410
Int. J. Sustainable Economy, Vol. 3, No. 4, 2011
Is desalination the most sustainable alternative for
water-shortage mitigation in Israel?
Doron Lavee
Department of Economics and Management,
Tel-Hai College,
Upper Galilee 12210, Israel
and
Pareto-Engineering Ltd.,
Netania, Israel
E-mail: dlavee@telhai.ac.il
Michael Ritov
Pareto-Engineering Ltd.,
Netania, Israel
E-mail: michael@pareto.co.il
Nir Becker*
Department of Economics and Management,
Tel-Hai College,
Upper Galilee 12210, Israel
E-mail: nbecker@telhai.ac.il
*Corresponding author
Abstract: Significant progress in seawater desalination technology has lowered
its costs considerably, making it an attractive option to policy makers in
countries facing water shortages. However, in making the decision to
implement desalination, two issues are often ignored: firstly, seawater
desalination is also associated with external costs. Secondly, alternative
measures of managing water shortage may potentially be more cost-efficient.
The current study estimates the external costs of desalination, and then
compares the full costs of desalination with those associated with three
alternative solutions for water supply shortage: increasing wastewater
reclamation and reuse, investing in water savers and reducing the amount of
water used in the agricultural sector. The main contribution of this paper is thus
in providing a complete methodological framework for the evaluation of
desalination projects, taking into account both direct and external costs.
Contrary to common wisdom, the study reveals that desalination is the least
economically efficient and sustainable of all alternatives considered, even
without taking into account the externalities involved.
Keywords: Israel; desalination; water policy; cost-effectiveness analysis;
externalities; water pricing; sustainability.
Copyright © 2011 Inderscience Enterprises Ltd.
Most sustainable alternative for water-shortage mitigation
411
Reference to this paper should be made as follows: Lavee, D., Ritov, M. and
Becker, N. (2011) ‘Is desalination the most sustainable alternative for
water-shortage mitigation in Israel?’, Int. J. Sustainable Economy, Vol. 3,
No. 4, pp.410–424.
Biographical notes: Doron Lavee holds a PhD from Ben Gurion University,
Department of Economics in 2005. He is a Senior Lecturer (from 2009) and
also Head of the Economic and Management Department at Tel-Hai Academic
College (from 2009). He also co-directs a consulting group specialising in
cost-benefit analysis projects related to water and environment.
Michael Ritov has a BA and MA in Economics from the Hebrew University of
Jerusalem. He works as an Economist at Pareto-Engineering Ltd., an Israeli
consulting firm specialising in cost-benefit analysis projects related to water
and environment.
Nir Becker is with the Department of Economics and Management at Tel Hai
College and a Senior Research Fellow at the Natural Resources and
Environmental Research Centre at the University of Haifa. He has published 36
refereed articles. In his research, he utilises concepts such as optimisation
techniques, game theory, cost benefit analysis and valuation methods. He holds
a BSc and MSc from the Hebrew University in Jerusalem and a PhD from the
University of Minnesota. His main interest is with natural resources and
environmental economics.
1
Introduction
Water consumption in Israel has been growing rapidly over the years. By 2015, total
water demand is forecasted to reach about 2,500 million cubic meters (MCM) annually
(Gvirtzman, 2002), while annual renewable water resources total only about 1,400 MCM.
This, according to forecasted water demand in the two main sectors (domestic and
agricultural), assuming the price of water remains unchanged.
In recent years, seawater desalination has been increasingly viewed as a basic
instrument to solve problems of water scarcity. This is true not only in Israel but also in
other parts of the world (Dolnicar and Schafer, 2009; El-Fadel and Alameddine, 2005;
Yuhas and Daniels, 2006). Until 2006, only about 30 MCM were desalinated in Israel
annually (out of a total of more than 1,500 MCM used). However, in 2006 a desalination
plant in Ashkelon began operation, producing 100 MCM each year. The national plan is
to increase desalination capacity to 1,000 MCM per year within the next ten years. This
will amount to 100% of the forecasted urban water demand in 2020.
