A Strategy to Build a Freshwater Pipeline from Turkey to Jordan

By:  
Tyler Hoffman  
MACD Spring 2003   

This project was completed to fulfill a requirement for an MA in Commercial Diplomacy at the Monterey Institute of International Studies, Monterey, California.

SCENARIO 

For the purposes of this project, I am positioning myself as an analyst with a fictitious organization, The Water Solutions Group, a non-profit organization that is involved in researching ways to alleviate water shortages and address water related issues around the world.  I am in Amman, Jordan presenting my research on alleviating Jordan’s freshwater crisis to an open forum of Jordanian government officials, water researchers, academics and the media. 

I will present information concerning the status of Jordan’s water crisis and support my recommendation for a transnational pipeline with economic, commercial, legal and political analyses.  Finally, I will present a strategy for implementing my recommendations. 

EXECUTIVE SUMMARY  

Jordan is running out of freshwater and is actively looking for ways to augment its domestic supply.  Jordan’s water shortage is due to a lack of sufficient domestic water resources compounded by mismanagement and inefficient distribution.  Jordan is currently making up its water deficit by drawing down non-renewable aquifers, and it is estimated that the country’s renewable water deficit will reach 360MCM by 2020.[1]  Jordan is at the center of the water dispute over the scarce waters of the Jordan River Basin and, with the exception of those living in the Occupied Territories, is likely to be affected the most severely of all Middle Eastern countries if a long-term solution to its water deficit is not found.   

This paper proposes solving Jordan’s water crisis through building a transboundary water pipeline that will transport water from the Seyhan and Ceyhan Rivers in the Taurus mountains of southern Turkey to Amman, Jordan via Syria. This pipeline will have the capacity to deliver enough water to meet Jordan’s 2020 deficit and provide water for years to come. 

Turkey has been selling water to its neighbors for years and the Seyhan/Ceyhan pipeline is the most commercially attractive option for supplying Jordan with additional freshwater.  It is more sustainable than pumping down aquifers, and more cost effective than desalination, delivering water by tankership or waterbag.  Any effort to supplement Jordan’s freshwater supply must be accompanied by the Government of Jordan taking the necessary policy steps to ensure the collection of water tariffs in order to cover the cost of new water and its delivery.  Steps are currently being taken in Jordan to make this a reality. 

Water is a contentious issue in international trade and there are several international bodies of law that pertain to its use and sale, including the GATT.  Although the absolute status of water in the context of international trade is unclear, there are several key legal issues that are addressed in order to effectively analyze the transfer and sale of water across international borders.

The construction of a transboundary pipeline is a major commercial and political undertaking.  This paper addresses and analyses the political relationships between Jordan, Syria and Turkey and presents arguments for why the Seyhan/Ceyhan pipeline could become a reality.  Although these country’s share disputes, such as Turkey’s use of the Euphrates River to the detriment of Syria and Jordan’s bad relations with Syria since signing a peace treaty with Israel in 1994, the necessary political elements are in place to facilitate the construction of the pipeline. 

This paper concludes with a strategy for persuading the three parties to engage in negotiations concerning the construction of the Seyhan/Ceyhan pipeline based on the internal mobilization of political, business and social stakeholders throughout the three countries.  

ISSUE  

The Problem:  Jordan is running out of freshwater.  Current freshwater demand in Jordan is about 1.2 billion cubic meters per year.  Current renewable supply is about 900 million cubic meters (MCM) per year resulting in a 300 MCM per year deficit.  This deficit is being made up by drawing down non-renewable aquifers and implementing water saving measures such as rationing and improving the water infrastructure in metropolitan areas.  It is projected that Jordan’s annual water demand will increase to 1.647 billion cubic meters by 2020 while supply, augmented by wastewater reuse, dams, indigenous pipeline projects, and improved municipal infrastructures, is projected to be only 1.287 billion cubic meters, leaving a deficit of 360 MCM.  Water deficits of this magnitude are unsustainable and will negatively impact Jordan’s ability to maintain standards of living and economic growth.  

