Economic Sustainability Evaluation of an Inter-Basin Water Transfer Project Using GWP Statement

Abstract

One of the strategic components of progress in societies is Water Resources Development Projects that have a key role for expanding regional infrastructures in safe and affordable water. These plans have direct and indirect economic impacts. In order to measure them, one needs to consider different parameters affected by regional conditions and project characteristics. Among the newest approaches to utilize water is to evaluate it as a socio-economic good. Global Water Partnership (GWP) guideline has been developed using this point of view. It follows economic sustainability evaluation in water projects and considers two main terms of full cost and full value. The former consists of: Full Supply Cost, Opportunity Cost, Economic and Environmental Externalities, and the later includes: Economic Value and Intrinsic Value. This statement explains that economic sustainability will be attained when the full value is equal or greater than the full cost of the project. In this paper, evaluation of economic sustainability based on GWP guidelines has been applied for an Inter-basin Water Transfer Project (IWTP) in Iran. The goal of this project is to supply water from the Karoon River in the South-Western part to the central region in Iran for agricultural activities. For this purpose, different components of the project are identified, and then its full cost (such as capital investment, loss of revenue from hydropower generation and crop production and the cost of improving water quality in the basin of origin) and full value (such as benefit from agricultural production, aquifer restoration) are calculated by using a simulation model and an accounting method. The results show the value and cost of each component of the project as a basis for identifying the stable economic elements of the project. Finally, certain recommendations for improving the sustainability of the system are presented.