system is developing according to water supply sources for all valley users in Mekorot's needs, which is not necessarily terms of research, physical maintenance, compatible with the goal of the country in economics and legal issues. To achieve this, its terms of allocating water resources water supply system is jointly owned and managed with Mekorot whose role is to operate efficiently and fairly. Mekorot's continuing and maintain the system. Expenditures and expansion in new directions in water investments are jointly shared between the resources, such as desalination, will Association and Mekorot. Senior management increase the monopoly's strength and of the company participate in regular policy meetings with the Association, and at the intensify its power. This is liable to draw operational level there is continuous interaction the national economy into excessive between the Association and staff of the expenses and greatly increase the price of Mekorot's Central District Division. A water to the consumer. In 1997, the characteristic of this arrangement is the involvement of he farmers themselves as well as Arlozorov Committee for Examination of advisory services from relevant government Water Resources Management suggested agencies in water management issues in the encouraging other private entities and local Valley. authorities to enter the field of desalination. The partnership between Mekorot and the Association is widely regarded as being highly Other Water-Related Entities successful, as illustrated by the increased efficiency of water use that has been realized in Water Associations and Private Producers recent years. Financial and technical support Water supplied by private parties, primarily provided by Mekorot for sewage treatment, for agricultural use in the northern part of water reclamation, and more efficient irrigation technologies have been a model that the the country, is managed by regional water Association is keen to demonstrate to others. associations. In most cases the associations belong to consumers who are farmers in the Source: Shaul Manor and Zeev Hagali, Survey on regions. These associations may either act Irrigation Modernization, FAO, December 2002 14 China: Addressing Water Scarcity Background Paper No. 3 independently or jointly with Mekorot in suppliers and agricultural and industrial supplying and allocating water resources. organizations (Goldman, 1996). Their financial ability is limited and they need assistance to establish their water The National Drainage Council supply facilities. In particular, they do not This Council provides advice on matters have access to the guarantee or credit terms pertaining to the implementation of the that Mekorot was granted in the past Drainage Law. The council members (Arlozorov, 1997). include the Water Commissioner, 8 government representatives and 12 Local Authorities members appointed by the minister, 8 of These are responsible for the water and whom represent agricultural organizations. sewage services within their jurisdiction Each drainage area has a drainage authority under the Municipalities Ordinance, in which the majority of members are ensuring that residents in their jurisdiction representatives from the local authorities in pay the water fee. that drainage area, the remainder being government officials who operate with the The Water Council approval of the Minister of Agriculture The Water Council is a national entity (Goldman, 1996). appointed by the government to advise the Minister of Infrastructure on a wide range of Lakes and Streams Authorities matters pertaining to water policy. The These are composed of the following minister must consult with the council groups of members. The first group consists before promulgating secondary legislation, of government officials who are and specifically with regard to tariffs. The representatives of the local authorities Council has about 30 members, including within the area of the Lakes and Streams representatives from the Ministry of Authority; the second group includes Agriculture, the Water Commissioner and representatives from the corporations that other government representatives, use the water from the streams (the Nature consumers, suppliers, and producers, as well Preservation Authority), and the third as a representative of the World Zionist group the representatives of property Federation. The Council appoints one owners whose land borders on the stream. committee to discuss matters related to The authorities have various responsibilities. agricultural water use and another one for First, they regulate water utilization in the other water uses. stream, maintain an environmentally healthy water level and ensure regular The Planning Committee drainage. Second, they determine the course This is appointed by the Minister of of the stream, remove hazards that may Agriculture and has 11 members. Its job is to pollute the stream, and preserve the natural examine plans for water facilities. landscape of the stream and its banks. Third, they regulate water distribution among The Consumer Representative interested parties, regulate the ways to At the local level, this includes utilize the stream, and rehabilitate the representatives from local authorities, stream for recreation and vacation purposes. 