There are several ways to supplement Jordan’s freshwater supply.  They are, developing large-scale desalination capacity, importing water in bulk by tankership or waterbag, or building  a water pipeline from Turkey to Jordan.  Each of these options involves several larger policy issues.  To be successful, all of the options require effective management of Jordan’s freshwater resources.  Pursuing water by tankership, waterbag or pipeline requires the additional decision to rely on water from beyond Jordan’s borders. 

The Solution:  Supplement Jordan’s freshwater supply with water from a pipeline originating at the Seyhan and Ceyhan Rivers of southern Turkey and crossing Syria into Jordan.  The Seyhan/Ceyhan Pipeline has the potential to not only meet, but exceed, Jordan’s freshwater needs for years to come at costs significantly lower than alternatives.  

JORDAN’S WATER CRISIS  

Jordan’s freshwater supply is precarious at best.  The country’s average rainfall is roughly 20 centimeters (7.9 inches) per year.  In contrast, San Francisco receives about 20 centimeters of rain in just 2 winter months.[2]  Since 1970, however, Jordan’s rainfall has averaged a mere 10 centimeters (3.95 inches) per year.[3] 

Jordan’s water deficit will have a particularly hard impact on the municipal, industrial and tourism sectors of the economy.  While demand for water in the agricultural sector is expected to remain fairly stable between now and 2020, demand in the municipal and industrial sectors is expected to increase by over 100% from a current demand of roughly 350 MCM/year to 757 MCM/year.  Evidence of the growing need for water is that real GDP growth in Jordan has exceeded 3% in each of the last three years (1999-2001) with the largest gains occurring in the manufacturing and services areas.[4]  As a result, Jordan must augment its water supply in order to keep pace with expected demand across the country.  According to Water Minister Hazem Nasser, Jordan is designing its national industrial strategy around water and its availability.  He has pointed out, however, that increasing investment and industrial projects have contributed to Jordan’s water crisis, and it is feared that a lack of water and its potentially high cost could discourage future investors.[5] 

Current Sources of Freshwater in Jordan: 

For the purposes of this study, sources of freshwater in Jordan can be broken down into two categories; renewable and non-renewable.  Renewable sources of water include the Jordan River, the Yarmouk River, and multiple underground basins.  Jordan’s main non-renewable source of water is the Disi Aquifer in southern Jordan which will eventually run dry.  Wastewater re-use is a growing source of renewable water, but it is best utilized in the agricultural sector as human consumption of this category of water poses health risks. 

The following chart illustrates Jordan’s sources of water by category: 

 
Source: Committee on Sustainable Water Supplies for the Middle East, Water for the Future, (1999, National Academy Press, USA). Pg. 49.

Water Use in Jordan:  

Nearly 80% of Jordan’s total population of about 5 million people lives in urban areas in the central and northern highlands.  Amman, Jordan’s capital and most densely populated city in the country is located in this area.  Most of Jordan’s total surface water is located and collected in this region from the lower elevations of the Jordan and Yarmouk Rivers. 

Since the 1940’s, per capita water availability In Jordan has dropped by 94%.  Jordan has less than 200 cubic meters of renewable freshwater available per person per year with some estimates placing it as low as 90 liters per person per day.[6]  This includes supplies for personal consumption, agriculture, and industry.  It is generally held that countries are considered “water stressed” if per capita availability is less than 500 cubic meters per person per year (1370 liters), and availability below 1000 cubic meters (2740 liters) per person per year is considered to impede economic development and harm human health.[7]

In comparison, Middle East countries as a whole average 1250 cubic meters (3425 liters) per person per year.[8]  The following chart demonstrates Jordan’s precarious water position compared to its immediate neighbors and the United States:

Per Capita Water Availability in 2000 (meter³)  

Source:  The World Bank, 2002 World Development Indicators. Pg. 151-152. 

Demand for freshwater has outpaced renewable supply in Jordan since the early 1990’s.  At that time, estimated annual demand of 875 MCM per year was nearly equal to estimated supply.  As the population of Jordan increased, the demand for freshwater became more intense.  According to the Jordanian Ministry of Water and Irrigation, projected freshwater supply, demand, and resulting deficits through 2020 are as follows: 

Water Supply and Demand Totals and Deficits (MCM)  

Source: The Hashemite Kingdom of Jordan Water Sector Review Update.  The World Bank, February 15, 2001. Pg. 5-6.  
   

