Arab Environment Watch : Pricing of Domestice Water in Jordan

By: Batir Wardam

With a water per capita share of 160 cubic meters per year, Jordan is among the world's top 10 water scarce countries. The struggle to provide adequate and clean water resources is one of the biggest developmental challenges in Jordan. At the center of the debate about water management is the issue of water pricing and valuation.

Although the infrastructure of water supply in Jordan reaches a high percentage of population (96%) , the sustainability of water supply is not considered adequate. Households in Jordan receive water either once or twice a week and in many occasions citizens are forced to buy water from tankers which price can reach up to 1.5 JD per meter.

Moreover, Municipal water in Jordan is used by the domestic and commercial sectors, public institutions, as well as by small industries that are connected to the public water system and receive needed water from municipalities. The municipal water requirements are determined by population growth, industrial development, urban concentration and income increase.

Water valuation is used by the Ministry of Water as an economic tool for better efficiency in water allocation. The Jordan’s Water Utility Policy (MWI, 1997) demands to move towards full cost recovery and to use water tariffs mechanism to promote cost recovery considering water quality, end users as well as economic impacts on the various economic sectors.

Cost recovery is a matter of pricing. The price of water does not cover the costs of water in Jordan. In case water prices would be raised to reflect the value of water, these prices will at least cover costs.

Indirect water valuation has been applied for irrigation water through restriction of water use in crops of low value that consume high quantities of water. In the municipal water sector, tariffs have been developed and executed to cover operation and maintenance costs as well as to reduce water consumption and wastage. However, these tariffs are not based on a valuation of municipal water through assessing the willingness of the consumers to pay for water.

For social and political reasons, comprehensive water valuation, as demanded by economists, has not yet been implemented in Jordan. Some areas in the desert, such as in Aqaba governorate, Mafraq governorate, etc, are still supplied with municipal water free of charge.

Water tariffs show a fixed rate for a 0-20m³ block, with a minimum of 20m³ and an increasing price for each additional consumed cubic meter of municipal water. This is based on the calculation that the minimum water consumption of a household per quarter of a year in Jordan is 20 m³.

The current pricing structure for municipal water was devised on the base of cost recovery of the maintenance and operation costs. However, the water tariffs in Jordan were structured in such a way as to guarantee the minimum needed consumption at a subsidized fixed price per m³ and to recover these subsidies from customers with higher consumption assuming the more consumptive customers to be wealthier. It is designed to possibly cover the service costs while keeping lifeline use affordable to the poor. The progressive pricing is at the same time a controlling mechanism to water wastage. The charges for water and wastewater are primarily based on the amount of water consumed.

Even with the on-going privatization of municipal water utilities in Amman, the Government of Jordan is still subsidizing the water sector. This subsidization has decreased gradually from a maximum of 59.13% of the total costs in 1995 and a minimum of 35% in 2005.

It is important to note that although the Jordanian population is paying a high rate of taxes for a variety of services and product the most important and non-renewable resource is still being subsidized.