15 World Bank Analytical and Advisory Assistance (AAA) Program There are currently two Lakes and Streams Authorities ­ The Yarkon River Authority established in 1988 and the Kishon River authority established in 1994 (Goldman, 1996). Sea of Galilee Administration This fulfills an important function in terms of protecting the water quality in the lake and preventing water pollution in the drainage area. However, its status is not defined by law. In fact, it is a type of coordination committee that connects various official entities, such as the Water Commission, the drainage authorities, the Ministry of the Interior, and the Israel Lands Administration. Farmers Farmers controlled water resources during the country's early years. The Minister of Agriculture was, traditionally, a kibbutz member or a member of the moshav movement. The Water Commissioner originated from the agricultural settlement, and there were many kibbutz and moshav members on the Knesset Water Committee. In practice, the situation is not very different now, with farmers continuing to play a dominant role in the allocation of water resources. However, as a consequence of arid years and over-use of reservoirs, concern about current and anticipated water shortage has become a major national issue and there has been strong pressure to change the principles of water resources management. 16 China: Addressing Water Scarcity Background Paper No. 3 CHAPTER 5 STRATEGIES FOR WATER RESOURCE MANAGEMENT: TECHNICAL APPROACHES Water resource strategies continue to evolve reductions of ROSWDP based mainly on in Israel, with various technical options local changes in the design of these plants. being developed or considered. These This decision also includes the completion include utilization of recovered water, of nationwide treatment and re-use of all of desalination, importation of water, its treated waste water (tertiary and construction of a national carrier, secondary treatment) and allocating these agricultural and industrial efficiency new sources of water to the farmers in improvements, and urban water use exchange for their fresh water allocations. standards. Importing water Extensive Utilization of recovered water Turkey is considered Israel's best source of Regulations have been initiated in order to imported water from the mouth of the improve the quality of sewage treatment Manavgat River in southern Turkey to the plants and their effluents to maximize water Ashkelon Port, 600 km away. Water may be reuse potential, and to minimize health and transferred using a submerged pipeline, environmental risk. A particularly super tankers or floating bags. The important objective is to replace fresh water Manavgat River has an average flow of 140 supplies currently used for irrigation cum/sec, of which 60 cum/sec are assumed purposes by treated wastewater effluents. to be available for export (15% of the By 2003, Israel was re-using 65% of its waste unused water on the Turkish Mediterranean water, and almost 50% of the total irrigation Coast). The use of super tankers, with a sector is now using treated sewage effluents capacity of 250,000 tons, is currently being (Saul, 2005). considered. They would unload near Ashkelon Port, on an existing floating Desalination Single Buoy Mooring (SBM) stationed 3.25 km from the coast. The existing facilities, To augment its existing relatively small including the SBM, the floating hose and scale desalination plants, and as a result of the submerged pipes connecting the SBM to the recent dry spells and growing water the coast, would have to be cleaned for demand, the government has decided to water use. initiate and accelerate the construction of Reverse Osmosis Sea Water Desalination The cost per cubic meter is estimated at Plants (ROSWDP), which will add about about $0.80 to $1.00 for supertanker 10% to the total fresh water availability of shipment, versus between $0.60 and $1.25 the country in 2005/6. This follows a period for seawater desalination. However, of intensive research and significant cost unloading and conveyance facilities 17 World Bank Analytical and Advisory Assistance (AAA) Program (seasonal storage, pumping station, inland water usage as well as pollution. After a transmission conduit, SBM, marine survey is conducted, an implementation unloading pumping station and the policy is formed which requires the submerged pipe) would add a further 50% establishment of a special fund, a to this cost. The excessive cost, reliability nationwide program for each industry, and and the doubt about uninterrupted supply an allocation system that aims to improve and long-term availability, render the productivity per unit of water that is importation a less desirable option for used. solving Israel's water deficit. Box 4 Irrigation Water Management National Carrier Israel is a world leader in the area of irrigation water As part of the nationwide network for the management in arid environments. Based upon the available surface and ground water greater agricultural efficiency of drip irrigation and micro-sprinkling compared with furrow irrigation in resources, a national carrier was completed Israel (90% compared with 64%), the country has over to transfer the water surpluses from the time carried a major technological switch in irrigation relatively water abundant north to the practices. The improved technologies, combined with water scarce center and south. This changes in cropping patterns and moving to higher investment enables the authorities to value crops, have had dramatic results. Thus the average requirement for water per unit of land has maintain a balanced national pumping been reduced from 8,700 cubic meters per hectare in pattern, monitoring hydro-geological 1975 to 5,500 cubic