Pressure on Jordan’s Freshwater Resources:  

Jordan is one of the poorest countries in the Middle East.  Per capita GNP in 1993 was only US $1,190 and 2001 estimates place it only marginally higher at $1,500.[9]  As traditional agriculture has been unable to support the country’s growing population, Jordan has experienced a large migration of people from rural areas to the country’s few large cities.  In 1980 the population of Jordan was 2.2 million with this figure growing to 4.1 million by the mid-1990’s.  At this time, 68% of the country’s 4.1 million people were concentrated in urban areas.[10]  As of 2000 the population of Jordan was 4.9 million with a projected annual growth rate of about 3%.  It is estimated that Jordan’s population will reach 6.8 million by 2015.[11] 

As a point of reference, Jordan’s water use in 1998 was broken down according to the following chart: 

 
Source: The Hashemite Kingdom of Jordan Water Sector Review Update, The World Bank, February 15, 2001.  Pg. 4.  

The following chart shows projected water deficits by sector based on expected requirements versus expected supply in coming years.  

Water Supply vs. Requirements in Jordan 1998-2020 (MCM)  

Source: World Bank Report, Water Sector Review Update, February 2001.  

As the data indicates, demand in the municipal and industrial sectors in 2020 will increase by over 100% from 1998 levels.  That same year total supply will not account for total demand in all three consumption areas, resulting in a huge estimated deficit of 360 MCM.  While it is possible for Jordan to cover this deficit by overdrawing aquifers as it is currently doing, this is not sustainable in the long-run and new sources of water must be found.  

Water Use in the Agriculture Sector:  The agriculture sector accounts for the largest quantity of water used in Jordan.  In 1998, agriculture accounted for nearly 70% of all water used.  In 2000, the agricultural sector used over 600 MCM of water and accounted for 2.2% of Jordan’s GDP that year.  As the data indicates, water demand in the agriculture sector is expected to stabilize at about 890 MCM in 2020.  This is an increase of only 27 MCM from 1998 levels and is expected to be the result of implementing more efficient farming and water distribution technology. 

Water Use in the Industrial Sector:  Industrial demand for water has remained low in past decades due to Jordan’s relatively small industrial sector.  However, water use jumped in the early 1990’s to about 45 MCM per year, and to 60 MCM in 2000.  Despite low water usage relative to the municipal and agriculture sectors, the industrial sector, including manufacturing, accounted for 40.4% of GDP in 2000.[12]  This figure is expected to rise significantly as Jordan’s industrial sector grows.[13]  

Water Use in the Tourism/Hotel Sector:  Jordan’s economy relies in part on a large hotel and tourism sector which currently contributes roughly 10% of annual GDP.  Over the past decade, Jordan has been substantially developing its tourism infrastructure, particularly around historical sites and the Dead Sea. Regional stability is the key to growth in this sector and there are great expectations that if a comprehensive, regional peace agreement is reached Jordan will reap tremendous financial benefits.  The number of hotel rooms in Jordan has increased from 12,100 in 1997 to 16,800 in 2000.[14]  There are plans to build an additional 15,000 hotel rooms in the Dead Sea region in the near future.[15]  Occupancy levels have been increasing dramatically as the number of occupancies went from 2.25 million in 1998 to 2.5 million in 1999, and there are expectations that this figure will reach 3.6 million in 2003 depending on the regional political situation.[16]  

Water Use in the Residential Sector:  The residential (municipal) sector accounts for the second highest annual consumption of water in Jordan.  In Amman, where the largest proportion of the Jordanian population lives, water is delivered only once a week.  It is estimated that nearly 50% of all water that is intended for use in the residential sector is considered “unaccounted for water” (UFW) as it is lost in the municipal system due to leaky pipes and poor infrastructure.  Each cubic meter “unaccounted for water” (UFW) places an added burden on Jordan’s water resources.  Water use in the residential sector is expected to more than double in 2020 over 1998 levels.   
 

Recovering Costs in Jordan’s Water Sector:  

Municipal, industrial and related water use in Jordan is regulated by the Water Authority of Jordan.  Water operations in the agriculture sector of the Jordan Valley, where most of Jordan’s agriculture activity occurs, are managed by the Jordan Valley Authority.  Both of these agencies are operating at a financial loss due to a disparity between high operation costs and weak revenue collection from water users.  