In the past, desalination was a relatively expensive solution (compared to
conventional water production alternatives) and was thus implemented only in isolated
places. However, the costs of water supply in recent years have risen in most places
(as water shortage necessitated production from marginal water sources) while at the
same time the cost of desalination has declined (Karagiannis and Soldatos, 2008; Reddy,
2005, 2008; Zhou and Toll, 2004). Desalinated water was considered an environmentally
safe solution, increasing total supply. By diluting desalinated water with regular water
(within the regular water supply system), it is possible to increase the total amount of
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D. Lavee, M. Ritov and N. Becker
water available for drinking purposes (Glueckstern and Priel, 1998) and for agricultural
uses (Lavee, in press; Samit, 2001).
However, more recently it has been argued that desalination has certain significant
negative environmental impacts that should be taken into account (Altayaran and
Madany, 1992; Azis et al., 2000; Einav et al., 2002). In particular, desalination plants are
associated with three major negative environmental impacts:
1
significant energy consumption, leading to air pollution and greenhouse gas
emissions
2
use of land along the limited coastal area of the country1
3
potential damages to marine life and resources, particularly due to the discharge of
residual salt to the sea.
An analysis which internalises these externalities may reveal more efficient means to deal
with water supply shortage, such as investing in water savers equipment, introducing
water saving measures, increasing water reuse and considering reallocation of water
between different uses.
The purpose of this paper is to quantify these external effects and then use the results
to compare desalination with other alternatives for mitigating water shortage.
Specifically, three such alternatives will be considered: wastewater reclamation and reuse
in agriculture, investment in water savers equipment and reduced water consumption by
the agricultural sector.
This paper continues as follows. Section 2 provides background regarding water
policy in Israel. Section 3 presents a full evaluation of both the direct and external cots of
desalination, while Section 4 describes the costs associated with the three other proposed
alternatives for mitigating the water shortage problem. Section 5 summarises and
concludes the findings.
2
Background: water policy in Israel
2.1 General background
Israel has a semi-arid climate with significant fluctuations in annual precipitation.
It suffers intermittently from series of very dry years during which annual evapotranspiration may be greater than annual precipitation. Israel’s water potential is derived
from four types of sources: groundwater or aquifers, natural surface reservoirs, storm
run-off and recycled domestic and industrial effluent. Total annual renewable water
resources equal about 1,400 MCM, most of which are derived from three major sources –
the Coastal and Inland Mountain Aquifers, and Lake Kinneret (the Sea of Galilee).
The availability of water from these sources is limited by the annual recharge rate and
by the need to maintain a minimal water table level. Withdrawal of water in excess of the
recharge rate, i.e. allowing the water level to fall below the minimum, would lead to
the intrusion of brines and deterioration of water quality, such that some of the water
would potentially no longer be suitable for either domestic or agricultural use. The annual
operational volume of the Coastal Aquifer is about 280 MCM, that of the Inland
Mountain Aquifer is about 330 MCM, and that of Lake Kinneret is about 400 MCM.
Despite the risk of water quality deterioration, over-extraction of aquifer water
Most sustainable alternative for water-shortage mitigation
413
has continued intermittently for more than 30 years. In recent years, however, it has
increasingly been understood by policy makers that this type of over-extraction must
stop, and solutions to the water shortage problem must be found elsewhere.
Indeed, water policy in Israel has always been focused on mitigating water shortage.
An important point in this respect is that as most of Israel’s water sources are shared with
its neighbours, any steps taken to mitigate water shortages in Israel may also have a
positive effect on its neighbours, as they reduce pressure for over-extraction of existing
sources. This is true both regarding the Coastal and Inland Mountain Aquifers (shared by
Israel and the Palestinian Territories) and the Lake Kinneret and Jordan River system
(shared by Israel, Syria, the Palestinian Territories and Jordan). Specifically, government
policy has advanced two main solutions: wastewater treatment and reuse, and, more
recently, seawater desalination.