meters per hectare today. With conditions at all times and throughout the water consumption remaining the same, agricultural country. Desalination of brackish and sea output has increased twelve fold. water have become the main means of Source: adding water quantities when natural www.jewishvirtuallibrary.org/source/History/scarcity.html supplies and re use fail to meet the growing demand for water. The Urban Sector The urban sector has adopted several Demand Management: Technical Aspects measures to improve water use efficiency. Those measures include: water metering, Agricultural and Industrial Production Sector pipe replacement, and electronic Irrigation water allocations are based on monitoring and retrofitting campaigns. norms developed by the agricultural Double-volume toilet flushing basins, and research community together with the recently redesigned standards for taps and farmers. The norms aim to maximize showers, were the legally enforceable basis economic gains by introducing new for a 25-year program. The effectiveness of irrigation technologies, changing cropping this can be seen from the fact that per capita patterns, and moving away from crops ­ urban water consumption in Israel has such as grains - where the product value hardly changed in the past 40 years despite per unit of water is relatively low. an increase of 300% in GDP during that A similar policy was adopted by the period. industrial sector in order to reduce per unit 18 China: Addressing Water Scarcity Background Paper No. 3 CHAPTER 6 WATER RIGHTS, ECONOMIC INSTRUMENTS AND FINANCING Water Rights and Allocation the Water Commissioner. It has the power to set quantity and quality standards for Water Rights those who have the right to receive water. Soon after the establishment of the State of Farmers are forbidden to use water in Israel in 1948, the issue of water became a excess of the amount allocated to them by top priority. Urgency was seen not only in the Water Commissioner, even if they have planning and carrying out projects and their own well. Water meters at the well are securing funds, but also in consolidating a read and controlled by staff of the water legal framework that would regulate all the Commissioner's office. Water pollution is elements pertinent to the matter of water forbidden and punishable by fine or supply. imprisonment. Accordingly, in 1959 the comprehensive The Law stipulates the basic rules for state Water Law was passed in the Knesset (the control of water charges, and provides for Israeli Parliament). The Water Law states the establishment of a Water Charges that all sources of water in the state are Adjustment Fund to reduce differences in public property, subject to the control of the water charges in various parts of the state and dedicated to the needs of its country. The Water Metering Law forbids inhabitants and the development of the the supply and abstraction of water without country. Water sources are defined to measurement. include all internal sources of water, including springs, streams, rivers, lakes and Water Allocations and Permits other current accumulations of water, above It was recognized early on that water, as a the ground or underground, including resource in a short supply, required a legal drainage water and sewage. Each person is framework and the prescribing of entitled to obtain water and to use it, subject engineering, economic and administrative to the provisions of the Law. actions in order to attain its efficient utilization, in accordance with the goals set The priority for water allocation is first for by the State. domestic use and then to commerce, industry and agriculture. Supervision of all Most regions in the country were declared matters related to water is managed by the as "rationing regions", which means that Water Commissioner who is responsible for water consumption was limited to a fixed carrying out a comprehensive and balanced amount. Therefore, norms were established policy of water production and supply at for agricultural consumption, domestic the national level. The Water Law prohibits consumption and industrial consumption. the drilling of wells without a license from 19 World Bank Analytical and Advisory Assistance (AAA) Program Since the promulgation of the Water Law, in the annual allocation date. In January, an annual water production and supply 70% of the overall allocation is determined license is issued to every producer and for each agriculture sector consumer, with supplier. The production license is a the remainder of the allocation determined fundamental document reflecting the Water during the winter according to the Commissioner's provisions regarding the hydrological situation, but no later than amounts of water allowed for production, April 1st of the same year. In 1999, after supply or consumption, conditions of severe depletion of the country's water production, and the restrictions to which it resources, the Water Commissioner decided is subject. The first priority is given on a reduction in the water quotas for however to municipal and domestic supply. agriculture (1998 was set as the basic year for the cut) by a 40% average and in the Water allocation for private agriculture years 2000 - 2002 an average reduction of began with the enactment of the Water Law. 50% was decided on. The initial stage was the recognition of water usage rights (not water rights). The Establishing quotas for industrial plants allocation of water rights was done by that use more than 5,000 cubic meters of photographing the farmers' areas, and water a year is done based on the quantities measuring the quantity of water consumed ("norms") of water consumption, according in certain period. After that, usage norms to the type of product and scope of were established for different crops, and production. The multiplication of the water use quotas were calculated by aforesaid norms by production scope multiplying the norms by the areas of crop constitutes the basis for water allocations in cultivated. the plant. A plant whose wastewater disposal system does not meet the required Water allocation for planned settlements criteria does not receive a water was determined by the types of soil and consumption license. means of water production as well as the maximum size of the settlement measured The amount of water allocated to domestic in terms of the number of units. The consumption includes water for household maximum water allocation for each needs, gardening, auxiliary farms, services settlement was obtained by multiplying the and public utilities, trades, commerce, etc. number of planned farm units by the water within the domain of the local authority, or quota per unit. in other words, the overall shared consumption of the local authority, Since 1986 the Water Commission has been excluding separate allocations for industrial following a policy of water quota cutbacks. and agricultural needs within its domain. A cutback was made in most parts of the country, due to the reduction in pumping In recent years the amount of water from the coastal aquifer (Pleistocene allocated to local authorities has not been aquifer), which was undergoing a fixed. Every local authority is entitled to use rehabilitation process. An important the amount it requires for various purposes. change initiated in 1993 was the flexibility However, the amount of water the local 20 China: Addressing Water Scarcity Background Paper No. 3 authorities sell to consumers within its Mekorot. boundaries should not be more than 12% of the total available water in the regions. If Unit costs of raw water supply (at the city the consumption difference is higher, the gate) in $US equivalent (constant 2002 local authority is given a monetary fine prices) were as follows: ("special payment"). Year Cost per Cubic Meter Fees and Prices 1960 0.12 1970 0.35 Mekorot provides two thirds of the water 2001 0.45 Source: Yoav Kislev, The Water Economy of supply in Israel. The prices the company is Israel, 2006 entitled to charge are set by the Ministries of Infrastructure and Finance, as approved The cost-plus method previously used by by the Knesset's Finance Committee (The Mekorot to calculate water prices was Israel Water Commission, 2002). Prices are replaced in 1994 with a business oriented updated from time to time according to method in which the government now changes in the consumer price index, determines recoverable fixed and variable electricity rates and the average wage index. costs. A substantial increase in water prices The rates are categorized according to use: - was approved by the government, and this, primarily, domestic, industry and coupled with improved performance agriculture. While some subsidization is (saving in energy cost and other variable employed, prices are essentially based on and fixed costs) resulted in a significant the costs of supply. reduction in the government's subsidy from 40% to 20% over the following four years. It Water Costs has remained at roughly this level of The unit cost of water in Israel has support ever since. However, water increased sharply over the last 45 years, as supplied to the urban and the industrial might be expected in a water-short country. sectors incurs the full cost, while water In 1960, water was primarily supplied by supplied to agriculture continues to be local sources, at relatively low cost. The subsidized. (see Section 6.4 below for more advent of the national carrier in the mid- details). 1960's involved heavy investment in water pumping, large conveyance systems and Agricultural Use: Reclaimed Water. treatment plants, which increased unit costs With regard to reclaimed water, the considerably in the early years of that government supports the agricultural sector project. Nevertheless despite having to by providing subsidies for initial capital access ever more expensive sources, unit investments approved by the Investment costs between 1970 and 2001 did not Committee, which is composed of increase greatly. This can be explained in representatives from the Ministries of part by greater utilization of the new Agriculture, Treasury, Health, Environment, capacity and improved operational and the water authorities. The committee efficiency on the part of the main supplier, evaluates proposed projects based on 21 World Bank Analytical and Advisory Assistance (AAA) Program technical, economic and managerial criteria. from any source have been charged with an The cost difference between the production extraction levy payment. Current rates for price and the price at which the reclaimed agriculture are 0.19 per cubic meter from water is sold is covered by a government underground sources and $0.06 from subsidy. surface water. (Households and manufacturing pay between $0.18 and $0.22 The cost of supplying one cubic meter of per cubic meter depending on the source). reclaimed water from the outlet of the The actual rates are updated from time to treatment plant to the farmer's field is time. The obligation for payment of the currently estimated at about $US 0.211. This extraction levy falls on the actual extractor, includes: 70% capital recovery cost and 30% who is entitled to collect from his operational costs. Operational cost includes: consumers their share of the extraction levy 35% for maintenance of lines, reservoirs and as well as other water supply costs, in pump stations, 40% for energy, and 25% for accordance with the quantity of water other operating costs and management. supplied to them. If the water extractor does not pay the extraction levy, the Water Farmers are charged between $0.13 and Commissioner has the right to cancel, to $0.19 per cubic meter for reclaimed water, suspend or to change the extraction license depending on quality. The balance is of that extractor for that water source. covered by the government as a subsidy. The payment is based on the actual number The extraction levy is not based upon the of cubic meters of reclaimed water used by immediate cost of supply, but rather reflects the farmers. the scarcity value of water. This is a unique and extremely important aspect of Israel's Agricultural Use: Fresh Water water policy (Kislev, 2006). With regard to fresh agricultural water, the tariff schedule is designed to discourage At the same time, in order to improve water farmers from using their complete use efficiency, the law provides a system of entitlement. For example, the amount they grants to be made to private extractors from pay to the main supplier, Mekorot, the State budget, for the production and increases according to the amount development of inferior quality water purchased, current rates being as follows: sources to be converted into higher quality supplies. This is designed to permit the · $0.28 per cubic meter up to 50% of their continued existence of private water entitlement extractors, who are a positive competitive · $0.33 per cubic meter for the next 30%, factor in the water economy, particularly · and $0.43 per cubic meter for the rest where their operations return hitherto low Source: Yoav Kislev, personal communication, 2006. quality water to drinking water standards. Extraction Levies Municipal and Industrial Consumption As from 1999 all those extracting water Water tariffs and allocations are applied to groups of consumers, namely, towns, local councils, and water user associations. Water 1Using 4.4 NIS/$US exchange rate 22 China: Addressing Water Scarcity Background Paper No. 3 prices are fixed by a parliamentary Since the latter cover full costs of supply, committee based on recommendations the figure of $0.20 per cubic meter can made by the Ministry of Finance and the therefore be seen as a rough indication of Water Commission. Increasing block rates the amount of subsidy. are used to discourage excessive consumption while allowing basic needs to Water subsidy has been one of the most be met. Currently, prices (including a expensive items in Israel's state budget. sewage charge) for most households, as With the expectation of cutting subsidies for passed on by the municipal authority public transportation, water subsidies will concerned, are as follows: be the main budgetary subsidy in Israel. For example, in 2000 NIS 298 million · First 8 cubic meters per month: $0.80 per (approximately $73 million) was allocated cubic meter for direct water subsidization, which is · Next 7 cubic meters per month: $0.95 per about 27 percent of the entire water system cubic meter governmental budget. · Additional Amounts: $1.51 per cubic meters · Minimum charge per month: $3.50 Another form of subsidy involves seasonal water use. It is more expensive to pump In addition, the average charge for water in summer months, yet there is no manufacturing uses is $0.56 per cubic meter. surcharge for this water to force users to compensate for the cost (There was a Financial Support surcharge added to summer consumption during 1978-1988, but it was dropped, The government, through the relevant apparently due to political pressure from ministries, provides grants and low-interest farmers). loans for improving and expanding water supply and wastewater treatment plants. Under-pricing of pumping and distribution Investment capital is distributed through services provided by Mekorot is another the Water Networks Rehabilitation Fund, type of subsidy. As noted above, the National Sewage Program, the Irrigation government financial support to the Systems Improvement Fund, and the company, albeit declining, remains Wastewater Renovation and Reuse Program. significant. Most significant of all however is the Until recently a major source of distortion in subsidization of irrigation water by the the water market was the water Ministry of Agriculture, which encourages equalization fund. The idea was to penalize wasteful use. Furthermore, many farmers those who had access to cheap water also receive subsidies to cover this under- sources (such as farmers with their own priced water and receive cash compensation wells) and use the proceeds to compensate when their water allotment is reduced. For those who use more expensive water fresh water farmers pay on average $0.25 sources. The rationale of such fund was per cubic meter to Mekorot. This is $0.20 fairness. The result, however, was to further less than the price paid by urban users. distort water allocation. The equalization 23 World Bank Analytical and Advisory Assistance (AAA) Program fund payments eliminated the incentive to incremental supply. In other words, the unit seek and exploit cheaper water sources. It cost of desalination is the appropriate subsidized the uses of the most expensive measure of the true economic (marginal) sources of water. The operation of the cost of water in the country. Give current equalization fund lasted for decades, but technology, the cost per cubic meter of this was finally eliminated in Israel in 1999 as option is somewhere between 0.60 and 1.25, part of the Arrangements Law (Hok including incorporation of desalination Hahesderim), and was replaced by a set of water into the national grid. Assuming the differential tariffs for drawing water from lower of these cost estimates2, with current the various sources of water. price paid to Mekorot by farmers being $0.25 per cubic meter the subsidy amounts Similarly, there has been a tendency in to about $0.35 per cubic meter for irrigation Israel to absorb transport differences for water use. Using a similar calculation, even water consumption in different parts of the urban uses are subsidized: the price country, especially for water pumped from municipalities pay to Mekorot is $0.45 per the Sea of Galilee and transported through cubic meter, the subsidy therefore being the national water carrier (Hamovil $0.15 per cubic meter if the low-cost Ha'artzi). The idea is that it is considered estimate for desalination is used as the unfair to ask farmers far from the water benchmark for determining subsidy. sources to pay their own water transport costs. This creates a further distortion, Water Trading3 leading to overuse of water at the destinations far from the sources. The The government has recently approved a traditional justification has been on grounds change in the water code enabling holders of subsidizing population dispersal to of water allocations to sell their permanent distant areas. Leaving aside a discussion of or temporary allocations to others by whether the government should be transferring the actual transaction via the involved in population dispersal at all, national water carrier, thus opening the water subsidization is an inferior method sector for a market-like operation. This is for achieving this result. Simply subsidizing similar to the policy that the Water directly the relocation of people and capital Commissioner's office has been to peripheral areas of the country would implementing for years in trading fresh accomplish the same goal without water with treated sewage effluents. This encouraging over-consumption of water. market concept could well serve and even promote peaceful exchanges of water Finally, it is important to make a distinction between the countries of the Middle East. between subsidization in purely financial terms and in real economic terms. It Water in Israel is used within a system of appears that in Israel, since use of natural allocations (annual or multi-annual) while sources and water-reuse as well as demand- in most other countries in the region it is side options appear to be approaching their user rights that determine the demand. In limit, there is little alternative to 2 desalination as the future source of As suggested by Kislev (2006) 3Source of much of this material is Arlosoroff (2005) 24 China: Addressing Water Scarcity Background Paper No. 3 many regions, a person who owns land (or role of Mekorot should be limited to the cultivates it) has the right to the water operation of the national carrier, while the flowing beside or under the plot. In other regional water supply schemes should be regions various quota systems allocate the privatized and defined as public services amounts of water on an annual, monthly, under the supervision of the Water weekly, daily, or even hourly basis. Old Commissioner. established users usually have the rights to continue to use the resource, when In particular, the urban water sector is shortages prevail. expected to undergo a profound reform, stemming from the introduction of the new In Israel it has been shown that the corporation law, under which the efficiency of water resource allocation and municipalities are to transfer the use can be substantially improved through management of the municipal water supply the increased use of price and trading to private sources. The aim is to ensure that mechanisms. Trading water on the margin activities in the municipal water sector will or using a system in which be carried out through independent, profit- urban/industrial demand is met by supply making enterprises. from farmers selling their quotas reduces the inefficiency of administrative allocations. The Israeli government currently lists Replacement of the traditional increasing competition as one of the goals of administrative allocation system by the national water policy. The budget proposal introduction of water trading using the for fiscal 2000 states as a goal: "Increasing national water system should greatly business competition in the areas of the improve the efficiency of water use in the water system, especially in the reuse of country. waste water, granting the economic right to produce water, quality control and Private Sector Participation distribution of water, with the intention of reducing the costs of water supply." The general view is that market forces are Decision 136 of the government (1999) the most suitable tools for the efficient use called for introducing elements of of water in the urban and agricultural competition in water production, especially sectors. Accordingly, water prices that are in water drilling. All drilling is supposed to determined by the Government, based on be conducted henceforth through the existing non-tradable allocation system, competitive tendering. Despite a broad law should be converted into a market that already requires the awarding of negotiating system. This change would government contracts through competitive eventually lead to a greater involvement of tendering, this had not previously been the private sector in the production and standard practice in the water sector. supply of water to the various consumers. Further, it is anticipated that rational water Privatizing the main sources of water in use will be achieved by the creation of new Israel is not a realistic idea, for the simple water suppliers, carved out of Mekorot. The reason that it is not feasible to establish 25 World Bank Analytical and Advisory Assistance (AAA) Program property rights in a competitive setting for that has become familiar in other settings, the water in the Sea of Galilee and the such as utilization of underground oil fields underground aquifers. If two or more by two or more companies. Essentially the corporations would have access to any of problem is that such arrangements grant these sources, each would have motivation pumping or utilization powers to private to over-pump and under-conserve. The corporations without assigning property over-consumption urge would be rights in the resource itself, which is in transferred to them, replacing farmers as effect shared. the main driving force. This is a problem 26 China: Addressing Water Scarcity Background Paper No. 3 CHAPTER 7 CONCLUDING REMARKS To date the Israeli government has been marginal costs of supply, exemplified by the highly successful in addressing the water costs of desalination, require still further problems it has faced, while maintaining a improvements in pricing policy. steady rate of economic growth and Subsidization of irrigation water ­ accommodating the demands of an considerable in purely financial terms and increasing population. Key aspects have even greater in economic terms - requires included its system of allocating water re-evaluation. Moreover, even urban and resources to designated sectors, and within other uses of water should increasingly be that allocation rigorously enforcing priced at rates reflecting real (incremental) compliance and economic incentives to costs of supply. This also implies the need achieve efficient resource use. to ensure that regional and geographic variations in water supply costs are Its achievements in the agricultural sector reflected in differential water prices; have been particularly outstanding. It is achievement of social equity should not be clear that economic incentives have played handled by means of water pricing. a key role in stimulating innovative technologies, most obviously in irrigation, Inefficiencies in the urban sector continue to but also in manufacturing and urban water prevail. Inadequate operation and use. The extraction levy system, where maintenance leading to leakage and waste charges are designed to reflect the scarcity of water is an on-going concern. To help value of water is of key importance, as is the address this problem, although not a increasing block system used for panacea, privatization of urban water agricultural and domestic uses, with all uses supply systems is advocated, as well as (including individual abstractions) being promotion of competition with regard to metered and sewage costs incorporated into bulk supplies. While public ownership of municipal water rates. basic common water resources is required, efforts should be made to introduce a Nevertheless severe problems remain: system in which allocated rights can be existing sources of supply can no longer traded. meet growing needs. Rapidly increasing 27 World Bank Analytical and Advisory Assistance (AAA) Program REFERENCES Arlozorov, S., (1997) Report of the Committee for Examining the Management of Water Supply in Saul, Arlosoroff (2005) Water Demand Israel (Jerusalem: Ministry of Infrastructures, Management ­ A Strategy to Deal with Water 1997). Scarcity. Israel: A Case Study www.ipcri.org/watconf/papers/saul.pdf Goldman, M D., (1996) Managing the Water Systems ­ the Legal Framework in Israel Soffer, Arnon (2002). Mapping Special Interest Jerusalem: The Florsheimer Institute for Policy Groups in Israel's Water Policy. Studies. http://www.biu.ac.il/Besa/waterarticle7.htm l Issar S. Arie (2000) The Water Resources of Israel Past, Present, and Future----- A State Comptroller (1990), Report on the comprehensive outline, April 2000. Administration of Israel's Water Economy. Jerusalem: State Comptroller (1990):p. 53. Kislev, Yoav, (2003) Urban water in Israel, in [Hebrew] Agethe, Donald E., Bruce Billings, and Nathan Buras (eds), Managing Urban Water Supply, Tal, Alon (1994) "Law of the Environment," Israel Kluwer, 2003. Business Law, Kaplan, Ed. Boston, Kluwer, p. 241-353. 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Case Study the Middle East from Israel Survey on Irrigation Modernization, http://www.waternet.be/jordan_river/policies The Hefer Valley Water Users Association, _israel.htm http://www.fao.org/AG/agl/aglw/waterma nagement/docs/MOD_Israel.stm#1 State of Israel Ministry of the Environment 28 China: Addressing Water Scarcity Background Paper No. 3 http://www.sviva.gov.il/Enviroment/Static/Bi naries/index_pirsumim/p0394_1.pdf Ministry of National Infrastructures http://eng.mni.gov.il/english/units/Water/W aterResourcesandWaterAvailability.shtml http://www.jewishvirtuallibrary.org/source/H istory/scarcity.html 29