Any water project such as the Seyhan/Ceyhan pipeline will be capital intensive and covering these, as well as long-run operation and maintenance costs, must be a priority.  A strong revenue collection mechanism is the most logical way to generate these revenues and reforming the current collection mechanism will be required to meet this goal.  The government of Jordan is currently working in conjunction with the World Bank to improve collection procedures.  This issue will be presented and discussed in more detail in the sections on Commercial Background and Commercial Analysis.
   

Efforts to Increase Jordan’s Freshwater Supply:  

Jordan is engaged in numerous water projects to enhance the country’s overall freshwater capacity (See Appendix 1).  Jordan plans to invest JD1.6 billion ($2.3 million), or about 4.2% of GDP between 2000-2005 for this purpose.  This investment plan is front loaded in which spending in 2002-2003 will likely exceed 5% of GDP.[17]  The total amount of additional freshwater gained through all of the projects in Appendix 1 is 314 MCM.  Population growth and economic expansion will make the net impact of these efforts on Jordan’s total water deficit minimal.  Following are examples of major projects Jordan is carrying out to enhance its water supply: 

Amman Water Infrastructure Renovation:  Jordan recently received $55 million in the form of a World Bank loan to renovate the municipal water infrastructure in the greater Amman area and transfer management to a private entity.  The French water management company, Suez, gained the initial contract.  This four year project aims to improve efficiency in the water distribution system, rehabilitate the city’s water network, repair meters, reduce unaccounted for water (UFW) by at least 25%, and increase sales revenue.[18]  

As-Samra Wastewater Treatment Center:  The As-Samra Wastewater Treatment Center is located 40 kilometers north of Amman and is the world’s largest wastewater treatment facility.  This facility began operating in 1985 and was designed to treat 68,000 cubic meters of water per day (24.8 MCM per year).  Due to rapid population growth in Amman and the surrounding area, this facility has been operating at overcapacity and is  treating over 170,000 MCM per day (62.1 MCM per year), nearly three times above capacity, resulting in deteriorating water quality.[19] A $153 million renovation and expansion project is currently being implemented at the facility and should be completed by 2005.[20]   

The Unity Dam:  The $136 million Wihdeh (“unity”) dam project will stop the flow of a portion of the Yarmouk River on the Jordan-Syria border and store up to 110 MCM of water.  50 MCM per year of this water will be allocated for domestic use while 20 MCM/yr will be allocated to irrigation.  As previously agreed, Syria will not have access to any of the water resulting from this project as Jordan is paying for the construction of the dam in its entirety.  Additionally, Syria does not rely heavily on water from the Yarmouk River to meet its national water needs.[21] 

The Disi-Amman Conveyor:  The Disi Aquifer, located in southern Jordan near the Saudi Arabian border, is Jordan’s largest source of non-renewable sub-surface water.  Water from this aquifer is currently pumped 325 kilometers north to Amman for consumption.[22]  In 1998, 300 MCM of water was taken from the Disi Aquifer but there are plans to use more.[23]  The Disi-Amman conveyor (pipeline) is currently under construction at a projected cost of $588 million to supply Amman with an additional 100 MCM per year of water from the Disi Aquifer.[24]  It is undetermined how long the Disi Aquifer will remain viable as conflicting estimates place the life of the aquifer between 40 and 150 years.[25]  

The Red-Dead Canal and Pipeline:  Not included in Appendix 1 is a plan that has been put forth by the Jordanian and Israeli Governments to construct a canal and pipeline system from the Dead Sea to the Red Sea located on the Jordan-Israel border.  This project entails a pipeline system originating in Aqaba, Jordan’s only outlet to the Red Sea, to carry seawater roughly 200 kilometers inland to the Dead Sea for the purposes of desalination, power generation, and to refill the rapidly shrinking Dead Sea.  The level of the Dead Sea has dropped roughly 20 meters in the past 40 years from 392 meters below sea level to 412 meters below sea level.  If this pattern continues over the next ten years the Dead Sea will lose over one-third of its total surface area, receding to 650 square kilometers from 1,000 square kilometers recorded as recently as the 1960’s.[26] 

