AIACC African Workshop Dakar, Senegal, March 2004

Capacity Building in Analytical Tools for Estimating and Comparing Costs and Benefits of Adaptation Projects in the

Berg River Basin, South Africa

AIACC African WorkshopDakar, Senegal, March 2004

Group AF-47Daan Louw, Molly Hellmuth, Mac Callaway, Jabavu Nkomo, Debbie Sparks

ERCERCEnergy Research Centre

Participating Organisations

* Energy Research Centre, University of Cape Town, South Africa

* Department of Water Resources, Banjul, The Gambia

* UNEP- Risø Centre on Energy, Climate and Sustainable Development, Denmark



The Project Areas…

The Gambia

The Berg River Basin, South Africa

Cape Town



The Berg River Basin, South Africa:The Context

• The Berg River basin provides water to both the Cape Town urban center and a variety of irrigation crops.

• In 1999, the managed demand on the dams of the Western Cape System was 457 MCMs/a compared to the yield of about 442 MCMs

• Winter rainfall region: April – September, need for storage capacity, farm dams and other large

• The decision to build the Berg River dam is controversial – is it needed?

• The impact of climate change was not considered in the dam feasibility assessment

• The total (holistic) economic impact of building new dams – not considered

• The impact of the new National Water Act (1998): a major push to create water markets in South Africa (there is provision for water trading, a reserve)



• Estimate the potential impacts of alternative climate change scenarios on water supply and demand in the basin due to changes in runoff, evapotranspiration and surface evaporation,

• Translate these physical impacts into monetary losses (or gains) for different groups of farmers and urban water users,

• Estimate and compare the benefits costs of the storage and water market options (‘adaptations’) of avoiding climate change damages under different climate scenarios

• Estimate the risk of making ex-ante planning decisions with different than expected ex-post climate outcomes

The Berg River Basin, South Africa:Objectives



The Berg River Basin, South Africa: Schematic

CLIMATE

WatBal Model:Rainfall/Runoff

Model

Production andResourceAllocation

MANAGEMENT/INVESTMENT DECISIONS

Upper Berg RiverSpatial Equilibrium

Model

IMPACTS: Runoff, Crop

WaterRequirements,

Surface Evaporation

COSTS/BENEFITS



ADAPTATION OPTIONS

The Berg River Basin, South Africa:Schematic

CLIMATE



Climate

• HAD A2* GCM Reference (1961 –1990), Near (2010-2039) and Distant (2070-2099) future time periods


20

60

100

140

180

jan feb mar apr may jun jul aug sep oct nov dec

Prec

ipita

tion,

mm

Reference PeriodNear FutureDistant Future


The Berg River Basin, South Africa:Schematic

CLIMATE


Model


WaterRequirements,

Surface Evaporation



Preliminary Impact Results

• This CC scenario results in a decrease in runoff over the basin

• An increase in Potential EvapoTranspiration losses– Higher crop-water use; Higher Evaporation Potential from

Storage


0

10

20

30

40

jan feb mar apr may jun jul aug sep oct nov dec

Ru

no

ff,

MC

M

Reference PeriodNear FutureDistant Future


The Berg River Basin, South Africa:Schematic, cont…

CLIMATE


Model


WaterRequirements,

Surface Evaporation


Model




The Berg River Basin, South Africa:Economic Model

Upper Berg River Spatial Equilibrium Model is an optimisation model that will simulate:

•Competition for water between urban and agricultural water use over space and time•Ex-ante investment in additional reservoir capacity•Ex-post reservoir operation to meet urban, agricultural and environmental demands for water •Objective function is based on economic efficiency, but model can also simulate alternative allocation systems.



The Berg River Basin, South Africa:Adaptation Options

• Consider specifically:– Markets– develop a system of water rights– More storage (at an economically optimal level)– collective

autonomous adaptation– by farmers and/or government– Marginal costs of environmental “reserve” flow

• Scenarios:– Current climate– Climate Change Scenarios (downscaled GCM, “what if”)– Partial Adjustment (reservoir capacity and institutions fixed,

farm and reservoir management variable)– Full adjustment (reservoir capacity and institutions are also

variable, partially and in combination)



The Berg River Basin, South Africa: Schematic

CLIMATE


Model


MANAGEMENT/INVESTMENT DECISIONS


Model


WaterRequirements,

Surface Evaporation

COSTS/BENEFITS



ADAPTATION OPTIONS

The Berg River Basin, South Africa:Evaluating Costs and Benefits

• COSTS (over 30 year time period):– Changes in farm production costs– Changes in investment costs for new

capacity– Changes in administrative costs associated

with water market transfers

• BENEFITS:– Changes in willingness to pay for water by

farmers and urban users (PV) – efficiency increases

– Benefit of delay in new storage



• The methodology allows us to:– Estimate climate change damage without the alternatives

(additional storage capacity, water markets, both) and– Estimate benefits and costs associated with reducing climate

change damages for each alternative for each and multiple climate change scenarios

– Determine the optimal storage capacity for each and multiple climate change scenarios

– Estimate the cost of making ex-ante decisions about reservoir capacity, if the climate change scenario turns out to be wrong ex-post

– Minimizing the cost of making these mistakes

• Preliminary impacts results indicate an expected reduction in runoff, which will exacerbate the existing water scarcity

Conclusions



Thank you, for more information contact:

[email protected]

[email protected]

[email protected]

[email protected]

[email protected]

Or, please visit:

http://www.start.org/project_pages/aiacc.html

End



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AIACC African Workshop Dakar, Senegal, March 2004

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