2.2 Wastewater reuse in Israel
In 1953, Israel drafted the world’s first set of standards for wastewater reuse, and effluent
recycling emerged as a central element of Israeli water policy. At present, 91% of all
municipal sewage in Israel is treated, 73% of which is then reused in agriculture, thus
contributing roughly one-fifth of Israel’s total supply. Typically, the effluents reaching
farm operations come from nearby cities, with the exception of Tel Aviv’s metropolitan
wastewater treatment plant, from which roughly one-quarter of the country’s sewage
(130 MCM/year) is conveyed 100 km southward to the Negev desert. Treatment is based
on an activated sludge process that incorporates additional nitrogen removal. After
treatment, the water is piped to spreading bases where it is injected into the ground for
recharge of a regional aquifer. Here the water undergoes additional filtering and seasonal
storage before it is pumped for irrigation.
Concerns about the effect of sewage recycling initially focused on public health
and gave authority to the Ministry of Health to oversee matters of effluent treatment and
reuse. Starting in 1992, a new standard for secondary treatment facilities required a
maximum concentration of 20 mg/l biological oxygen demand (BOD, a measure of
organic pollution in wastewater) and 30 mg/l for total suspended solids (TSS). However,
this ‘20/30’ secondary sewage treatment level proved inadequate for a variety of reasons.
The range of crops that can be grown at this treatment level is relatively narrow
because of the presence of pathogens in the effluents. Directly consumed vegetables as
well as many fruits, e.g. cannot be irrigated with recycled wastewater at this treatment
level. The salinity in the wastewater poses risks to soils and freshwater sources. Boron
compounds, common in detergents, are not efficiently removed and accumulate in
recycled wastewater, contributing to soil structure problems. Moreover, during the 1980s,
industrial solvents such as toluene and benzene began to appear in Israeli rural well
samples. Their presence was attributed to inadequate sewage treatment and widespread
irrigation with effluents.
It thus became clear that effluent standards at 20/30 levels – which make sense in
regions such as Europe, where the river dilution factor is considerable – are insufficient
in arid environments, where wastewater supplies most of the baseline flow in naturally
ephemeral streams. Ultimately, ecosystem recovery in Israeli rivers must be based on
higher quality effluents. In April 2005, the Israeli government approved the
recommendations of an expert committee that increased the stringency of sewage
treatment requirements. Maximum BOD and TSS were reduced to 10 mg/l. The standard
414
D. Lavee, M. Ritov and N. Becker
contains a long list of new criteria for salinity as well as concentrations of boron, heavy
metals and nutrients. The criteria are dichotomous, with limits set for agricultural
irrigation often differing from those set for wastewater discharged into streams. For
example, an ammonia standard of 20 mg/l is set for agricultural reuse, whereas concerns
about eutrophication led to a stringent 1.5 mg/l requirement for discharge into streams.
The banning of boron in detergents has already resulted in reduced wastewater
concentrations.
The estimated cost of the 10-year phase-in of advanced tertiary sewage treatment is
$220 million (Lavee, in press). The economic burden of meeting the new standards will
be much less significant in the large municipal facilities than in the non-mechanised
smaller plants that produce a quarter of the country’s effluents.
2.3 Desalination in Israel
Desalination constitutes the most recently adopted component of Israel’s water
management strategy. In the past, high costs limited the scope of desalination to Reverse
Osmosis facilities in remote southern agricultural communities and at the Red Sea resort
town of Eilat, where no viable alternative water source existed. Today, the combination
of modern membrane technologies, reduced energy consumption and the economies of
scale associated with mass production yields very-high-quality drinking water production
at Israel’s Mediterranean coast at a cost of less than $0.60 per CM (Dreizin, 2006;
Tal, 2006).
These new economic dynamics led to a 2002 government decision to construct five
new Reverse Osmosis desalination plants over the coming years. The facilities are
expected to produce more than 315 MCM/year, adding about 15% to present drinking
water supplies. The first of these plants was constructed near the city of Ashkelon, and
went into operation in 2006, producing 100 MCM annually. More recent plans call to
increase desalination capacity to 1,000 MCM per year within the next ten years.
3
Desalination costs
Dreizin et al. (2008) report the contracted price for the three large desalination plants
constructed in Israel in the last five years. The lowest is that of the desalination plant near
the city of Ashkelon – 50.9 cents per 1 CM. This is one of the lowest cost estimates found
in the literature, and indeed, the actual delivery price has risen significantly above the
contract price due to an increase in energy costs (a price escalation mechanism was built
into the contract). Nevertheless, for the purpose of the estimations in this paper we will
use this price, which is equivalent to 2 NIS per CM.
In addition to the direct costs of desalination, project appraisal requires taking into
account its external costs as well, and these may be considerable. Specifically, seawater
desalination is associated with three major negative environmental impacts: air pollution
and greenhouse gas emissions, use of land along the coastal area and damages to marine
life due to the pumping of seawater into the plant and the discharge of residual salt. We
will discuss each of these impacts in Sections 3.1–3.3.
Most sustainable alternative for water-shortage mitigation
415
3.1 The costs of air pollution and greenhouse gas emissions
Desalination plants consume significant amounts of energy. Indeed, 30–50% of the total
cost of the desalination process is associated with energy consumption (Samit, 2001).
Moreover, in Israel, the plants must operate on a continuous basis, hence the potential for
using alternative energy sources for this purpose is very limited, and the plants must rely
on conventional fossil-fuel power.
In addition to the direct costs associated with the consumption of the required energy,
there are also external costs reflecting the pollution emitted when energy is generated to
meet this demand. Several studies have examined this issue. For instance, Stokes and
Horvath (2006) make the point that when considering different water supply alternatives,
a full life cycle energy assessment must be carried out for each. Looking at California,
which suffers from water shortage due to population growth, they compare between
desalination, importation of out-of-state water and water recycling. They find that
desalination is associated with significantly greater energy demand than the other two
alternatives, such that the environmental costs of the corresponding air pollution are
considerable and must be taken into account. A certain limitation of the study, however,
is that sources on which the monetary values attributed to the different pollutants are
based on somewhat dated (from the early 1990s) studies. Nisan and Benzarti (2008)
analyse different types of desalination plants (making use of different types of fuels),
taking into account both the direct energy costs and the external costs associated with
emissions. They conclude that when externalities are taken into account, systems based
on nuclear technology are by far superior to fossil-fuel-based plants. Karagiannis and
Soldatos (2010) also consider the externalities of desalination, focusing on greenhouse
gas emissions. In the context of the Greek islands, they investigate under what conditions
it would be economically worthwhile to invest in desalination plants based on renewable
energies rather than in plants using fossil-fuels. They find that such an investment may
indeed be warranted under reasonable assumptions regarding the environmental cost of
CO2 emissions. They do not consider other air pollution emissions.
This paper continues in this line, using up-to-date methodologies and resources, and
focusing on the damages caused by the four major pollutants released during energy
generation from conventional sources: particulate matter (PM10), NOX, SO2 (all of which
are associated with human health risks) and CO2 (the main greenhouse gas). To assess the
emission costs we use estimates from a study conducted by Pareto-Engineering Ltd.
(an Israeli consulting firm specialising in analysis of the economic implications of
environmental issues) for the Israeli Ministry of the Environment (Pareto, 2008).
As regards NOX, SO2 and PM10, Pareto (2008) cost estimates were based on the
results of the European project Cost Assessment for Sustainable Energy Systems
(CASES, 2008). This project used the methodology developed within the Extern-E
project for the evaluation of the externalities of energy generation (Bickel and Friedrich,
2005), and presents pollution costs on a per ton basis for each country in the European
Union as well as neighbouring countries (north African and eastern European countries).
These costs were estimated using simulations taking into account climate, population
density and epidemiological studies linking pollutant concentrations and morbidity and
mortality rates. Using this dataset, Pareto (2008) estimated adjusted pollution costs for
Israel on the basis of two parameters: population density in the surrounding region
(within a radius of several hundred km) and national income (as measured by GDP per
capita). As regards CO2, Pareto (2008) estimates are also based on the value provided by
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D. Lavee, M. Ritov and N. Becker
the CASES project – arrived at by an analysis of both model simulations concerning the
potential damages of global warming, and the avoidance costs of reducing CO2
emissions. This value (19€/ton) was then adjusted to economic conditions in Israel on the
basis of the ratio between GDP per capita in Israel and that in the European Union
(as the damage in this case is of a global nature, regional population density is of course
irrelevant).
To calculate pollution costs per kWh of electricity generated, we use data on average
emissions during electricity generation in Israel, as reported by the Israeli Electricity
Company (IEC, 2010). Finally, as desalination of 1 CM requires 4.25 kWh of energy, in
order to assess the external costs of desalination we multiply the per kWh pollution costs
by 4.25. The results are presented in Table 1.
As can be seen in the table, the total environmental costs attributed to air pollution
and greenhouse gas emissions equal 13.13 cents per 1 CM of desalinated water.
3.2 Use of land along the coastal area
Desalination plants in Israel are most often built along the coastline. This creates an
external cost which is represented in Equation (1).
C
AV×DP
Q
(1)
where C is the cost per cubic meter of water produced, AV is the average monetary value
of coastline property per unit area, DP is the area of relevant coastline appropriated by
desalination plants and Q is the quantity of desalinated water produced in cubic meters.
The alternative value of those areas taken up by desalination plants should thus be
taken into account. Desalination of 100 MCM requires about 100 m of shoreline and 7 ha
of territory (Dreizin, 2006).
A weighted average of the different values of the Israeli shorelines is provided in
Kivun (2006). The report compels estimates based on market values such as lost
development opportunities and non-market values which are mainly related to
recreational opportunities. It reveals a maximum annual value of 190 NIS per 1 m2 of
shoreline. There are an estimated 14 ha of territory lost due to desalination with a total
value estimated at 27 million NIS per year. Dividing by the 200 MCM of desalinated
water yields an additional 0.135 NIS per CM.
Table 1
Air pollution externalities of desalination
Pollution costs per
ton emitted ($/ton)a
Average emissions during Emission costs per Emission costs per 1
electricity generation
kWh generated
CM of desalinated
(gram/kWh)
(cents/kWh)
water (cents/CM)
SO2
6,468
1.6
1.03
4.40
NOX
3,746
1.7
0.64
2.71
PM10
9,232
0.05
0.05
0.20
CO2
19.39
707
1.37
5.83
Total
a
13.13
Values in Pareto (2008) were stated in €. They have been converted to $ using an
exchange rate of 1.3075.
Source: Pareto (2008), IEC (2010) and authors’ calculations.
Most sustainable alternative for water-shortage mitigation
417
3.3 Damage to marine resources
In recent years, a growing body of literature is concerned with the environmental impacts
of seawater desalination. Pitzer (2003), for instance, studied the issue of the residual salt
concentration and its impact on marine life when dumped back to the sea. Sadiq (2002)
examined the impact of the desalination plant in Ras Tanajib, Saudi Arabia, on marine
life in the vicinity of the plant and found significant remainders of metals along the shore.
Altayaran and Madany (1992) analysed the effect of the desalination plant in Sitra,
Bahrain on water quality in the nearby area, and highlighted potential harmful effects in
parameters such as water temperature and salinity. Yuhas and Daniels (2006) looked at
the environmental impact of the desalination plant in Tampa Bay, Florida, and found
significant causes for concern. They concluded that at the current technology level
and given the significant uncertainty concerning environmental impacts, desalination
should be avoided when possible, while other water management means such as
groundwater use, water recycling, water saving technologies and water price increases
are preferable.
The above mentioned studies all focused on monitoring and describing the physical
effects of desalination plants on the nearby environment, highlighting areas where
desalination may have a negative impact. No studies on the issue, however, have been
carried out to provide monetary estimates of these impacts. Accordingly, this section will
only describe the potential damages to marine resources, without valuating them.
Marine life in the vicinity of a plant is impacted by its operations primarily due to
both the discharge of salt residuals and the pumping of seawater into the plant (Einav
et al., 2002; Zhou and Toll, 2004). Specific sources of risk include:
x
high salt concentration of the residuals: 63K ppm relative to 35K ppm, which is the
natural level of salt concentration in the seawater
x
higher temperature at the discharge site relative to the natural temperature of the sea
x
desalination residuals characterised by high turbidity rates compared to the natural
seawater turbidity rate
x
low oxygen level of the residuals, compared to the natural seawater level
x
dumping of chemicals used in the pre-treatment stage
x
dumping of metals and other inorganic materials which accumulate during the
desalination process.
All of these impacts may be harmful to marine life. For example, metals can poison
reproduction areas for some fish species, high chloride concentration can cause high
sedimentation levels which in turn may have a negative impact on Phytoplankton beds,
and higher temperatures can have a negative impact on the reproduction capability of
some marine organisms. Unfortunately, we do not know of any study that has tried to
estimate the dollar value of these damages, and therefore we do not include this element
in our estimation of the negative externalities of desalination. However, we can thus
safely assume that our bottom-line estimate for total negative externalities of desalination
constitutes only a lower bound, as it does not incorporate damages to marine resources.
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D. Lavee, M. Ritov and N. Becker
Alternatives for mitigating water shortage
In this section, we examine alternatives for mitigating water shortage. There are two
basic approaches to manage water scarcity – demand and supply management (Becker,
2001; Hurlimann et al., 2009). Demand management solutions may include increasing the
price of water, introducing trade in water allotments (totalling the available amount
of renewable water supply), etc. Supply management alternatives may include import of
water from countries with abundant water sources, production of water from marginal
sources such as wastewater or seawater, etc.
With respect to the supply side, it should be examined whether the potential exists
to reduce water shortages in a cheaper and more efficient manner (compared to
desalination), at least in the short-run. In this paper, we examine one such policy –
increased wastewater reuse in agriculture. On the demand side, we examine two potential
policies: reducing water consumption by the agricultural sector (by raising prices), and
investing in water savers so as to reduce domestic water demand.
Our comparative analysis of the alternatives is based on the criterion of costeffectiveness. That is, the preferred alternative is the one which produces an additional
cubic meter (or saves one) at the lowest cost, taking account both direct costs and
externalities.
4.1 Wastewater reuse in agriculture
This solution may be associated with several key advantages:
1
Relatively low cost (as described below).
2
A double-dividend element (as this solution removes pollutants from the
environment). Without treatment, wastewater pollution reaches the rivers and
groundwater and may cause serious damages. Thus, a certain degree of treatment is
required regardless of the final use of the water.
3
Sustainable solution for the long run: the amount of wastewater is positively
correlated with the size of the urban population and its income level. Thus, using
treated wastewater to increase water supply may help to address future increases in
water demand for agricultural purposes, or alternatively may allow less reliance on
freshwater sources.
By 2015, available wastewater supply in Israel is forecasted to reach about 515 MCM per
year Lavee (In press). Currently, the agricultural sector uses about 399 MCM of treated
wastewater annually. This means that if steps are taken to ensure treatment and reuse of
the additional amount of available wastewater, demand for freshwater may be reduced by
almost 116 MCM, equal to about 23% of the planned desalination capacity. In addition,
this type of solution may be implemented faster than desalination.
To analyse the feasibility and efficiency of increasing reuse of domestic wastewater
in agriculture, we must assess the following:
1
the cost of treatment required to bring the wastewater to a level suitable for reuse in
agriculture
2
the cost of delivering the water from the treatment plant to the point of use
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Most sustainable alternative for water-shortage mitigation
3
the costs associated with the removal of wastewater from rivers and groundwater
(which would need to be carried out regardless of potential reuse)
4
the environmental benefit of such a policy.
It is thus necessary to differentiate between the costs required to allow use of treated
wastewater in agriculture, and those associated with the basic treatment of wastewater
(required to prevent pollution), which must be borne by the national economy regardless
of potential reuse. The true costs of increased use of recycled wastewater in agriculture
are the additional costs required to upgrade water quality level beyond that required for
pollution prevention, and the costs of conveying the water from the treatment plants to
the fields where they are to be used. The costs associated with the current treatment
standards, as well as the costs of conveying the treated wastewater to discharge in rivers
or the sea should be subtracted from the total costs of the project. Two treatment
standards are relevant for this analysis.
4.1.1 The 20/30 treatment standard
The current treatment standard in most wastewater treatment plants in Israel. Since this
standard is required in order to prevent pollution, i.e. regardless of potential reuse in
agriculture, the costs required to attain it should not be taken into account in the current
analysis.
4.1.2 The Inbar Committee standard
This higher standard is named after a public committee formed in 2001 with a mandate to
set new standards for wastewater reuse. The standards which were adopted by the
government in 2005 are presented in Table 2.
Table 2
Wastewater treatment standards proposed by the Inbar Committee
Parameter
Unit
Maximum concentration
Electric conductivity
dS/m
1.4
Chloride
mg/l
250
Sodium
mg/l
150
Boron
mg/l
0.4
pH
6.5–8.5
SAR
(mmol/l)0.5
BOD
mg/l
10
COD
mg/l
100
TSS
mg/l
10
Fecal coliforms
col/100 ml
10
Dissolved oxygen (DO)
mg/l
>0.5
Residual Cl
mg/l
1
Source: Lavee (In press).
~5
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D. Lavee, M. Ritov and N. Becker
Lavee (in press) carried out a detailed analysis of 22 prospective treatment plants. As
wastewater must be treated to the 20/30 treatment standard regardless of its use (to avoid
environmental damage), Lavee (in press) identifies the added cost of treating wastewater
to meet the Inbar Committee standards (which allow for increased use of treated
wastewater in agriculture), and estimates it at 1.85 NIS per CM. This estimate includes
both construction and operation costs over the plant’s lifetime. It also includes the
additional cost associated with transporting the water from the treatment plants (often
located in close proximity to urban centres) to the agricultural fields, subtracting the costsavings achieved by replacing the need to deliver the treated wastewater to the rivers or
the sea for disposal.
4.2 Investing in water savers
An alternative to the increasing water supply is of course to reduce demand. One way in
which this may be achieved is to invest in water savers, so as to reduce total urban
demand. Currently, urban water consumption in Israel is estimated at 758.5 MCM
annually. Investing in water-saving equipment may reduce total urban consumption by
about 25% (Dar, 2002). The average cost of such equipment is estimated at 300 NIS and
its average lifetime is about three years. An average household consumes about 250 CM
annually, such that about 60 CM would be saved. Calculating the perpetuities on the
investment and dividing by water consumption reveals that the cost of this investment is
1.7 NIS per CM. Thus, this measure is less costly than desalination, even when ignoring
the negative externalities of the desalination process.
4.3 Reduced agricultural water consumption
Another alternative for demand management is reducing agricultural water consumption.
To compare this alternative to desalination, we will assume that the planned 315 MCM of
desalinated water will be taken away from the agricultural sector (without providing any
replacement water) and analyse the impact this will have on the sector. A welfare
analysis for the agricultural sector is presented in Figure 1.
Agricultural water consumption is estimated in the last few years at about 566 MCM
per year. To estimate the effect of a potential price increase on the agricultural sector we
need to first estimate its water demand curve. This was done by estimating the value of
the marginal product of the 45 crops grown in Israel, per CM (Becker, 2001). The
marginal product values were then listed in descending order so as to generate a demand
function for water. Figure 1 presents the results for a semi-logarithmic function which
was found to have the best fit for functional form (the figure is based on Equation (2).
P 16.11 – 2.394 ln(W )
(2)
R2 = 0.88
where P is the price of water, in NIS and W is the total amount of water used, in MCM.
The average price paid for water by farmers in Israel is estimated at 1.39 NIS per CM.
The average cost of water production from conventional sources is estimated at 1.79 NIS
per CM. Multiplying the difference by total agricultural water consumption (566 MCM),
we estimate the total water subsidy in Israel at 226 million NIS annually. Since the
increased profitability to farmers is estimated at 170 million (change in consumer surplus
Most sustainable alternative for water-shortage mitigation
421
between 1.79 and 1.39 NIS per CM) NIS annually, the net loss of the subsidy is estimated
at 56 million NIS per year.
If we reduce the amount of water allocated to the farmers to 251 MCM (=566 – 315),
we find that the market price which clears the market for this amount is 2.88 NIS per
CM. The associated loss in the consumer surplus is estimated at 609 million NIS
per year. This can be seen as the area A + B in Figure 1. However, only area B constitutes
true cost (since area A is considered transfer payment from the farm sector to the
government), and this is estimated at 234 million NIS. Dividing this figure by the lost
315 million CM, we get 0.74 NIS per lost CM.
One argument that must be taken into account in this context is that agriculture
creates positive externalities. According to Ayalon et al. (2004), the net externalities
(positive minus negative) per 0.1 ha are estimated at 335 NIS. Through the agricultural
water demand function it is estimated that increasing the price of water to 2.88 NIS per
CM will take out 10,746 ha from production (by taking out of production those crops that
cannot sustain the higher price). The associated external benefit lost with that amount is
thus estimated at 35,999,100 NIS, corresponding to 0.11 NIS per CM. This brings the
total cost of reducing the water available for agricultural use to 0.85 NIS per CM, still
lower than the cost of desalination (even ignoring the negative externalities of the
desalination process).
4.4 Comparing the alternatives
A comparative analysis is presented in Table 3. As can be seen in the table, water
desalination is the most expensive of all alternatives, even without taking into account the
externalities involved (which account for 7% of the total cost). In fact, if all other
alternatives are utilised first, the construction of planned future desalination plants may
be delayed by about 10 years.
Figure 1
Welfare changes in the agricultural sector due to a price increase (see online version
for colours)
422
D. Lavee, M. Ritov and N. Becker
Table 3
Comparative analysis of water-shortage mitigation alternatives
Desalination
Direct costs (NIS per CM)
2
External costs (NIS per CM)
0.266
Total costs (NIS per CM)
2.266
Wastewater
Reduced consumption
treatment Water savers
in agriculture
1.85
1.7
0.74
1.85
1.7
0.85
0.11
Total project costs (million NIS)
453
215
323
268
Amount of water saved or added
(MCM)
(200)
(116)
(190)
(315)
Source: Authors’ calculations.
5
Summary and conclusions
Water shortage is a given fact of life in many countries. In semi-arid regions where
several alternatives exist to mitigate the problem, a comparative analysis is required to
allow for informed decision making. There are two basic approaches to deal with the
problem: increasing supply and reducing demand. However, it appears that much of
the suggested policy measures choose to focus only on the first approach.
Analysing two supply enhancing alternatives and two demand management options,
we have shown that desalination appears to be the most expensive of all alternatives
considered. Furthermore, it is estimated that by first applying the other three more costeffective measures, construction of planned future desalination plants may be delayed by
about 10 years. As current plans in Israel call for increasing annual desalination capacity
by hundreds of millions of CM, potential savings in this area are quite significant.
Wastewater treatment and water savers were found to be the most efficient
alternatives to alleviate water scarcity, followed by an additional cut in agricultural
(fresh) water. This is true even without taking into account the negative externalities of
desalination projects. The main conclusion that may be drawn from this study is that
future desalination projects should be postponed until more cost effective means are
exhausted first.
Future studies should attempt to quantify in greater detail the external effects of both
desalination and agricultural landscape, as these two features will determine the optimal
timing of construction of new desalination plants.
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Note
1
Land use as of itself does not constitute a direct externality. However, as land value is usually not
included in Israel in cost estimates of desalination projects (as prospective sites are usually owned
by the government), the value of potential alternative uses is not taken into account (most often
recreational uses).