The Red-Dead system is projected to carry 1.8 billion cubic meters of saltwater with 850 MCM of this targeted for desalination and distribution between Israel and Jordan.  The proposal indicates that two-thirds of this desalinated freshwater (560 MCM) will be piped to Amman and the remaining third (290 MCM) to the West Bank and Jerusalem.  Desalination plants will be powered mainly with hydro-electric energy generated by utilizing the elevation difference between the hills surrounding the Dead Sea and the shoreline.  As pipeline water falls from 126 meters above sea level to the banks of the Dead Sea at 400 meters below sea level roughly 550 megawatts of electricity will be generated and used to power desalination and pumping facilities with additional electricity being made available to local communities.[27] 

The initial cost of this project is cited at roughly $4 billion, with the cost of the pipeline being an estimated $800 million and the installation of initial desalination and distribution facilities an additional $3 billion.[28]  If implemented, this project is expected to meet Jordan’s freshwater needs up to about 2030.[29]   
 

Is it Possible to Import Freshwater from Turkey? 

Turkey has an abundance of freshwater from its numerous streams and rivers.  The headwaters of both the Tigris and Euphrates Rivers originate in Turkey and the country is considered by some to be an emerging regional “hydro-power”.  Since the mid-1980’s, Turkey has made several offers to sell some of its water to needy neighbors.  Turkey currently ships about 6.8 MCM/year to Turkish controlled Northern Cyprus via tankerships and waterbags.[30] 

The Manavgat River in southern Turkey is responsible for 4.5 billion cubic meters per year of freshwater runoff.  The city of Manavgat, which lies on the Mediterranean near Antalya, is the site of a dam and a $150 million dollar, 186 MCM per year freshwater treatment and transfer station. [31]  The facility was completed in the late 1990’s and is designed specifically for water exports.  The Manavgat facility consists of a series of pumping and treatment stations where water is extracted from the Manavgat River and sent to either a treatment and purification plant or directly to a filling station for export depending on what the buyer specifies.[32] 

As of 2000 the Manavgat transfer station could supply 180 million cubic meters per year of water for export and that figure is expected to rise.[33]  In August of 1999, Turkish President Demirel, once an opponent to the sale of Turkish water, offered to sell Israel up to 140 billion cubic feet (4 billion cubic meters) of water a year from the Manavgat River.[34]  The water, which Israel desperately needs, would be shipped the 400 miles between Manavgat and Israel by either tanker or waterbag.  Israel followed through with Turkey and recently signed a deal to supply it with 50 MCM/year of water each of the next 20 years.[35]  As of November 2002 the price of this water was not yet determined.
   

Water Potential of the Seyhan and Ceyhan Rivers:  

The combined average annual flow of the Seyhan and Ceyhan Rivers in southern Turkey is 15.19 billion cubic meters.  A portion of their waters is utilized along the course of the rivers while the remaining water drains into the Mediterranean Sea.[36] 

ECONOMIC BACKGROUND

The following section will present economic issues relevant to the construction of the Seyhan/Ceyhan pipeline.  Issues include Jordan’s economic growth, water use by sector of the economy, current tariff schedules for water, and economic issues for Syria and Turkey regarding the pipeline. 

Economic Growth in Jordan:  

Jordan’s average economic growth in the early 1990’s averaged over 8% per year.  This growth has slowed to an average of just over 3% per year and is expected to continue at roughly this same rate in coming years.

 
Source: The World Bank, World Development Indicators, 1997 – 2002. 

The following two charts indicate Jordan’s water use by sector in 1998, which totaled 1,224 MCM, and water use by sector in 2020 which is projected to be 1,647 MCM.  As a point of reference, in 2000, the agricultural sector used over 600 MCM of water and accounted for 2.2% of Jordan’s GDP that year. The industrial sector, including manufacturing, used 60 MCM and accounted for 40.4% of GDP that year.[37]  The municipal, hotel and tourism sector combined accounted for about 400 MCM of water.  Of this, the hotel and tourism sector contributed to roughly 10% of GDP that year.   

Economic growth by sector of the economy over the past 20 years is as follows:

 
Source: The World Bank, World Development Indicators, 2002. Pg. 205. 

As the data indicates, new growth is concentrated in industry, manufacturing and services, with growth in the agriculture sector posting negative numbers.  In the tourism sector alone, as part of services growth, Jordan saw the number of tourists rise from 572,000 in 1990 to 1.42 million in 2000, and increase of over 100%.[38] 

Jordan’s water use by sector in 1998 and projected water use in 2020 are displayed in the following charts.

 
Source: The Hashemite Kingdom of Jordan Water Sector Review Update, The World Bank, February 15, 2001.  Pg. 4.[39]

 
Source: The Hashemite Kingdom of Jordan Water Sector Review Update, The World Bank, February 15, 2001.  Pg. 4.[40] 

According to projections by the Jordanian Ministry of Water and Irrigation, water use in 2020 will be broken down as follows: 

Source: The Hashemite Kingdom of Jordan Water Sector Review Update, The World Bank, February 15, 2001.  Pg. 4,6.

The Agriculture Sector: 

The majority of Jordan’s agricultural production occurs in the Jordan Valley which accounts for about 73% of total irrigation sector water use.[41]  The Jordan Valley is bordered by the Jordan River to the west and the East Mountains to the east.  It extends north to south a distance of 104 kilometers from Lake Tiberias to the Dead Sea varying in width from 4 to 16 kilometers.  Average annual rainfall in the Jordan Valley is about 260mm, however, most agricultural production is sustained through irrigation due to a short rainy season.  Vegetables are the primary product grown in the valley, specifically tree borne fruit, tomatoes, eggplants, potatoes, squashes, cucumbers, peppers, onions, cauliflower, cabbage, and beans.[42] 

T he Jordanian government is attempting to expand its total cultivatable land.  However, water use in the agriculture sector is only expected to increase from about 860 MCM in 2000 to 890 MCM in 2020 due to the adoption of more efficient methods of water use.  This is a sign of stabilization of water consumption in the agriculture sector and efforts by the Jordanian government to allocate less water proportionately to this sector.     

The following chart indicates financial returns on water by sector according to a 1997 World Bank study, , The Hashemite Kingdom of Jordan Water Sector Review, Vol II, Annexes C-N. The data indicates that the lowest returns per cubic meter of water are in the agricultural sector while municipal sector returns are about 50% higher and industrial sector returns are over 500% higher.

Financial Returns on Water by Sector 

Source: The World Bank, The Hashemite Kingdom of Jordan Water Sector Review, Vol II, Annexes C-N, October 15, 1997. Annex C, Attachment 2, Pg. 8.

Opportunity Costs of Water Use:  

The following chart indicates the opportunity cost of water use by sector according to the same 1997 World Bank study.  The data indicates that the use of a cubic meter of water in the agricultural sector incurs the greatest opportunity cost, while the use of a cubic meter of water in the municipal sector results in a slightly smaller opportunity cost.  The opportunity cost for water use in the industrial sector is dramatically lower than in the two competing sectors.
  

Opportunity Costs of Water Use by Sector

Source: The World Bank, The Hashemite Kingdom of Jordan Water Sector Review, Vol II, Annexes C-N, October 15, 1997. Annex C, Attachment 2, Pg. 8.  

Patterns of water use and existing tariff structures result in negative returns on investment for the Jordan Valley Authority (JVA), the water management body of the Jordan Valley.  The estimated average cost to supply irrigation water in the Jordan Valley from 1990-2000 was $0.52 per cubic meter, $0.23 of which consisted of operation and maintenance costs.  During this period the government subsidized this water at a rate of about $0.35 per cubic meter leaving the remaining $0.17 to be recovered by the JVA.  Current water cost in the Jordan Valley is based on a progressive scale as follows: 

Source: Jordan Valley Authority, 2002.  

As the JVA tariff structure indicates, the largest tariff recovered per cubic meter of water used is $.05, for the use of 3001+ cubic meters per billing cycle.  As noted above, this is well below the cost to produce and deliver it.  As a result of production and delivery costs outpacing revenue recovered, the JVA has consistently incurred financial losses.[43]     
 

The Municipal and Industrial Sectors

Jordan currently charges the following tariffs per cubic meter of water in the industrial, hotel and municipal sectors: