The Study of Water Use and Treated Wastewater Discharge Charge the Federal Democratic Republic of Ethiopia Awash Basin Authorit

The Study of Water Use and Treated Wastewater Discharge Charge

Water use chargeforhydropower, aquaculture and recreation

Final Report

Submitted to

The Federal Democratic Republic of Ethiopia Awash Basin Authority

MelkaWerer, Ethiopia

Prepared by: School of Civil and Environmental Engineering Addis Ababa Institute of Technology (AAiT) Addis Ababa University P. O. Box. 385, Addis Ababa, Tel. + 251- 111-232437

October, 2018 Addis Ababa Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

Generated by 1. Dr Yilma Seleshi (Team Leader & Senior Water Resources Engineer / Hydropower Engineer) 2. Dr Abebe Getahun (Aquaculture expert) 3. Ato Fisum Teshome (Water Resources Engineer) 4. W/t Dure Mulatu (Hydrologist)

Approved by:Dr. Geremew Sahilu

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

Contents List of Tables and Figures...... 8

Abbreviations and Acronyms ...... 9

Executive summary ...... 10

1 Introduction ...... 18

1.1 Background and problem ...... 18

1.2 Understanding of the ToR ...... 21

1.3 Objectives of the study...... 21

1.4 Team composition ...... 21

2 Literature Review...... 22

2.1 Principles of water charging ...... 22

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

2.2 Experience in Water Charging (National / International) ...... 23

2.2.1 Hydropower charge setting literature review ...... 23

2.2.2 Aquaculture charge setting literature review ...... 34

2.2.3 Recreation water use charge setting literature review ...... 39

3 Method – technical aspect of water charge for hydropower, aquaculture and recreation water uses 42

3.1 Description of the study area ...... 42

3.2 Conceptual Framework for hydropower water use charge setting ...... 43

3.3 Conceptual Framework for aquaculture water use charge setting ...... 48

3.4 Conceptual framework for recreational water use charge ...... 50

3.5 Method of Data collection and Analysis ...... 53

3.5.1 Approach for field work...... 53

3.5.2 Team composition ...... 53

3.5.3 Data Collection Methods ...... 54

3.5.4 Data Collection Instrument ...... 54

3.5.5 Sampling ...... 54

3.5.6 Field Visit Plan and Organization ...... 55

3.5.7 Field Survey Routes ...... 55

3.5.8 Field work data and findings...... 57

4 Charge setting ...... 69

4.1 Water charge setting for hydropower ...... 69

4.2 Water use charge setting for capture fishery and aquaculture ...... 71

4.3 Water use charge for water-based recreation ...... 73

5 Economic aspect hydropower, aquaculture and recreation water use charge setting ...... 74

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

5.1 Introduction ...... 74

5.1.1 Data collection methods ...... 75

5.1.2 Sampling ...... 75

5.1.3 Data collection instrument ...... 75

5.2 Findings...... 76

5.2.1 Hydropower ...... 76

5.2.2 Fisheries ...... 78

5.2.3 Recreation ...... 80

6 Social aspect hydropower, aquaculture and recreation water use charge setting ...... 81

6.1 Methods of the study ...... 81

6.1.1 Literature review ...... 81

6.1.2 Survey ...... 81

6.1.3 In-depth interview ...... 81

6.1.4 Key informant interview ...... 81

6.1.5 Focus Group Discussion (FGD)...... 81

6.1.6 Observation ...... 82

6.2 Data Collection Instruments ...... 82

6.2.1 Sampling ...... 82

6.3 Findings (Hydropower, recreation and aquaculture) ...... 83

6.3.1 Hydropower ...... 83

6.3.2 Recreation ...... 84

6.3.3 Aquaculture ...... 86

6.4 Mitigation of perceived negative impacts on charge ...... 89

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

6.5 Concluding Remarks and Recommendations ...... 89

7 Conclusions and recommendations...... 90

8 References ...... 90

Annex I: ...... 96

1 Stakeholder consultation findings ...... 96

1.1 Objective of the field visit...... 96

1.2 Consultation with AwBA head office at MelkaWorer ...... 97

1.3 Consultation with Tendaho reservoir – fish production ...... 97

1.4 Consultation with Awash National Park ...... 97

1.4.1 Summary ...... 97

1.4.2 Details of the consultation ...... 98

1.5 Consultation with Koka hydropower and reservoir ...... 99

1.5.1 Summary ...... 99

1.5.2 Details of the consultation ...... 100

1.6 Consultation with East Shoa, Adama Water Office ...... 101

1.6.1 Summary ...... 101

1.6.2 Details of the consultation ...... 102

1.7 Consultation with Isolated lodges Kuruftu and Adulala ...... 103

1.7.1 Summary ...... 103

1.7.2 Details of the consultation ...... 104

1.8 Field visit in Addis Ababa area ...... 106

1.8.1 General Description of Field Visit (where, when, which, whom) ...... 106

1.8.2 Description of Stakeholders (contacted/identified who are relevant to water/waste charge and their interest in water charge) ...... 106

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

1.8.3 Key Issues discussed (Summary)...... 106

1.8.4 Existing Charge System ...... 109

1.8.5 Existing Institutional Setup (General/Charge Specific) ...... 109

1.8.6 Challenges /problems in relation to water charge ...... 109

1.8.7 Suggested Preconditions for Charge Setting (Institutional/Legal/ Capacity Development…) ...... 109

1.8.8 Recommendations for Early Conceptualization of Charge (issues to be incorporated) ...... 109

1.9 Summary ...... 109

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

List of Tables and Figures

TABLE 1: HYDROPOWER ROYALTY RATES IN CHINA (USING US$1 = 6.66 CHINESE YUAN). 25 TABLE 2:HYDROPOWER ROYALTY RATES IN CANADA’S LARGEST HYDROPOWER PROVINCES (PRODUCTION ≥ 10 TWH)(USING US$1 = CANADIAN $1). 29 TABLE 3: HYDROPOWER ROYALTY RATES IN THE US’S LARGEST HYDROPOWER STATES (PRODUCTION ≥ 10 TWH). 31 TABLE 4: FIELD WORK ORGANIZATION 55 TABLE 5: DESCRIPTION OF STAKEHOLDERS (CONTACTED/IDENTIFIED WHO ARE RELEVANT HYDROPOWER CHARGE) 57 TABLE 6: DESCRIPTION OF STAKEHOLDERS (CONTACTED/IDENTIFIED WHO ARE RELEVANT TO WATER/WASTE CHARGE AND THEIR INTEREST IN WATER CHARGE) 59 TABLE 7: DESCRIPTION OF STAKEHOLDERS (CONTACTED/IDENTIFIED WHO ARE RELEVANT WATER-BASED RECREATION FACILITIES CHARGE) 67 TABLE 8: YEARLY BUDGET. AL.LOCATED FOR KOKA AND AWASH II AND III HYDROPOWER PLANTS 76 TABLE 9: SUMMARY FINANCIAL STATISTICS OF FISHERMEN 78 TABLE 10: SAMPLE RESPONDENTS BY DATA COLLECTION METHODS 82 TABLE 11: RESPONDENTS’ OPINION ON WATER CONSCIOUSNESS, WATER CHARGE AND ENVIRONMENT 88

FIGURE 1: LOCATION MAP OF THE AWASH BASIN 19 FIGURE 2: LOCATION OF SOME LAKES IN THE AWASH BASIN 20 FIGURE 3: WP5 CHARGE SETTING CONCEPTUAL FRAMEWORK 46 FIGURE 4: CONCEPTUAL FRAMEWORK FOR HYDROPOWER CHARGE SETTING 47 FIGURE 5: CONCEPTUAL FRAMEWORK FOR FISHERIES/ AQUACULTURE CHARGE SETTING 49 FIGURE 6: CONCEPTUAL FRAMEWORK FOR RECREATION WATER USE CHARGE 52 FIGURE 7: MAY-JUNE 2018 CONDUCTED FIELD TRIP LOCATIONS 53

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

Abbreviations and Acronyms

AAiT Addis Ababa Institute of Technology AAU Addis Ababa University AwBA Awash Basin Authority CBA Cost Benefit Analysis DWA Department of Water Affair’s EEP Ethiopia Electric Power EIA Environmental Impact Assessment EU European Union FERC Federal Energy Regulation Commission FGD Focus Group Discussion GRC Gross Revenue Charge GTP Growth and Transformation Plan GW Groundwater ha Hectare Hp horsepower IWMI International Irrigation Management Institute IWRM Integrated Water Resources Management kW Kilo Watt MoWIE Ministry of Water, Irrigation and Electricity MW Mega Watt MWh Mega Watt Hour RBA River Basin Authority ToR Terms of Reference TWh Terra Watt Hour USD United States Dollar WB World Bank WP Work Package WSS Water Supply Service WTA Willingness to Accept WTP Willingness to Pay WUAs Water User Associations

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

Executive summary

INTRODUCTION

To date in the Awashbasinthere is no water abstraction/usechargeset for hydropower, aquaculture, and recreational wateruses. The unavailability of water abstraction/usecharge for hydropower, aquaculture, and recreation in long-term will lead to inadequate water management, inefficient allocation of scarce water resources, and generate water conflict among various users and to ultimately unsustainable water resources development.

Moreover, in order to sustainably deliver water from rivers and aquifers for various uses with sufficient quantity and quality at required place and time, water should be well protected and managed as well as valued. Managing freshwater requires significant financial, technical and institutional resources.

To sustain such water conservation, protection and management function, in general, water users /abstractors should pay. A charge is thus set by competent authority for water abstraction from river and aquifer. Similarly, a charge for discharging treated wastewater into a river system should be set.

Non-consumptive water charges, that is for hydropower and recreation water use, are set normally at a lower rate than for consumptive use, although non-consumptive use does entail some opportunity cost, where water is stored, released into a different part of the catchment, or with its quality or temperature altered.

Water for aquaculture purposes could be abstracted from lakes, reservoirs, natural ponds, rivers and ground water. It could be diverted and be used in man-made ponds, tanks, and raceways. For water abstraction and use of the water sites (in-situ utilization) for business, other countries experiences have shown that,a fee is normally paid for using the natural resource as a guarantee for creating equal legal business conditions for all the citizens and corporate bodies.

Objective Themain tasks were:

a) To set water use charge for hydropower generation,

b) To set water use charge for captured fisheries and aquaculture, and

c) To set water use charge for recreational (tourism) water use relying on lakes / waterfall / rivers.

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

It is to be noted again that water charges are needed for hydropower, aquaculture, recreational water uses to have: (a) increase in water consciousnesses, (b) sustainable management and allocation of scarce water resources, and (c) preservation of water sources (sustainability)

Review of literatures and other country experiences

The Work Package 5 team has reviewed literatures of other countries related to hydropower, captured fishery and recreational water uses principles of charge setting; objectives of charges and their charge system and level of the charge related to their economy.

For hydropower water use charge setting experiences of China, Brazil, USA and Canada were accounted. For aquaculture and captured fishery water use charge setting experiences from Spain, Indonesia, Lithuania were studied. No literature was found for the recreational water use charge (aesthetic value); but the issue is acknowledged in UK and South Africa.

Learning points from other countries experiences to Ethiopian case as relevant as possible were outlined.

Conceptual framework:

The general conceptual framework for water use charge setting in hydropower, captured fishery and aquaculture, and recreation is given below. The framework includes major components of the work and their interconnectivity, namely

(a) Objective of charges (b) Review of past studies / practices and consultations with stakeholders (c) Charge setting principles (d) Charge cost basis (e) Conceptualised charge model sturctures (f) Field data collection ad stakeholder interview (g) Developing water use charge for hydropower, fishery and recreation

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

Charge setting conceptual framework

Objective of Water Use Charge setting:

Sustain water management and create efficient and equitable allocation of water resources through conservation, protection and administration of water resources.

Review of past studies / practices and consultations with stakeholders

Setting charge cost bases (AwBA Cost Items):

- Hydropower, aquaculture & Principlesused for charge setting: recreation: hydrological monitoring, affordability, willingness to pay water management/allocation and enforcement, catchment management, reservoir buffer zone development and mgmt, water weed control.

Early Conceptualization of charge structure and implementation mechanism

Assess / develop /modify legal Assess / develop /modify institutional

framework for charge structure for charge implementation (collection of permit & charge for water use;

water allocation, and monitoring)

Developing water use charge for hydropower, fishery and recreation

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

CONCEPTUAL MODELS PROPOPOSED FOR THE AWASH BASIN

From the extensive literature review, we have learned that water charge on hydropower is well practiced around the world including in China, USA, Canada, and Brazil. The Brazil and China experiences are more relevant for Ethiopia condition as they use transparent and readily implementable charge structure. The team recommends the following hydropower water charge model which accounts fixed fee (registration fee) and annualenergy generated (amount of water turbined).

Hydropower charge = Registration fee +

Variable annual hydropower water charge (Birr) = VH *K*EO

VH = charge coefficient

K= Rate of energy charge (Birr/KWh) – which Ethiopian Electric Power (EEP) sell toEthiopian Electric Utility (EEU)

EO = Annual Energy Output in KWh which is a function of water stored and turbined

TheVHvalue (percent of income form hydropower generated) was fixed by using international experiences from Brazil and China and adapting that to Ethiopia economic condition of the hydropower sector and specific hydropower station.

Fishery and aquaculture

After considering several factors affecting the use of water by fishermen and aquaculture investors, the following formulae were developed to estimate the amount one should pay for the water used for production of fishes in the natural system and in manmade ponds.

Capture fisheries water use charge = Registration fee + K*VF*CF

K= Unit price of 1 kg fish (Birr/Kg) CF = Captured fish (kg/year)

VF = Variable cost factor determined based on the field collected data from Haike, Ardibo and Koka lakes

Aquaculture water use charge = Registration fee + Aq*K*VF*HF

Aq = a coefficient for aquaculture

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

HF = Harvested fish (kg/year)

Variable cost factor, VF,for capture fisheries was determined by taking into consideration average incomes and expenses of fishermen from selected water bodies in the Awash Basin. The income was determined by assuming effective fishing time of 22 days per month and 10 months per year.Average production/fisherman/day and average cost/kg of fish have also been considered.The expenses include operational, maintenance as well as buffer zone watershed management

costs.VF(the ratio of AwBA expenses to sustain water conservation, protection and management function / Annual total sell value of fish) and VFis less than 6% - average willingness to pay.

It is recommended that for each lake a specialized Crew with two experts (water quality and hydrologist) shall be stationed at the specific lake having a motor boat and water quality instrument and install staff gauge (if not available) measure water level and water quality of the lake. In flowing rivers flow and water quality including sediment should be also measured in cooperation with the hydrology department. The experts will ensure that fisherman is registered for water use, and regulate sustainable use of fishes catch together with other relevant local offices. The Crew also manage the lake buffer zone together with the relevant local offices.

Recreation

Recreation areas in the Awash basin include Lake based (boating and lake related) and also fountain based recreation in parks which are used for commercial purposes. In use of water resources as a recreation area public safety and proper management issues shall be given the highest standard.

Parks and recreation have economic value, social importance, and health and environmental benefits that make them essential to communities. This charge considers their importance and is developed to sustain recreation areas while encouraging the proper of the water resource.

Lake and water-fall based recreation = Fixed charge (Registration /license or annual renewal fee)

+variable charge (VRP/E P)

P = annual profit (Birr) or E entrance fee (Birr)

VRP = factor of profit; VRE = factor of entrance fee;

Proposed charge models for the Awash basin

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

Charge setting for water use in hydropower is based on relevant survey data and in particular China and Brazil experiences. Volume of water turbined, electricity generated, annual income, and the size the hydropower plant are used to determine annual hydropower water use charge. The EEP willingness to pay also account in setting charge.

Hydropower charge = Registration fee +VH *K*EO

VH = charge coefficient

VH = 0.006 – 0.012

Based on the MW generated the following specific ranges are suggested

Category 1: 0.006 - 0.01 for HPP with capacity less than 100 MW

Category 2: 0.01 - 0.012 for HPP with capacity 100-500 MW

Category 3: 0.012 HPP with capacity greater than 500 MW

K= Rate of energy charge (Birr/KWh) – which Ethiopian Electric Power (EEP) sell toEthiopian Electric Utility (EEU)

EO = Annual Energy Output in KWh which is a function of water stored and turbined

TheVHvalue (percent of income from hydropower generated) was fixed by using international experiences and Ethiopia economic condition (capacity & willingness to pay).

Fishery

Capture fisheries water use charge = Registrationfee + K*VF*CF

Annual registration fee to be fixed by the AWBA regulation.

VF = 0.02 – 0.04, charge coefficient:

The VF values in the range depend on: Category 1: 0.02-0.03 for degraded watershed and / or small lake size Category 2: 0.03-0.04 for protected watershed and / or large lake size

The study team suggested two range categories. Awash Basin authority should consider

access to market, the size and productivity of the water bodies while deciding on the VF values from each of the categories. 15 | Page

Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

K= Unit price of 1 kg fish (Birr/Kg) – the price that the fisherman sells at the site of fishing. CF = Captured fish (kg/year)

VF is determined based on the field collected data from Haike, Ardibo and Koka lakes.

Aquaculture water use charge = Registrationfee + Aq*K*VF*HF

Aq = a coefficient for aquaculture (1.0-1.5) local and international experience

a) Source:Spring &ground water Aq = 1.25-1.50

b) Source:River, lake and reservoir Aq = 1.0-1.25

HF = Harvested fish (kg/year)

The study team suggested two range categories. Awash Basin Authority should consider access to

market, the size and productivity of the water bodies while deciding on the VF values from each of thecategories.

Recreation water use charge

Option A: based on the annual profit

Lake and water-fall based recreation = Registration / annual renewal fee) + variable charge (VR P)

License fee / renewal fee = To be fixed by the AwBA regulation

P =annual profit (Birr)

VRP = 0.006-0.010, factor of profit Category 1: 0.006-0.008 – recreation facility access to major market is limited

Category 2: 0.008-0.01 - recreation facility access to major market is good

VRPis determined based on the field collected data from Haike and Kuruftu lodges and Awash Fall Park and lodge.

Option B: based on the annual entrance fee

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

Lake and water-fall based recreation = Registration fee + variable charge (VRE) E

License fee / renewal fee = To be fixed by the AwBA regulation

E = annual entrance fee (Birr)

VRE = 0.01-0.02

Category 1: 0.010-0.015 – recreation facility access to major market is limited

Category 2: 0.015-0.020 - recreation facility access to major market is good

VRE is determined based on the field collected data from Sodere and Awash Fall Park and lodge.

Recommendation

The study has focused on water use charge development for hydropower plants, recreational centers and fishing communities. The hydropower plants, the recreational centers using water bodies and the fishing communities do not yet pay for the water they use. According to the social study, they have shown interest to pay water charges if introduced. However, many of them have set conditions to be fulfilled by the AwashBasin Authority by strongly involving in protecting the water bodies by creating buffer zones, in water management and allocation for various uses and watershed protections.

Cognizant of the opinion of various respondents, and their willingness to pay and ability to pay, the study recommended the introduction of water charge with respect to hydropower plants, recreational centers and fishing communities based on the Awash basinas specified in Chapter 4.

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

1 Introduction

1.1 Background and problem

To date in the Awashbasin (Figure 1), there is no water abstraction/usechargeset for hydropower, aquaculture, and recreational wateruses1. The unavailability of water abstraction/usecharge for hydropower, aquaculture, and recreation in long-term will lead to inadequate water management, inefficient allocation of scarce water resources, and generate water conflict among various users and to ultimately unsustainable water resources development.

Establishment of water charge for aquaculture use, as may be true for other sectors as well, is not an easy task, given that this charge must have an elevated value, sufficient to encourage the rational use, but not so elevated, in a manner that compromises or prevents the development of production activities.

1 Council of Ministers Regulation No. 115/2005, Ethiopian Water Resources Management Regulations defines water uses “the use of water for drinking, irrigation, industry, power generation, transport, animalhusbandry, fishing, mining and uses of water for other purposes” 18 | Page

Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

Recreational uses of water are mainly concentrated in isolated lodges around Bishoftu town surrounding crater lakes (Figure 2). The AwashNationalPark fall, near Awashtown, is also one of the national recreation sites. These recreational facility owners, by being in the basin, also benefit from the conservation and sustainability assurance works the AwashBasin Authority. It is necessary that the recreational owners acknowledge and contribute to the works of the AwashBasin Authority.

WP5 is focusing onestablishing water abstraction/usecharge for hydropower, aquaculture and recreational water uses.

Figure 1: Location map of the Awash basin

From the outset, it must be noted that if water abstraction /use charge is too low they may lead to non-viable institutions, sub-optimal water resources services and overall deterioration of the water resources. There is, therefore, a need to adjust to higher real charge over time to accommodate the cost of effective and financially sustainable water management institute, taking note of affordability constraints within abstractor sectors.

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

Figure 2: Location of some lakes in the Awash basin

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

1.2 Understanding of the ToR

The ToR is well developed with clear objectives and scope of the work. The WP5 is following the ToR and what is stated in the AAiT technical proposal.

1.3 Objectives of the study

There are three main objectives of WP5 in relation to a charge: a) To set raw water abstraction / use charge for hydropower generation, b) To set raw water abstraction / use charge for fisheries and aquaculture, and c) To set raw water abstraction charge for recreational (tourism) water use relying on lakes or waterfall.

1.4 Team composition

WP5- Team members for charge setting for hydropower, aquaculture and recreation water uses:

- Dr. Yilma Seleshi (Team Leader & Senior Water Resources Engineer) - Prof. Abebe Getahun (Aquaculture expert) - Ato Fisum Teshome (Water Resources Engineer - Recreation) - W/t Dure Mulatu (Hydrologist)

The social and economist experts, who are member of WP1, who worked closely with WP5 are

- Dr Woldabe Teshome (Sociologist) - Ato Marshal Nigussie(Economist)

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

2 Literature Review

This literature review section discusses principles of water charging as indicated by the MoWIE and international experiences applied in charge setting for hydropower, aquaculture and recreation.

2.1 Principles of water charging

Major criteria in water use/abstraction charge setting according to the MoWIE 2013 documentwhich lead to sustainable and efficient water uses and managements are: a) Economic efficiency: to ensure water resources are used in the most efficient way at the lowest possible social cost, b) Full cost-recovery: means that the water supply serviceis able to recover the cost of operation and maintenance of the water supply service systems as well as the cost of investments; c) Financial stability: charges should minimize risks of unexpected revenue fluctuations; d) Fairness: charges should treat all consumers; e) Equity: - equals be treated equally, and un equals be treated unequally; f) Social orientation of water services: guaranteed provision of water rights to all consumers regardless of income etc,; g) Resource conservation: charges should encourage resource conservation by the utility itself and consumers; h) Conservation of treated water: - an incentive to conserve water through payment for actual consumption (metering of consumption) and progressive charges to control wastes/misuses; and i) Environmental protection: - The environment has to be protected for the use of future generations thus, the excessive use of ground water has to be avoided in order to prevent a permanent decline of the groundwater level and sewage has to be treated adequately before being released into the environment.

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

The following considerations should be made to handle constrains of charge setting

a) Public acceptability. A successful charge design is one that is not controversial, or which does not serve as a focus of public criticism of the water supply agency. b) Political acceptability. A charge design that is objectionable to political leaders will lead to loss of political support and may cause increased political interference in the operations of the agency. c) Simplicity and transparency. A charge design should be easy to explain and easy to understand. It should be possible for most users to know what price they are paying for water. d) Ease of implementation. The promulgation and implementation of the revised charge should not encounter significant barriers in terms of legal authority, administrationcompetence, information requirements, or billing procedures.

2.2 Experience in Water Charging (National / International)

A review of worldwide experiences on charge setting for hydropower, aquaculture and recreation are discussed below.

2.2.1 Hydropower charge setting literature review

Olivier et. al. in 2017 (Olivier) published an important paper outlining hydropower charge system employed in four main hydropower producers in the worlds: China, Brazil, Canada and the United States. The paper reviewed the criteria proposed and used to set hydropower charges. Salient points of the paper are discussed herein. Applicability to Ethiopian case as far as possible isoutlined.

Olivierin 2017 indicated that hydropower is the leading renewable source of electricity generation, with 16.3% of the world output compared to only 5.7% for other renewable. In addition to being a low emission energy source, it has many benefits, often including storage, low ramp-up time and water management opportunities for irrigation, water supply, and other uses. Olivier emphasized that to be used and developed sustainably, it is important that its costs and benefits are adequately set and distributed. Different mechanisms, such as royalties/charges, can be used for this purpose.

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

Imposing such types of afinancial instrument on developers of these natural resources is not, however, as common as it is in the oil, gas or coal sectors.

The paper indicated that very little has been written about the criteria that should be considered to set hydropower royalties and even less on international comparison of hydropower royalties. Olivier addresses these two issues. First, they identify different methods that have been used to establish a financial compensation, and, second, they compare hydropower royalties in the world of four main hydropower producers: Brazil, China, Canada and the United States. Together, the four countries, they account for more than half of the global hydropower production.

The concept of royalties evokes payment to the right of use and the right to obtain some economic benefits from natural resources. In the case of hydropower royalties, they are established as payment for the right of use water resources to produce electricity. In fact, as water and energy are interconnected, it is very important to manage them together.

The basis for royalty/charge setting:

Olivier identified that the most common practice found in China, several US states and provinces in Canada is to charge a royalty based on electricity generation rather than the water used:

(a) charges can be stated as fixed tax per unit of electricity generated.

(b) charge a royalty based on the revenues from hydroelectric sites as Brazil and Ontario do.

Other practices are based on water usefor hydropower production.

Royalties can be stated as fixed charges per unit of water used which assist in recognizing the value of water. It tends to value not only the importance of good water quality but also the availability of this resource for different uses. According to Olivier California has adopted this approach and has created a water fund where those royalties go.

The following sections discuss in detail China, Brazil, Canada and USA hydropower charge legal framework, charge structure, and distribution.

2.2.1.1 China royalty rates (Olivier et. al. 2017):

Legal Framework:In China, the central government manages the system of licenses and has

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

enacted detailed regulations for levying hydraulic royalties. Thus, the management of water resources functions according to three principles: the responsibility of three hierarchical levels of government (provincial, municipal and district), the co-management by the regional governments and the administrative institutions of the river basin, and, finally, a co-fixation of the fee by a group of regional departments, then approved at the central level.

Implication to Ethiopia

The question who manages hydropower licenses (separately or jointly)?AwBA or Ethiopia Electric Agency.Who sets the charge either basin Authorities or/and the MoWIE / Regional Governments / the Council of Ministers these have to be determined.

China Hydropower Royalty Structure

The CentralGovernment has given a national framework to set the hydropower royalties in China, they vary in price and in approach from one province to another. Nevertheless, the main criteria in all provinces are the power output of the station, and, in some provinces, the size of the power plant is taken into consideration.

Table 1: Hydropower royalty rates in China (using US$1 = 6.66 Chinese Yuan).

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In China, the hydropower royalty (Table 1) is clearly considered as a compensation that the operator of a plant shall pay to use the public commodity (water / hydropower) conceded to him. The government, which has been trying to regulate the matter since 2006, set minimum and maximum rates for royalties, leaving the provinces free to implement their own rates within these limits (one example between US$0.75 and US$1.25/MWh).

Hydropower royalties in each province greatly vary, even beyond these limits: the most economically developed provinces in southeast China, specifically the provinces of Fujian, Guangdong and Zhejiang, impose a high fee (about US$1.25/MWh), while less developed regions, for example, the autonomous region of Tibet, require lower fees (for instance, US$0.3/MWh). Some provinces have differentiated rates for large and small hydro, but not the province of Hubei, where the Three Gorges dam is installed. The royalty rate adopted by this province has followed the minimum rates suggested by the central government, US$0.75/MWh.

The implication to Ethiopia:

Royalty set by the “Federal government” providing ranges (aUSD/MWh to b USD/MWh) so that basin authorities fix a reasonable charge depending on thesituation.

China Royalty Distribution Policy

Concerning the royalty distribution policy, the levied water resource fees shall be separately turned over to the treasuries of the Central Government and of the Local Governments. The collection shall be mainlyused for conservation, protection, and administration of water resources, or may be used for reasonableexploitation of water resources, as specified in State Council of China.

The implication to Ethiopia:

Charges collected by AwBA may be distributed among basin authority and regional/central governments; proportion to be determined as recommended by WP1 Team.

2.2.1.2 Brazil hydropower Charge/ Royalty Legal Framework: the legal requirements associated with the development of hydroelectric projects and the royalty systems are clearly enacted at the federal level. The Brazilian Constitution enacted in 1988 mentions that states, the Federal District, municipalities, as well as the Federal government, should share the profits of oil or natural gas exploration, as well as water resources for the purpose of power generation and other mineral resources by getting financial compensation and royalties for such exploitation.

Brazil Hydropower Royalty Structure

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In 1989, a specific law about financial compensation was established to regulate the use of water resources for the purpose of electricity generation. The amount currently stated that must be paid by concession holders and permits for any hydraulic potential is 6.75% of the value of the energy produced, based on the energy generated. Initially, plants with anominal capacity of less than 10 MW were exempted from this payment. This exemption was extended to plants with a capacity not greater than 30 MW.

In general, the Financial Compensation (FC) to be paid is calculated through a standard formula:

FC = Power generated in the month * reference rate.

Hydropower reference rate/royalty rate is based on the annual revenue of power output and is estimated with:

6.75% x sales value/MWh

The reference rate is set annually through the Brazilian Electricity Regulatory Agency Resolutions, and the rate (6.75%) is revised by the federal government every four years.

Brazil Royalty Distribution Policy

The above-mentioned 6.75% is divided into two parts: 6% and 0.75%. The 6% is allocated to municipalities affected by the dams and the states where dams are located. More specifically, this 6% is divided between states and municipalities, each getting 45% of the total amount. The remaining 10% goes to the federal government: Theministry of the Environment gets 3%, the Ministry of Mines and Energy also 3% and the National Fund for Scientific and Technology obtains 4%, which is managed by the Ministry of Science and Technology.

The share concerning the Ministry of Environment is dedicated to the implementation of the National Water Resources Policy and the National Water Resources Management System, as well as the management of the national hydro-meteorological network.

The implication to Ethiopia:

Charge distribution policy among various watershed management / soil and water conservation works implementers is required (AwBA, MoWIE, Regional Governments)

2.2.1.3 Canada hydropower Charge/ Royalty Legal Framework:Likewise, Brazil, the Canadian federal legal system operates on a shared jurisdiction betweenthe federal government and the provinces.

The division of powers has been set in detail by the Constitutional Law of 1867. According to the

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Canadian Constitutional Law, provinces are owners of the natural resources that are in their territories. In addition, the Canadian Constitution states that provinces enjoy exclusive legislative power for the management of their natural resources that are found in their territories. Thus, water and hydropower management are under provincial responsibilities. The federal government is responsible for managing water and natural resources that are found on federal lands (e.g., national parks), First Nation reserves, as well as Nunavut and Northwest Territories. The federal government can also adopt legislation related to interprovincial waterways, but, in practice, those waterways are managed on a mutual cooperation basis between riparian provinces.

Since Canadian provinces enjoy exclusive legislative power for the management of water resources and the hydropower sector located on their territory, they have the ability to impose rights on water use and electricity production itself using licenses and royalties. Consequently, each one has developed its own management system, and hence, this sector, as the royalities system, varies from one province to another (Table 2).

Canada Hydropower Royalty Structure

In Canada, all provincial governments charge a hydropower royalty to plant operators, except New Brunswick and Alberta, where hydropower production remains relatively small.

The federal government and the province of Newfoundland and Labrador have fixed a unique annual royalty: the federal one is based on water used or stored (Dominion Water Power Regulations), while the Newfoundland and Labrador ones are related to the lease of water power. Precisely, the annual rent for a water use license shall be Can$0.80/MWh of power generated (Water Power Rental Regulations, 2003 under the Water Resources Act).

In Quebec, the main producer of hydroelectricity in Canada with 183 TWh or 49% of the Canadian total in 2013, production is largely dominated by the government-owned enterprise Hydro-Quebec. The legal framework of this province specifies that holders of hydraulic power rights are subject to an inflation-adjusted charge of Can$3.852/MWh. Additional contractual charge and various one-time fee may also be charged.

Hydro-Quebec and private hydropower producers have also to pay a rent for the lease of the water property occupied by their hydropower installations. This rent is fixed at the higher amount between the 10% of the value of the water property, up to five hectares (ha) used, or Can$318 (per 5 ha). This amount is not significant. Hydro-Québec, contrary to private hydropower producers, is exempted from municipal taxes, which is deplored by municipalities.

In Ontario hydro-electric generating station owners and water power leaseholders, producers have to pay taxes and charges on the gross revenues of hydro-electric generating stations, called the

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“Gross Revenue Charge” (GRC). It is composed of a property tax component, payable by the owner of the hydroelectric generating station (private or public), and a tax related to the right of producing hydropower.

In British Columbia, there are different types of hydropower royalties. First, a royalty based on the storage capacity of the station that is intended to “reimburse the expenses incurred to preserve the right to use water”. The rates for storage supporting waterpower production for 2016 are the equivalent to approximately Can$0.002 per 1000 cubic meters. Then, a royalty based on electricity generation and capacity are charged. Finally, if the dam is on crown lands, there is a royalty payment due for the permit over crown land occupied by a dam, a minimum of Can$100 per year or Can$120/ha per year in 2016.

In Manitoba, the main producer of hydroelectricity is the state-owned company Manitoba Hydro. As for all producers of hydropower in the province, it must pay two royalties. One related to the right of use crown lands: Can$1.80 per acre per year. The other royalty is related to water use, which is based on the greater of the horsepower (hp) capacity or the horsepower output of the station(with rates converted in $/kW and $/MWh).

Table 2:Hydropower royalty rates in Canada’s largest hydropower provinces (production ≥ 10 TWh)(using US$1 = Canadian $1).

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established in 2006. All hydropower producers pay the greater of the capacity fee of Can$1000/MW per year, or an energy fee of Can$5.10/MWh (2015 values). This energy fee changes every year.

In Nova Scotia, the fee regulation made under the Environmental Act establishes an annual administration fee of $608.84 for the use of water for hydroelectric purposes and an annual capacity fee of Can$2600/MW.

Canada Royalty Distribution Policy

Hydropower fees collected by the federal government and in Newfoundland and Labrador are intended to ensure conservation and proper use of water resources, as well as to finance programs and other measures related to the environment (Water Power Rental Regulations, 2003 under the Water Resources Act).

2.2.1.4 USA hydropower Charge/ Royalty Public owners of hydropower (municipal, non-federal and federal organizations) operate 31% of the plants, but they control 73% of the US capacity, of almost 54,000 MW.

USA Legal Framework:Unlike Canada, the US centralizes, at the federal level, part of the hydropower regulation.

USA Hydropower Royalty Structure

The Federal Power Act of 1935 gives to the Federal Energy Regulation Commission (FERC), an independent organization of the Department of Energy, the responsibility to regulate non-federal hydropower projects (this includes all hydropower projects not owned by the federal government. The FERC issues license allowing the construction and operation of dams and powerhouses and set up different charges collected from licensees operating hydro plants.

The Federal Energy Regulation Commission levies annual fees from licensees in order to “repay the U.S. government for the costs of administering the regulatory program of hydropower” and also requires charges for government land use, government’s dam use or because of the upstream benefits due to projects built by the government. Nevertheless, as it is the case for Canada, US states have the primary responsibility for managing the use of water resources. Accordingly, they retain a residual authority enabling them to establish additional, discretionary, specific water rights and rent regimes through their own constitutions. Thus, the US system is characterized by a common federal framework and various state regulations.

As already mentioned, the FERC imposes a fee, applied to all non-federal hydroelectric projects, which could be described as a “reimbursement royalty”: it collects charges in order to offset

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administration costs. This federal charge can be supplemented with a state royalty. For example, New York and Oregon states additionally require a “reimbursement charge”: every license shall pay an annual charge for the cost of administration of the waterpower program.

The “reimbursement” fee of the FERC is calculated on the basis of the authorized installed capacity in kW, and the annual generated power in MWh. The FERC also charges for the use of government land based on its commercial value. These fees are established by thecounty, or by state, on a feet/acre/year basis. The schedule of these fees is updated every year, in accordance with the most recent schedule of fees for the use of linear rights-of-way prepared by the U.S. Forest Service.

Large hydropower states such as Oregon, Washington (Revised Code of Washington) and California (Water Code) charge some fees for hydro-electric production. In fact, they have decided to calculate the charges on the basis of the installed capacity, reported on the licenses for use, employing scales, but each state has its own way of determining the rate.

Table 3: Hydropower royalty rates in the US’s largest hydropower states (production

≥ 10 TWh).

It must be considered that fees do not apply to any hydropower project owned by the US government if the use of water for the generation is 50 hp (37 kW) or less.

The FERC also determines, on a case-by-case basis, the annual charges for any project using Tribal Lands.The FERC administrative charges are adjusted annually.

USA Royalty Distribution Policy

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In general, at the federal and at the state levels (Oregon and New York), charges are based on administrative and operational cost-recovery principle, without any consideration for the negative externalities related to dams. Similarly, in California, royalties are going to the Water Fund to cover costs of the administration system.

2.2.1.5 Summary and conclusion Summary:

Olivier et. al. (2017) summaries that historically, governments across the world have chosen to keep royalty rates, and hence hydropower prices, low to promote industrialization. This is the case for the four main hydropower producers we study. One notable exception is Switzerland, where hydropower royalty rates are about $10/MWh. Olivier indicated that these policies should be revised as they do not promote efficiency and the reduction of environmental and social costs, in order to ensure sustainable development

Olivier also noted that exemption of royalties for government-owned hydropower producers, as in the United States, does not encourage public owners to value the societal benefits of these sources of energy.

Charging lower water royalty rates and exempting some producers is a way to keep production costs artificially low and, as a consequence, to artificially decrease the overall average price of electricity. This appears to be the case in all jurisdictions reviewed in this paper, with royalty rates ranging from $0 to a maximum of $3.8/MWh (Ontario and Quebec, Canada). It has been particularly documented in Ontario, where royalty rates were considered to be below the market value of the production of hydro-electricity.

This situation also increases the negative externalities2associated from hydropower, as it unfairly promotes its development. Furthermore, most of the damages generated by the construction of dams are never recovered. In fact, as it has been shown, most states do not provide a royalty for covering and, in the same way, internalizing the negative externalities that hydropower sites have produced. Indeed, at the moment, externalities are generally not reflected in the market prices, so the external costs associated with the production are borne neither by consumers nor producers.

According to Olivier hydropower royalty systems should include the cost of those externalities, even if it raises the price of electricity. It is true that, on one hand, collecting the full amount of hydroelectric royalties would have adverse effects on residential, commercial, and industrial

2 A negative externality is a cost that is suffered by a third party as a result of an economic transaction. In a transaction, the producer and consumer are the first and second parties, and third parties include any individual, organization, property owner, or resource that is indirectly affected. Some externalities, like waste, arise from consumption while other externalities, like carbon emissions from factories, arise from production.

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consumers of electricity.

An increase in electrical rates will affect their costs and hence what they may charge for the goods and services that they produce. However, on the other hand, higher royalty rates intended to cover negative externalities would, in fact, be more equitable to those who support the higher costs of the construction of dams (local populations and the environment). In addition, while higher rates have an impact on the price of electricity, they also encourage a lower energy consumption and, therefore, promote the conservation of water and aquatic resources. This is what some authors call the “value gap”, which, in our case, is the gap between current royalty rates and the full cost of social and environmental value of water and energy. If this situation stays as it, as Olivier stated, is in the four countries that we have studied, we can hardly expect improvements in water and energy management. This leads to some forms of the “tragedy of the commons”: overexploitation of common resources.

Finally, Olivier et. al. showed that royalty and distribution policies are determined in an arbitrary and unsystematic manner. This leads to a heterogeneity that undermines the creation of a level-playing field for hydropower development and use. In fact, the different approaches we document here illustrate how water use is undervalued. A more harmonized royalty system, starting at the national level, would be a significant policy improvement. Adopting such a more uniform system of royalties should become a priority, as economies and issues are increasingly becoming global. Furthermore, in a context of climate change, key renewable resources such as hydropower should continue to be developed, but in a sustainable and responsible way, where production and use are properly valued.

Conclusions

Olivier et. al. 2017 have shown that the leading hydropower producing countries, China, Brazil, Canada and the United States, are differently organized regarding hydropower royalties. In Canada the primary responsibility clearly belongs to provinces, in China, the central government plays a much larger role. The United States and Brazil have centralized many aspects of the management of hydropower at the federal level with, nonetheless, a contrast between the autonomy American states have in creating local rules and the uniformity imposed by Brazilian states.

Olivier et. al. 2017 study have revealed that the current royalty’s approaches may vary considerably between regions, even inside the same country. The most common criterion that has been identified to charge royalties is hydropower generation. Nevertheless, the application schemas can be very different. Furthermore, royalty practices are not subject to regular updates in all jurisdictions and don’t equally apply to all. Few cases include the principle of compensating negative externalities in royalty rates. Only Brazil appears to clearly consider this cost in the 33 | Page

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foundations of the royalty’s system, even if in Canada, the United States and China, we can identify some cases where water conservation concerns are considered. Therefore, some recommendations could be put forward, such as the need for countries to adopt a royalty system that considers compensating for damages to local communities and to the environment. While it may be argued that the establishment of a new rate would increase the price of access to electricity for final consumers, it is worth adopting a long-term vision in which governments internalize environmental and social costs. Those policies should also integrate some equity principle to protect low-income consumers.

2.2.2 Aquaculture charge setting literature review

2.2.2.1 Introduction

The Ethiopian natural aquatic systems are with limited fishery potential and production and hence they need to be managed and protected. Given the high and ever-increasing population of the country, the shift to aquaculture is mandatory to fulfill the demands for a nutritious protein-rich food. It is, thus, mandatory to value the aquatic systems and the resources contained within. Therefore, a charge should be set for any use of water and the biotic resources from all aquatic systems.

The Awash Basin has a number of lakes, reservoirs, and rivers that could actually and potentially be used for capture fisheries and aquaculture purposes. These include Lakes Hayq, Ardibo, Beseka (Metehara), and the Bishoftu Lakes (Babogaya, Hora and Kuriftu), as well as Koka, Kessem and Tendaho Reservoirs. The rivers, although with very limited capture fishery potential, include Awash River and its tributaries (mainly Borkena, Mille, Mojo, Akaki, etc..). However, these rivers could serve as sources of water for aquaculture.

The following scenarios may actually or potentially exist for water use in Awash Basin for fisheries and aquaculture purposes.

1. Water abstraction or diversion from ground water, lakes, reservoirs, rivers into artificial ponds or tanks. 2. In- situ use of standing waters (lakes, ponds, reservoirs) as aquaculture sites. 3. Putting enclosures (cages, pens, etc..) in natural water bodies (usually in lakes, reservoirs and natural ponds). 4. Capture Fisheries(capture from the wild) from lakes and reservoirs. 5. Sport fishing for recreation purposes.

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In order to set up the water use chargefor aquaculture and fishery purposes technical, political and cultural aspects need to be seriously considered. The charge should be elevated, in a manner to promote the rational use of water, but should also remain at a rate that does not compromise the development of production activities. The present study is aimed at evaluating different water charge values that could be proposed and applied to fishery and aquaculture farms. The analysis, especially in the case of aquaculture, considered the productive performance of the fishing activity/farm, production costs for the activity, and incomes that could potentially be earned by the producers.

Generally, the study, considering experiences of other countries through literature review and looking into preliminary assessments of actual situations on the ground in the Basin, tries to set fair and affordable water use and discharge charges for aquaculture and fishery uses in the aquatic systems of the Awash Basin. The field trips took place for one week (May 29 to June 3, 2017) to key areas of the AwashBasin and visits of relevant ministerial offices in Addis Ababa.

2.2.2.2 Aquaculture water charge setting literature review The increase in global water demand has stimulated the application of water charge to seek its rational use. However, the establishment of the water charge for a certain use is not an easy task, given that this charge must have an elevated value, sufficient to encourage the rational use, but not so elevated, in a manner that compromises or prevents the development of production activities.

To determine the amount of water needed for aquaculture production the following conditions may be considered: densities and the weights of the harvest, the number of production cycles per year, the volume to fill the ponds, the volume evaporated daily, and the volume infiltrated daily. The value of the charge would be estimated from the production costs, including the cost of water.

Significant differences between economic activities and aninadequate charge value may lead to negative externalities on a portion of users who can be financially impaired. The capacity to pay is important to consider in the establishment of the charge for a determined use. The cost of water and the other factors intrinsic to the activity in question must be considered, such as the exploited product, the market and the agronomic, economic, social and environmental variables.

Water for aquaculture purposes could be abstracted from lakes, reservoirs, natural ponds, rivers and ground water. It could be diverted and be used in man-made ponds, tanks, and raceways. For water abstraction and use of the water sites (in-situ utilization) for business, a fee must be paid for using the natural resource as a guarantee for creating equal legal business conditions for all the citizens and corporate bodies.

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Different countries have set their water charges for the use of it for aquaculture. Some European Union countries have identified charges or taxes for water use for aquaculture purposes. However, in some other countries, there is no freshwater charge for any land- based freshwater units. For example, in Greece, charges exist for marine aquaculture (by surface area). The fee is 150 euros per 1000 sq. meters of occupied sea surface per year, while for marine shellfish farms the fee is 50 euros per 1000 sq. meters of occupied sea surface per year.

In France, there are some charges for water use in aquaculture since 1987, based on official annual declaration prepared by the competent authority for water management. Charges are based on the annual declaration of feed used per year submitted to one of the regional agencies and, depending on the region they are calculated differently. For example, in one region for use of 200 tons of fish feed breeder can pay up to 4000 €, and in another 2000 €. Furthermore, it is possible to reduce costs, if the farm has filters used for decantation or there is the treatment of suspended matter. The costs can also be lower due to government subsidies of up to 50% of the costs incurred for the purchase of filters.

In Germany, individual federal states have water usage charges for aquaculture under certain conditions. For example, the Federal State of Schleswig-Holstein has • charges for fish farming of 0.03 €/m3 for the usage of ground water • no water charges for fish farming in the case of using surface water

Hungaryintroduced water use charges in 2016. Water fees in aquaculture consist of two components: water abstraction fee, payable to the state, and agricultural water supply fee, payable to the supplier. Water abstraction fees are currently calculated according to the following formula: VKJ = V (m3) × A (Ft/m3) × m × g; where V = volume of used water, A = a basic fee, currently 4.5 HUF/m3, m = a factor showing whether the volume of the used water is measured; its value is 1 if the

water volume is measured and 2 if not, g = a factor depending on the water use, water source and water quality; in case of water abstraction from surface waters for fisheries purposes, its value is currently 0; if the water comes from different sources, the value may be 10 (medicinal water), 4–6 (karst and fissure water), 7.5 (thermal water), 1–4 (bank-filtered water), 2–5 (aquifer water) or 1.5–3 (groundwater), depending on water quality.

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The agricultural water supply fee is determined so as to cover the operational expenses, services, depreciation and paid charges of the water supplier. The State currently takes over the payment of the agricultural water supply fee in case of fisheries water uses, i.e. pays it from the state budget. However, similarly to the water abstraction fee, this is expected to change in 2016 so that water users pay directly for the water used.

In Italywater charges are established at regional levels. Fees change depending on the source of supply (surface fresh water, underground fresh water, brackish and salt water). The fee for the use of fresh water (in 2013) was on average between 350 and 400 Euro per 100 litres/second flow for fresh water; however with important variations in some regions where, for example, the annual fee can be more than 600 Euro for the same flow rates. A license fee for the use and discharge of water must also be paid every 4 years. The analysis of the water discharged must also be paid (up to 2000 Euro / year). For salt and brackish water the fees are calculated from the surface used for fish farming activities.

In Lithuania two water-related charges are applied to aquaculture use of surface water: • To fill the ponds in the spring; the tax charge is a certain sum of EUR/m3 of water.. • Discharges: pollution from stationary sources of pollution (includes aquaculture ponds or closed recirculation systems); the tax is paid by operators of such stationary sources of pollution, who according to national legislation must have the permit for integrated pollution prevention and control or the pollution permit, indicating the maximum allowable emissions into the environment; the tax charge is certain sum of EUR/t of pollutants. Some tax reliefs are foreseen for operators who implement environmental measures to reduce the emissions (National Legal basis: Law on Pollution Tax).

In the Philippines, one cannot dam flowing water for exclusive private use without a proper permit or license to do so (Hishamundaet. al.., 2009). This permit or license must be obtained from a national agency mandated to regulate water use. Where aquaculture is using municipal waters, a one-year renewable but non-transferable permit is required. However, drilling or digging a well for the extraction of ground water within one’s property is always done without any prior permit from authorities. Although there might be laws requiring such permits, such laws are often difficult to enforce since it is not possible to monitor such activities.

In Indonesia, farmer associations resolve conflicts and manage resources through Water User Farm Associations. These associations, in addition to water allocation, also provide marketing assistance. Thailand similarly leaves local committees to allocate water resources. This community approach is a means of implementing Integrated Coastal Zone Management. In Romania, since 2010, the volume of water a farmer has to pay is as per the following:

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• For dam lakes (usually 150 - 300 ha which can be drained for harvest in the autumn): the volume of the lake + the volume of the yearly flow+ yearly evaporation + yearly infiltration + volumes released when the farmers need the water levels down/empty for harvesting the fish.

• Ponds and pools: the volumes for filling the ponds/pools + the evaporation + infiltration + the water needed for the normal water circulation in ponds/pools.

Until 2010 the price for water “used” in aquaculture was 3.00 RON (0.60 €) per 1000 m3. It was reduced in 2010 to 0.5RON (0.10 €) per 1000 m3. Bonuses and incentives also exist in the Water Act provided for maintaining the water quality.

InSpainthe River Basin Authority applies taxes for regulation and utilization, and for discharges. The costs are the same in all regions although there are regional acts that set the taxes for discharge. The taxes for regulation and utilization are only applied for facilities that benefit from infrastructures built by the state such a reservoir, ditch, etc. It is calculated by adding operating cost, the cost of maintenance and administrative cost and the 4% of the value of the state investment. The total cost is divided among beneficiaries, considering the use of water.

Discharge costs in Spain

CCV = Authorized Volume of Discharge (m3) × unit price (€/m3)

Nowadays, basic price for industrial waste water (including aquaculture) is 0,04207 €/m3. The coefficient for aquaculture is calculated as per the following: If emission limits values of the characteristic parameters of water pollution are lower than the limits set by environmental quality standard for receiving environment: C=0.0006 Otherwise, this coefficient is multiplied for 3: C=0.018

In a general way, taxes applied by regions are set considering water supply and waste water.However, some regions apply a reduction coefficient that is calculated differently in different regions so taxes vary widely.Regions with neither specific acts for water taxes for aquaculture nor reduction coefficients have the highest taxes in Spain.

In some of the EU Member States such as Austria, Croatia, Czech Republic, Denmark, Estonia, Greece, Malta and Poland, there are no charges for water use/provision, but some of these countries have fees for discharges from aquaculture.

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It appears that there is no experience in water charge that is applicable to aquaculture in any of the African countries.

In Mauritius consumption is billed according to the readings recorded by the meter. A Meter rental is also payable and the amount claimed varies according to the size of the meter. The present Water Charge came into force on 01 January 2012.Aquaculture users are required to pay 1.00 Rs per m3 of water.

2.2.3 Recreation water use charge setting literature review

The water use in recreational areas is different in addition to potential consumption from lakes or rivers recreation areas use water as a base for their business in a way of site, navigation or commercial fishing which is non-consumptive uses. Setting a water use/extraction tariff for isolated lodges, lake and fountain based recreational water use has been considered to be a part of setting tariff for commercial use of water. The usual trend is commercial water users are allowed certain amount and are charged for extra use. The water extraction may be from surface water or from ground water. Either way lodges use the water from the basin they are in, therefore are subject to water extraction and water use charging.

In some countries lodges are subject to charging based on the water consumed as any commercial/industrial use of water. Commercial water customers are billed quarterly for both their flat rate charge and any applicable excess charges. Commercial Users are allowed some cubic meters consumption for a certain period, per user. If the user goes over those amounts, the bill will include excess charges. Recreational water use cost in its non-consumptive aspect is not widely known and studied concept and local knowledge and some of the experiences available can be used to derive recreational water use cost.

The South African experience The South African experience considers the split of the formerly Domestic and Industrial category into two separate groups, Municipal and Industrial/Mining. However, the tariff set did not set a separate charge for lodges. (DWS, 2015).

(Johannesburg, 2017) The City of Johannes berg sets a tariff for the supply of water to any hostels with or without appurtenant outbuildings where water consumed in all such units is metered by one meter supplied by Johannesburg Water. Hostel” means collective accommodation for Local Authority and Provincial Government workers which accommodation may be single rooms or

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dormitories, with shared facilities such as kitchens and bathrooms. The aggregate consumption be divided by the factor of the number of registered beds divided by six and the tariff stipulated in sub paragraph (1) above be applied per hostel.

a) The first 6 kilolitres per hostel multiplied by the factor of the number of registered beds per hostel divided by six: Free of charge per month. b) In excess of 6 kilolitres up to and including 10 kilolitres per hostel multiplied by the factor of the number of registered beds per hostel divided by six: R 6.80 per kilolitre per month. c) In excess of 10 m3 up to and including 15 m3 per hostel multiplied by factor of the number of registered beds per hostel divided by six: R 11.07 per m3 per month. d) In excess of 15 m3 up to and including 20 m3per hostel multiplied by the factor of the number of registered beds divided by six per hostel: R 16.03 per m3 per month. e) For any quantity in excess of 20 m3 per hostel multiplied by the factor of the number of registered beds divided by six per hostel: R 28.08 per m3 per month.

2.2.3.1 The United Kingdome experiences Paying for any water business uses and for the drainage of water and effluent (liquid waste) from the premises is a regulation in the united Kingdome. Business owners will be charged either: for the water businesses use, plus a set charge (if there is got a meter) or a set amount, usually based on the value of the business property. Business could be eligible for a large user tariff, meaning the water tariff might be cheaper. This is because it often costs less to supply larger businesses. (UK, 2017).

2.2.3.2 Bighorn River Basin, Wyoming (Western EcoSystems Technology, 2017) There are many water-based recreations destinations throughout the Bighorn RiverBasin that are located on public land, including over 3,000,000 ac of NFs, over 4,200,000 ac of BLM land, and over 170,000 ac of state-managed land.The State Trust Land owns over 600,000 ac (one section in each township) of land in the Basin, but these lands are not typically used for water-based recreation. Recreation use in the Basin includes fishing, boating, whitewater rafting, waterfowl hunting, boating, camping, hiking, general sightseeing (such as bird watching), and a variety of other passive recreation activities. Recreation activities associated with water use are fairly concentrated and often occur on land specifically identified for public access, such as USFS land, state parks, and national parks.

Further discussion on recreation water use is provided below. The Wyoming Office of Tourism published the 2016 Visitor Profile for Wyoming which showed an increase in nearly all tourism categories in Wyoming (Insights Strategic Marketing and Research 2017). The top activities that

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motivate tourism included: scenic drive (69%), visiting state or national parks (66%), and wildlife watching (52%), with other water-based destination including hiking/backpacking (34%), visiting hot springs (22%), camping (21%), bird watching (12%), and fishing (12%). Recreation Model is used in the basin to identify the range of recreational factors present for specific water resources in the Basin. This model can be used in conjunction with the protection model to identify areas where high levels of recreational resources exist and associated levels of protection are provided. This can be used to focus on areas where a change in water management may have a greater effect on the recreational resources present. This experience doesn’tconsider calculation of recreational water use cost.

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

3 Method – technical aspect of water charge for hydropower, aquaculture and recreation water uses

3.1 Description of the study area

The Awash River originates near Ginchi town in the upper basin at an altitude of about 3,000m and terminates in a series of swamps and lakes in the lower plains. The river flows in an easterly direction through Amhara, Addis Ababa, Oromio, Afar, Dire Dawa and Somali Regional States. Its length goes greater than 1250 km. And, the Awash Basin develops along the Awash River forming one of the 12 basins in the country. The total catchment area of the basin is about 115,523 square kilometers and is divided into a number of sub-catchments. The basin is characterized by wide-ranging agro-climatic zones with extreme ranges of topography, vegetation, rainfall, temperature and soils. Among others, the basin extends from both semi-desert lowlands to cold high mountain zones (Gedion, 2009).

The River Awash and its tributaries are sources of drinking water for large and small cities such as Addis Ababa, Adama, Awash and Metehara towns. As a matter of fact, it is also the main source of domestic water for the majority of the pastoralist people in the eastern Afar Region.

The Awash Basin has been divided into three distinct zones: Upper Basin, Middle Basin, and Lower Basin on the basis of various inter-related factors such as location, altitude, climate, topography, agricultural development, inhabitants, administrative boundaries, etc. The mean annual rainfall of the basin varies from about 1,600 mm, in the highlands north east of Addis Ababa, to 160 mm, in the northern point of the basin. Rainfall distribution is generally bi-modal in the Middle and Lower Awash and uni-modal in the Upper Awash. The mean annual rainfall over the entire Western catchment is 850 mm and over the headwaters of the Awash, it is 1,216 mm. Over the Eastern catchment the mean annual rainfall is estimated to be 465 mm. Minor rains normally occur in March and April and major rains from July to August. As such, the occurrence of rainfall is highly erratic. The total amount of rainfall also varies greatly from year to year, resulting in severe droughts in some years and flooding in others.

The total annual surface runoff in the Awash Basin amounts to some 4,900 × 106 m3 of which 3,650 × 106 m3 is utilizable, the remaining being largely lost to Gedebassa swamp. According to EVDSA (1979) the potential for exploitation of groundwater resources is very meager in this part of the continent. Frequent and persistent droughts and the associated food insecurity have drastically affected the human and livestock population, especially in the Middle and Lower Basins of River Awash. As a result, the survival of thousands of people in the basin depends on international food assistance. The development of irrigation projects in the upper reaches of the basin, coupled with drought (climatic) occurrences have caused serious threat to the region’s water resources, affecting the socioeconomic activity of the people and the diversity of ecosystem especially in the lower reach of the basin.

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

Many of the industrial hotspots in the country are found inside the Awash basin. These include the industrial corridor extending from Addis Ababa to Adama town, Metehara area and Dire Dawa city. For all of the industries, except Dire Dawa, the Awash River serves as a source of water abstraction and site for the disposal of their waste. As a result, the water in the Awash basin is increasingly becoming polluted by various categories of users. The Awash Basin contains two major lakes, namely Besaka and Gedebassa.

The Awash Basin is characterized by a number of small, medium and large-scale irrigation schemes; some 200,000 ha of suitable land could be available for irrigation. The net area currently commended by irrigation is estimated to 89,000ha. Approximately 70% of the irrigable land is owned by the Federal Government, 5% by Afar Regional State and 7% by Oromia Regional State. The remaining 18% is owned by private farms. Some 3% of the land is known to have been abandoned as a result of salinity problems from Lake Beseka (Water Governance Center, 2013).

The following section gives conceptual framework for hydropower, aquaculture and recreation water use sustainable and efficient charge setting.

3.2 Conceptual Framework for hydropower water use charge setting

Ethiopian Water Resources Management Proclamation No. 197/2000 which states that the water resources of the country are protected and utilizedfor the highest social and economic benefits of the people of Ethiopia. Accordingly, in setting up charge (including permit fee + charges for water use)for hydropower, aquaculture, and recreation two major components are considered. The first is the cost items which the water user (hydropower utility, aquaculture & recreational companies) requested to pay by the Awash Basin Authority for essential water management itemsincurred in order to sustainably deliver the raw water at required time, place and quality.

The second aspect is to assess water user capacity to pay and determining how much is shared cost among hydropower utility, aquaculture & recreational, irrigation, water supply and industry companies. The socio-economic aspect of charge setting thus comes into thepicture.Implementation of charge system also requires appropriate institutional and legal framework. This concept is well described in Figure 3.

Utilities/agencies, that pay for abstracting raw water, should clearly know why they pay and how the charge is set. This chapter discusses the Awash Basin Authority water resources management functions which are cost-shared by raw-water abstraction charge. Water resources management expenditure relates to those activities that are required to protect, allocate, conserve, manage and control the water resources and manage water quality located in the watershed.

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

In cost setting, good to think to intermesh of first-time cost and annual running cost for each of the six cost areas if applicable.

i. Monitoring 3water resources from river, lake, reservoirs, and GW. Extending and maintaining the hydrological database & compilation of information. Water quality monitoring and compilation of information.

ii. Catchment management strategy which includes resources studies, investigations and integrated strategy development to make allocation plans and water quality management plan.

iii. Water use authorizationwhich includes registration and verification of water uses which is related to abstraction and waste discharge licensing.

iv. Reservoir buffer zone management (protection of intakes and mechanical equipment including turbine blades).

v. Water weed control program including hyacinth

vi. Monitoring raw water abstraction /uses from river, lake, reservoirs, and GW for achieving the equitable and efficient allocation of water for various uses to assure sustainability, availability and reliability of acceptable quality.

In Figure 3 General framework and hydropower conceptual framework (Figure 4) it is noted that willingness to pay for the raw water abstraction/use (socio-economic analysis) was done together with WP1 experts.Standard engineering procedures for cost estimation were employed. Many of the capital costs in WP5 are covered by the owner Hydropower, EEP; the cost aspect is covered by the owner for Parks including (National, public and private); Hotel and Lodges outside the (in non-urban settings).

Setting charge with principles outlined in detail in WP1 including but not limited the ownership of assets (source, the level of water quality requirements, access to market etc), responsibility for operation and maintenance, the level of service, and the willingness and the ability to pay.

Developing an institutional mechanism for licensing, monitoring and control raw water abstractions by the four operators will be done together with WP1.

3 Monitoring includes design, construction, installation, observation, data collection, quality check, data archiving, and dissemination. Extending and maintaining the hydrological database.

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

Objective of Charge(permit fee and charge for water use)setting:

Sustain water management and create efficient and equitable allocation of water resources through conservation, protection and administration of water resources.

Review of past studies / practices and consultations with stakeholders

Setting charge cost bases (AwBA Cost Items):

- Hydropower, aquaculture& Principlesused for charge setting: recreation: hydrological monitoring, affordability, willingness to pay water management/allocation and enforcement, catchment management, reservoir buffer zone development and mgmt, water weed control.

Early Conceptualization of charge structure and implementation mechanism

Assess / develop /modify legal Assess / develop /modify institutional

framework for charge structure for charge implementation (collection of permit & charge for water use;

water allocation, and monitoring)

Developing draft water charge

Developing Charge Implementation Guideline and capacity building for AwBA

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Awash Basin Authority: The Study of Water Use and WP5: Final Report - Water use charge for Wastewater Discharge Charge hydropower, aquaculture and recreation

Figure 3:WP5Charge setting conceptual framework

From the extensive literature review, we have learned that water charge on hydropower is well practiced around the world including in China, USA, Canada, and Brazil. The Brazil and China experiences are more relevant for Ethiopia condition as they use transparent and readily implementable charge structure. The team recommends the following hydropower water charge model which accounts fixed fee and annualenergy generated (amount of water turbined).

Hydropower charge = Registration fee +

Variable annual hydropower water charge (Birr) = VH *K*EO

VH = charge coefficient

K= Rate of energy charge (Birr/KWh) – which Ethiopian Electric Power (EEP) sell toEthiopian Electric Utility (EEU)

EO = Annual Energy Output in KWh which is a function of water stored and turbined

TheVHvalue (percent of income form hydropower generated)was fixed by using international experiences from Brazil and China and adapting that to Ethiopia economic condition of the hydropower sector.

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Figure 4:Conceptual framework for hydropower charge setting

Variables - forcharge setting Dam reservoir area and storage, installed capacity, water turbined, and energy generated

Best practices

Economic / financial (revenue stability): Social: Water

Cost and income approach (fixed and consciousness, variable costs)for EEP and assess Fairness, Affordability, WTP and WTA Hydropower and Equity

Water Charge

Governances: Social Sustainability (cost by the AwBA to keep Institutional, Legal environmental sustainability in areas of): administrative simplicity, • Watershed management cost (sediment Institution control and increasing reservoir life) • Water Resources management cost (planning, allocation, monitoring, control) Laws and regulations • Reservoir weed control Federal, regional, • reservoir buffer zone development and mgmt.

3.3 Conceptual Framework for aquaculture water use charge setting

There are two main categories (Capture fisheries and aquaculture) and four forms of water use in fisheries and aquaculture each of which should be looked into separately in its own merit, based on productivity and capacity to pay of the users. It would always be appropriate if the costs of the water use should not exceed 0.5% of the production cost. Figure 5: Conceptual Framework for Fisheries/ Aquaculture Charge setting

Categories of Water Use for Aquaculture Production Capture Fisheries (Birr/Kg of Cage Culture Pond Culture In-situ culture system fish harvested in a year)

+ A license fee for the use

Willingness and

Capacity to pay

Economic/financial: Cost and income approach (fixed and Fisheries and variable costs), total income or revenue Fish Productivity Aquaculture Affordability: Use (Cost-benefits) • Small scale • Commercial farms Social Cultural

Political, cultural and Legal Sustainability (social, economic and Institution env): rights entitlements • Pollution cost • Watershed management cost Policy, legal and International Best • Water Resources management cost Institutionalissues Practices (planning, monitoring, control) Capture and culture fisheries water use charge

Capture fisheries water use charge = Registration fee + K*VF*CF

K= Unit price of 1 kg fish (Birr/Kg) CF = Captured fish (kg/year)

VF = Variable cost factor to be determined based on the field collected data from Haike, Ardibo and Koka lakes.

Aquaculture water use charge = Registration fee + Aq*K*VF*HF

Aq = a coefficient for aquaculture

HF = Harvested fish (kg/year)

Variable cost factor, VF,for capture fisheries to be determined by taking into consideration average incomes and expenses of fishermen from selected water bodies in the Basin. The income was determined by assuming effective fishing time of 22 days per month and 10 months per year.Average production/fisherman/day and average cost/kg of fish have also been considered.The expenses include operational, maintenance as well as buffer zone watershed management costs.

VF(the ratio of basin expenses to sustain water conservation, protection and management function / Annual total sell value of fish) and VFis less than 6% - average willingness to pay as determined from the Awash basin.

3.4 Conceptual framework for recreational water use charge

Lake and water-fall based recreation = Registration fee +variable charge (VRP/E P)

P = annual profit (Birr) or E = annual entrance fee (Birr)

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Awash Basin Authority: The Study of Water Use and WP5: Draft finalcharge report for hydropower, Wastewater Discharge Charge aquaculture and recreational water uses

VRP = factor of profit; VRE = factor of entrance fee;

VRPor VRE is to be determined through socio-economic survey for the specific recreation area.

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Figure 6: Conceptual framework for recreation water use charge

Category of recreational Water Use

Fountain based recreation. Lake and reservoir-based recreation (lodge established adjacent to water body)

Profit based /entrance fee

Social: Water International best practices consciousness, Fairness, Affordability, and Equity Economic/financial: Social • Companies cost and benefit, WTP, Cultural WTA Governances: Legal Institutional, Institution administrative simplicity, Sustainability (cost incurred by AwBA to Recreational keep sustainability in areas water use Charge • Reduction of environmental impacts (social disturbances and degradation of Laws and regulations ecosystems and cultural heritage Federal, regional, resources…)

• Water resources management (planning allocation monitoring and control) cost • Preservation of minimum flow

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3.5 Method of Data collection and Analysis

3.5.1 Approach for field work Following the conceptual framework established in WP5 Package, the team designed questionnaires relevant for the charge setting for hydropower, aquaculture and recreation water uses. The technical team accordingly planned 17 days field work to collect the necessary data and the relevant analysis derived from the data are presented in this interim report in the route indicated in Figure 7. The result of this technical analysis is integrated with social and economic analysis to fix jointly charges and later workout the institutional aspect.

Figure 7: May-June 2018 conducted Field trip locations

3.5.2 Team composition

WP5- Charge setting for hydropower, aquaculture and recreation water uses team members conducting the 17 days field works were: 53 | Page

Awash Basin Authority: The Study of Water Use and WP5: Draft early charge conceptualization report for Wastewater Discharge Charge hydropower, aquaculture and recreational water uses

• Dr. Yilma Seleshi (Team Leader & Senior Water Resources Engineer) • Prof. Abebe Getahun (Aquaculture expert) • Dr. Woldeab Teshome (Team leader Sociology) • Ato Fitsume Teshome (Water Resources Engineer) • Ato Marshal Nigussie (Economist) • Ato Abel (Water quality expert from the Awash Basin Authority)

3.5.3 Data Collection Methods

Data collection methods employed are (a) field observation in the Awash Basin, (b) consultation of secondary sources, (c) Key Informants Interview.

Field observation of water uses / abstractors assisted by topographic maps and professional guides in the Awash Basin conducted by the study team. These includes, observing and taking pictures, informal discussions with major actors. This helped the team to have clear understanding about the conditions in the Awash Basin and how various actors operate with regard to water production and consumption.

Consultation of secondary sources: The WP5 experts undertook the review of pertinent books, journals, research documents, reports, legal frameworks and policy frameworks in order to deeply grasp the context, earlier trends and operations of water charge setting including the experiences in other countries. Secondary data and official records were collected from relevant ministries and institutions in the Awash Basin.

Key Informant Interview (KII). It includes qualitative in-depth interviews with people who have in-depth knowledge of the subject matter in the hydropower, or aquaculture or recreation development, use and management. key informant interview method is used to gather information for a needs assessment and utilize the findings for setting and managing charge. Thus, key government representatives form line ministries universities, research centers and influential groups is contacted through key informant interviews.

3.5.4 Data Collection Instrument

Technical questionnaires which aims in determining appropriate charge level and to identify a basis for setting charge are prepared for hydropower, aquaculture and recreation.Thequestionnaires together with the infilled data are given in Interim Report of WP5.

3.5.5 Sampling

We purposefully selected the key informants/ stakeholders who are able to give their opinion on charge issues looking into their requirements.

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Awash Basin Authority: The Study of Water Use and WP5: Draft early charge conceptualization report for Wastewater Discharge Charge hydropower, aquaculture and recreational water uses

3.5.6 Field Visit Plan and Organization The hydropower, aquaculture and recreation technical experts organized as one to team together with social, economic and form the Awash Basin Authority experts. Table 4 gives the joint field work planning categorized in source of water and charge items.

Table 4: Field work organization

Criterion Hydropower Aquaculture Capture Fisheries Recreation Source Location River / Upper Awash/ Main (to be fixed) diversion Borkena, Ankerkech, Shewa Robit Middle Awash II HP Awash fall rivers Lower Awash III HP Awash/ Main (to be fixed) Boat based Lake / recreation Upper Aba Samuel HP Haike and Ardibo Reservoir Haike and Ardibo Bishoftu area Middle Koka Koka lakes (Hora) Lower Tendaho

3.5.7 Field Survey Routes ⋅ Route 1: Addis-Koka-Awash II and Awash II + Awash Fall + Melka-Worer and Tendaho -Addis (7 days) ⋅ Route 2: Addis-Debre Birhan-Dessie- Addis- (5 days) ⋅ Route 3: Addis Ababa and surroundings + Bishoftu + Abasamuel survey (5 days): Route 1: Addis-Koka-Awash II and Awash II + Awash Fall + Melak Worer and Tendaho -Addis (key informant interview and base site data collection) 1st field visit plan (7 days) Addis-Koka-Awash II and Awash II + Awash Fall + Melak Worer and Tendaho -Addis (Prof Abebe + Yilma + Social + Economist)

• Koka dam Hydropower (chief engineer), fishery & recreation (Cooperatives head) (1 d) Fishermen association (or individual fishermen); office of agriculture (Adama / Koka); office of tourism (Adama / Koka)

• Awash II hydropower (route to Assela town) – runoff-river type hydropower (1 d) – dam operator

• Awash III hydropower – runoff-river type hydropower (1d) – dam operator

• Beseka lake (fishery) – Fishermen association (or individual fishermen); office of agriculture (Adama / Koka); 55 | Page

Awash Basin Authority: The Study of Water Use and WP5: Draft early charge conceptualization report for Wastewater Discharge Charge hydropower, aquaculture and recreational water uses

• Awash fall and hot-springs – recreation - Head of Awash National Park (1 d)

• Tendaho dam reservoir – fishery and Afar Agriculture B / Dam operator / Water Works Construction Enterprise field office (2d)

Detail of Route 2: Aquaculture and recreation - Addis-Debre Birhan-Shewarobit-Dessie- Shewarobit - Addis- 6 days (Prof Abebe + Yilma + Social + Economist + AWBA) 2nd Field visit plan Visit to Lakes Haike &Ardibo near Dessie and make key informant interview and base data collection (2 days) at:

• Fishermen associations; • Wollo University – fishery recreation / tourism department • Office of Agriculture-Fisheries section; • Estifanos Monastery; • Commercial boat operators / user associations Visit to river-based fish catch Borkena, Ankerkech, Shewa Robit make key informant interview and base data collection (2 days) at:

• Individual fishermen (Kombolcha / Shoa-Robit); • Fishermen’s association (Kombolcha / Shoa-Robit); • Office of Agriculture-Fisheries section (Shoa-Robit); • Detail of Route 3: Addis Ababa and surroundings survey (6 days):

Federal institution to be visited (key informant interview and site-specific data collection) (3 days)

• Hydropower (Dr Yilma & Prof Abebe-Ask if EEP can work together with MoA/Fish creating favorable fish

production in the reservoirs):

a) Hydropower Directorate of the Ministry

b) Load Dispatch Center, EEP

c) Ethiopian Electric Power (Heads) – Pisa – Eng Azeb;

• Aquaculture: Visits to Ministry of Livestock and Fisher / Agriculture (One day)- • Recreation: Ministry of Culture and Tourism – • Abasamuel hydropower Fishery and recreation team goes to Babogaya (fish), Babogaya & Hora (recreation boat), Fishery & recreation (2 d).

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Awash Basin Authority: The Study of Water Use and WP5: Draft early charge conceptualization report for Wastewater Discharge Charge hydropower, aquaculture and recreational water uses

It can be stated that the planned field work was executed 80% completion. The team could not manage to travel to Tedaho dam (fishery purpose) due to shortage of time (requiring additional 3 days) in the first, rather Kessem dam fishery situation was surveyed. Abasamuel dam hydropower was not visited due to its present limited activity.

3.5.8 Field work data and findings

Field work findings relevant for the charge setting for hydropower, aquaculture and recreations are discussed below.

3.5.8.1 Hydropower 3.5.8.1.1 Stakeholders consulted The trip was planned in two phases. The first phase of trip was made to the Koka hydropower plant and Awash II (Awash Melkasa hydropower plan). The second one was focused with discussion at the Ethiopian Electric Power Head Office and the Load Dispatch Center (Table 5).

Table 5: Description of Stakeholders (contacted/identified who are relevant hydropower charge)

Date Institution/organi Name of the Responsibility Address Major issues discussed zation person

7 May 2018 Koka Woldemariam Deputy Head 092304452 Sediment accumulation at the Hydropower Tilaye Power House 2 intake. The bottom outlet / Plant Electrical sediment sluice started operation in Sept 2018.

9 May 2018 Awash II power Dissasa Head Awash II 091174658 Water is diverted for plant (near Gelmessa Power Plant 8 Wolenchity irrigation before Melakssa) generating HP.Loss of energy

25 May 2018 LDC Mirage Ferega Head Operation 091188732 Charge in principle is ok and Planning 3 provided we observe that Ethiopian Electric LDC, EEP AWBA contribution in Power Head sustaining the river flow Office quantity and quality. It should be minimal. 29 May 2018 Ethiopian Electric Ato Andarge D/ General 096036703 Power Head Eshete manager 0 Office (Addis Ababa) Ato Muluken Eng. Muluken 092668794 Tessema Repi Waste to 9 Energy Plant

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Awash Basin Authority: The Study of Water Use and WP5: Draft early charge conceptualization report for Wastewater Discharge Charge hydropower, aquaculture and recreational water uses

Date Institution/organi Name of the Responsibility Address Major issues discussed zation person

Head

Ato Senai Technical 091180791 G/Giorgis Support Director 0

3.5.8.1.2 Key Issues discussed (Summary) Hydropower administrators and operators discussed their need which can be fulfilled by the AwashBasin Authority and anchor these with propose of thewater charge. They responded to a question if they are willing to pay for water use charge for hydropower, the first response was no and why? At the second stage of thought, after they understood what the AWBA to offer, in principle they gave their agreement. They clearly stated that we need to observe that AWBA contribution in sustaining the river flow quantity and quality. It should be also minimal not to significantly affect the charge that goes to electricity end users. Hydropower administrators and operators also gave their consent in participating for monitoring river flow, reservoir water level and evaporation, reservoir sediment survey and sediment inflow monitoring, and monitoring of flow and sediment releases in cooperation with the AWBA or the Ministry hydrology department. The basis for setting charge was also discussed. They indicated that rate good be based on KWhr energy generated. They requested to make also adjustment in the rate when applying on the cascade dams where a stored water is used more than one time; such as Koka reservoir water is used for Koka hydropower, then for Awash II and III hydropower plants. Similarly, Gilegel GIbe I reservoir is used to generate for the Gibe II hydropower scheme.

3.5.8.1.3 Field work data implication to charge setting The proposed hydropower charge system is adjusted to account the Hydropower managers and operator’s requirements as indicated. Introduce a reduction factor for the same reservoir water is used in the cascade of hydropower plants. The second point is increasing awareness on the charge implementation timing. The strong message is AWBA should implement charge after their presence is felt in each hydropower plants and make clear planning and commitment in areas where they intervene in managing the specific river / lake water resources. The collected charge should be used by the Awash basin Authority for conservation, protection, and administration of the rivers pertinent to the Hydropower generation.

Detailed responses of the key stakeholders are given in theInterim Report WP5.

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Awash Basin Authority: The Study of Water Use and WP5: Draft early charge conceptualization report for Wastewater Discharge Charge hydropower, aquaculture and recreational water uses

3.5.8.2 Aquaculture

3.5.8.2.1 General Description of Field Visit

The trip was planned in three directions. The first trip started on May 7, 2018 from around Koka Dam and proceeded to Adama (visiting all relevant stakeholders). The second one was around Wollo lakes (Lake Hayq ad Ardibo) 3.5.8.2.2 Stakeholders consulted

Table 6: Description of Stakeholders (contacted/identified who are relevant to water/waste charge and their interest in water charge)

Date Institution/ organization Name of the person Responsibility Address

08/05/2018 Misrak Shoa Zone Ato Sisay Abebe Fisheries Expert 0936042384 Agriculture Office

09/05/2018 Metehara/ Beseka Ato Shambel Legesse Livestock production 0910009927 officer

Ato Sisay Adi Poultry expert 0920078895

Ato Mohammed Ali Meat production expert 0922306831

Ato Eshetu Tesfaye Animal feed expert 0910924194

10/05/2018 Kessem (Sabure Ato Essa Indris Chairman of the 0920214331 Kebele) Fishermen’s Association

Ato Mohammed Adem Secretary of the Fshermen’s Association

18/05/2018 Water resources office Ato Yimam Head of water office 0922464697

Ato Mesfin Dessie Town water 0912448523 office

18/05/2018 Tehuledere Woreda Ato Ahmed Dawud Fishery expert 0933174286 Agriculture office (Animal production)

18/05/2018 Hayq Fishermen Ato Kenimos Member 0912480234 Association

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Awash Basin Authority: The Study of Water Use and WP5: Draft early charge conceptualization report for Wastewater Discharge Charge hydropower, aquaculture and recreational water uses

Date Institution/ organization Name of the person Responsibility Address

18/05/2018 Hayq Fishermen Ato Mohammed Ibrahim Member 0910812410 Association

18/05/2018 Erikum Lodge Ato Getachew Andualem Manager 0929460616

18/05/2018 Wollo University Dr. Asgede Tefera Director, Culture and 0914725326 tourism

19/05/2018 Ardibu Fishermen Ato Seid Hussien Chairman 0920483305 Association Ato Adem Yusuf Secretary 0921265400

Ato Ahmed Ibrahim Treasurer 0920186656

Ato Mekin Abdo Member 0914673804

21/05/2018 Bishoftu Town Ato Dechasa Aboye Director of the culture & 0911346242 administration (Culture tourism office & Tourism office)

21/05/2018 Bishoftu Town Ato Tesfaye Abebe Director of the office Livestock and Fisheries office

Ato Alemu Dejene Quality control officer

Ato Bejiga Serecha Poultry and Beef expert

30 May 2018 Ministry of Agriculture Ato Hussien Abegaz Fishery Director 0911172571 and Animal production

3.5.8.2.3 Key Issues discussed (Summary)

The technical questions on the questionnaire were presented to each of the contacted focal groups and experts (mentioned below) and the following were the responses and discussion points abstracted from the discussants.

A. Koka Dam and Reservoir

We were able to visit the Koka Dam and reservoir and the fishing grounds, fishing boats and some of the fishermen.

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Awash Basin Authority: The Study of Water Use and WP5: Draft early charge conceptualization report for Wastewater Discharge Charge hydropower, aquaculture and recreational water uses

Adama Misrak Shoa zone agriculture office was contacted and we were able to sit with the fishery expert, Ato Sisay Abebe, and discuss the issues with regard to fisheries and aquaculture in the zone. The following were major issues discussed: . The localities where fishing takes place . The number of fishermen and their association in the zone especially around Koka Reservoir . The number and type of boats and fishing gears used . The market value of the boats and fishing gears . The total production per year . The average catch per day of the fishermen . The market price and marketability . The aquaculture sites and capacity . Production potential . Major fish species farmed . Number of fish farmers B. Metehara/ Beseka Lake

We were able to meet the team of experts in the Fentale Woreda Agriculture Office, especially those involved in animal production. The following issues were discussed:

• There is a fishermen association; however, the association is not very strong • There are fishing boats in which one is motorized boat • The fishermen are also equipped with fishing nets and they could fish all year round. • The major fish group caught is Nile tilapia, Oreochromis niloticus. • I kg of fillet of tilapia is sold for Birr 6o in the market in Metehara C. Kessem Reservoir

Although we cannot reach the Kessem Dam and Reservoir we were able to meet leaders of the fishermen cooperative at Sabure town.

• The fishermen cooperative is not very strong • They were able to catch about 100m kg per day • Fishing is only done for a month

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• There is problem of market access (major problem) • There is also shortage of fishing gears and boats • There is no support from the Medium and Small Enterprise • They are willing to pay if the fishing conditions are improved

D. Tehuludere Woreda Agricultural office (Lake Hayq) • No charge so far • Good to start water charge by improving the situation of the fishing community • There are two fishermen associations; one around Lake Hayq and the other around Lake Ardibo • Licenses have been provided to the fishermen’s association • The Woreda Agricultural office has taken the initiative to organize the fishermen, provide them with the necessary fishing gears and boats • There are about 530 fishermen with some 530 reed boats and 555 gill nets • They produce up to 7.5 tons per month (an average of 4.45 tons) • The market is in Hayq, Dessie and Kombolcha • The major fish caught is Nile tilapia, although its catch is decreasing this time around. • 1 kg of Nile tilapia could be sold for 30 Birr on the average

E. Lake Ardibu Fishermen association

We met the executive committee of the Ardibo Fishermen Association (four of them).

• The association was established in 1996 (Eth. Cal.) • There are now 84 members of the association • There is a problem of illegal fishermen operating in the lake, especially from other woredas (e.g. Kalo) • There is a problem of habitat degradation and there tilling to the shore, which is causing massive sedimentation in the lake. • There is also unregulated water abstraction for irrigation, which is affecting the water level of the lake. • Despite the above problems they are willing to pay for the water use, believing that the money collected will be used to rehabilitate the lake and its environs. • There is a closed season for fishing, which is May to August.

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F. Bishoftu Lakes

We met the Livestock and fisheries team of the Agriculture office of the Bishoftu Town and the following points were raised:

• There are five natural lakes • There was fishing in three of the lakes; but now there is no fishing activity because of not well established reasons. There are two hypotheses:

o Overexploitation of the fishery resources, especially using illegal fishing gears o Release of toxic wastes from the recreation centers • However, there is fishery activity in Belbela Reservoir (Cuba Dam) • There are several problems surrounding the lake’s environment • If the fishery is restored the fishermen should be able to pay some amount for the water they use. • There is problem of illegal fishing using illegal fishing gears • No fish expert in the administration and is difficult to provide expert advice to the fishermen and also develop the sector 3.5.8.2.4 Challenges:

Access to some of the sites

It has been difficult to get to some of the sites by car. The case in point is Kessem Dam and reservoir where it has been difficult to reach the site because of poor road condition (se plate 1).

Plate 1. Difficulty to reach Kessem Dam and reservoir (2018)

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. It was also challenging to find higher number of interviewee as most are in their own businesses and difficult to find them

3.5.8.2.5 Preliminary assessment:

o The data obtained for the capture fisheries section appears to be adequate to estimate the charge o However, there is no data for the aquaculture sector as it is a potential, although we have been informed and we have data on some 12 ponds in Wonji, we couldn’t collect data due to time constraints.

Some pictures taken during the field visits and discussions

Meeting at Koka Dam I Fishermen’s wooden boats at Koka Dam

Fisherman/trader filleting its catches at Koka Dam 1 (Afer Gideb-Saddle Dam) - 2018

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Misrak Shoa Zone Agriculture office (Ato Sisay Abebe) Fentale Woreda Livestock and fisheries office (2018)

Awash National Park (2018)

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Kesem sugar plantation office, Sabure Sabure Kebele administration

Debub Wollo Zone water Resources office Tehuludere Woreda Livestock and fisheries office (2018)

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Hayq Fishermen association Ardibo Fishermen association (2018)

3.5.8.3 Recreation 3.5.8.3.1

Table 7: DescriptionWater based of Stakeholders recreation (contacted/identified facilities visited who are relevant water-based recreation facilities charge) Recreation Recreation based Day Lat Long Location Contact Area on Yewilsew and 9-Apr-18 Awash Park lodge 9.08 40.00 Awash/Metehara Awash river 251987038808 Mohammod Fentale

11-Apr-18 Sodere resort 8.40 39.39 Sodere Awash river Shaleka 251930107515

13-Apr-18 Kuriftu resort 8.78 39.00 Bishoftu Lake bishoftu Eskindir Getachew 251911673253 13-Apr-18 Liesak resort 8.79 39.00 Bishoftu Lake Babogaya Elias Abdo 251911492723 16-Apr-18 Erikum Lodge 11.33 39.69 South Wolo Lake Haiq Andualem Getachew 251929460616

Institutions

East Shoa tourism 7-Apr-18 8.55 39.27 Adama Monitoring Institution Lemi Kebede 251917095971 bureau office Federal tourism 14-Apr-18 9.02 38.75 Addis Ababa Monitoring Institution Tewodros Deribew 251913965175 bureau Ministry of water and 15-Apr-18 irrigation/ license 9.01 38.78 Addis Ababa Monitoring Institution Mohammod Ali 251911822169 department

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3.5.8.3.2 Challenges The challenges faced in the field trip are

1. The questions why recreation areas should pay has been puzzling to the respondents, clearly understanding the services they are going to be provided by AWBA was sketchy. 2. Finding people for interview with the allocated short time has been a challenge eg. Sodere resort manager (met with adjusted schedule), and Awash park manager (missed). 3. The team has noticed overlap of assignments in federal institutions (EWCA and AWBA, both work on watershed preservation) 3.5.8.3.3 Field work data implication to charge setting The field trip was successful in identifying the works AWBA shall do to ask for charge from recreation water users. Almost all has raised their concern on paying for abstraction, rather they emphasized they are willing to pay back in return for the services AWBA provides. The identified services where recreation areas have shown willingness to pay are;

1. Flood protection works and monitoring the quantity of water coming to the recreation area (Sodere, Awash lodge park and Kuriftu ) 2. For assurance of quality of water (Awash lodge park and Kuriftu) 3. For watershed protection and preserving the watershed (Sodere, Leisak and Awash park lodge) 4. For protection of aquatic animals, fishes, from illegal fishing (Erikum lodge) 5. For protecting buffer zones (Erikum lodge) The other preliminary finding was AWBA is expected to engage actively with the recreation areas to monitor their demands before asking for water use charge. The Amount of payment was also the issue of discussion and the alternatives provided by the respondents from recreation areas are worth looking; here are some alternatives derived from interviews with recreation areas;

1. Some percentage from the profit 2. Based on the recreational water use 3. Based on the number of visitors and boats The technical conceptual frame work developed for the recreational areas has now been updated with the inputs from the field trip. In the previous conceptual frame work the way of payment has been only through the number of users. From the observation of the conceptual frame work additional works to be done for the respective recreation area shall be introduced to make the payment based on the services AWBA provides. Thus, the new conceptual framework will be as shown below.

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4 Charge setting Charge setting for water use in hydropower,capture fish &aquaculture and recreation are based on relevant survey data and international experiences. The intended water charge is recommended to cover part/all costs in following core activities:

(a) Institutional development and management, (b) watershed / water resources management, and (c) Research & development and capacity building.

The general model structure is composed of fixed charge (registration /license / annual renewal fee) andvariable charge.

4.1 Water charge setting for hydropower

Hydropower charge = Registration fee +VH *K*EO

VH = charge coefficient

VH = 0.006 – 0.012

Based on the MW generated the following specific ranges are suggested

Category 1: 0.006 - 0.01 for HPP with capacity less than 100 MW

Category 2: 0.01 - 0.012 for HPP with capacity 100-500 MW

Category 3: 0.012 HPP with capacity greater than 500 MW

K= Rate of energy charge (Birr/KWh) – which Ethiopian Electric Power (EEP) sell toEthiopian Electric Utility (EEU)

EO = Annual Energy Output in KWh which is a function of water stored and turbined

TheVHvalue (percent of income from hydropower generated) was fixed by using international experiences and Ethiopia economic condition (capacity & willingness to pay).

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TheVHvalue (percent of income form hydropower generated) is fixed by using international experiences from Brazil (6.5% energy sell) and China (0.75-2.5% of energy sell) and adapting that to Ethiopia economic condition of the hydropower sector (capacity & willingness to pay).

VH varies with size of the power plant, with large hydropower required large storage for other and more inundated reservoir area, more payment is expected to cover some of water management costs. This approach also used in Canada and China hydropower charge setting (see Chapter 2).

Sample calculation is based on Koka hydropower plant considering one turbine (15 MW) which is operational.

No Example Value Unit 1 Hydropower plant Name Koka _ 2 Installed Capacity 45 MW Annual Energy Generated (read from power house 3 Energy meter) 131,400,000 KWhr 4 K 0.06 USD/KWhr 1.74 Birr/KWhr

5 VH 0.006 _ 6 Fixed Charge 1000 Birr Annual Hydropower Charge: Fixed Fee + FtcH* K * EO 1,372,816.00 Birr

The hydropower charge rate in the above example is 1 cent Birr/KWhr while electricity price rate (house hold level), that is 0.6% of the 1.74 Birr/KWhr.

The Excel based model is attached with this document.

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4.2 Water use charge setting for capture fishery and aquaculture

The water use charge for capture fisheries and aquaculture, in order to generate the charge coefficients, has considered the costs that could potentially be accrued to watershed management and water resources management, the costs for monitoring and supervision of appropriate use of the fish resources and also the annual income of the fishermen in the basin. Moreover, the coefficient for aquaculture was developed taking international experiences into consideration.

The team strongly recommends to establish local office (one crew) at the Lake and reservoir sites to closely monitor and manage them (fishery, and recreation related issues). The cost item recommended are:

(d) hydrometric & water quality expert (1 person); (e) monitoring and supervision of fishermen/association and tariff collection (1person) (f) motor boat, fuel, maintenance (1) (g) handheld water quality equipment and its supply (h) gage book

Proposed charge system is given below:

Capture fisheries water use charge = Registrationfee + K*VF*CF

Annual registration fee to be fixed by the AWBA regulation.

VF = 0.02 – 0.04, charge coefficient:

The VF values in the range depend on: Category 1: 0.02-0.03 for degraded watershed and / or small lake size Category 2: 0.03-0.04 for protected watershed and / or large lake size

The study team suggested two range categories. Awash Basin authority should consider

access to market, the size and productivity of the water bodies while deciding on the VF values from each of the categories.

K= Unit price of 1 kg fish (Birr/Kg) – the price that the fisherman sells at the site of fishing. CF = Captured fish (kg/year)

VF is determined based on the field collected data from Haike, Ardibo and Koka lakes.

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Aquaculture water use charge = Registrationfee + Aq*K*VF*HF

Aq = a coefficient for aquaculture (1.0-1.5) local and international experience

c) Source:Spring &ground water Aq = 1.25-1.50

d) Source:River, lake and reservoir Aq = 1.0-1.25

HF = Harvested fish (kg/year)

The study team suggested two range categories. Awash Basin Authority should consider

access to market, the size and productivity of the water bodies while deciding on the VF values from each of the categories

Variable cost factor, VF,for capture fisheries determined by taking into consideration average incomes and expenses of fishermen from selected water bodies in the Basin. The income was determined by assuming effective fishing time of 22 days per month and 10 months per year.Average production/fisherman/day and average cost/kg of fish have also been considered.The expenses include operational, maintenance as well as buffer zone watershed management costs.

VF(the ratio of basin expenses to sustain water conservation, protection and management function / Annual total sell value of fish) and VFis less than 6% - average willingness and ability to pay as determined from the Awash basin in the social and economic analysis.

Sample calculation for a capture fishery water use charge (Individual)

Individual capture Fishery Water No Use Charge Value Unit 1 Koka reservoir capture fish Fisherman _ 2 Regitartion fee 0 Birr 3 K 22 Birr/kg

4 VF 0.02 _ 5 CF 3000 Kg Annual Capture Fish water use charge: Registartion Fee + VF* K * CF 1,320.00 Birr/year It is recommended that for each lake a specialized Crew with two experts (water quality and hydrologist) shall be stationed at the specific lake having a motor boat and water quality instrument and install staff gauge (if not available) measure water level and water quality of the lake. In flowing rivers flow and water quality including sediment should be also measured in cooperation with the hydrology department. The experts will ensure that fisherman is registered

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for water use, and regulate sustainable use of fishes catch together with other relevant local offices. The Crew also manage the lake buffer zone together with the relevant local offices.

4.3 Water use charge for water-basedrecreation

Recreation areas in the Awash basin include Lake based (lodges, boating, natural hot spring) and also fountain based recreation in parks which are used for commercial purposes. Parks and recreation have economic value, social importance, and health and environmental benefits that make them essential to communities. This charge considers their importance and is developed to sustain recreation areas while encouraging the proper use of the water resource. The water charge model for recreational areas is based on audited profit of the recreational areas or entrance fee in recreation site whichever applicable in the basin. The charge considers the willingness and ability to pay and also the variation in market for the existing different recreational water uses. The charge collected will be used to ensure the quality and quantity of water in rivers, lakes, reservoirs and fountains on which recreation is rely on.

Option A: based on the annual profit

Lake and water-fall based recreation = Registration / annual renewal fee) +variable charge (VRP)

License fee / renewal fee = To be fixed by the AwBA regulation

P =annual profit (Birr)

VRP = 0.006-0.010, factor of profit Category 1: 0.006-0.008 – recreation facility access to major market is limited

Category 2: 0.008-0.01 - recreation facility access to major market is good

VRPis determined based on the field collected data from Haike and Kuruftu lodges and Awash Fall Park and lodge.

Sample Calculation:

No Recreation Water Use Charge Value Unit 1 Awash Fall & Awash National Park Enterprise _ 2 Registration fee 0 Birr

3 VRP 0.006 _ 4 P 322,755.00 Birr/year Recreation water use charge: Registration Fee + VRP* P 1,936.53 Birr/year

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Option B: based on the annual entrance fee

Lake and water-fall based recreation = Registration fee + variable charge (VRE) E

License fee / renewal fee = To be fixed by the AwBA regulation

E = annual entrance fee (Birr)

VRE = 0.01-0.02

Category 1: 0.010-0.015 – recreation facility access to major market is limited

Category 2: 0.015-0.020 - recreation facility access to major market is good

VRE is determined based on the field collected data from Sodore and Awash Fall Park and lodge.

Sample Calculation (50 Birr/person, 200 visitors per month, for one year)

No Recreation Water Use Charge Value Unit 1 Awash Fall & Awash National Park Enterprise _ 2 Registration fee 0 Birr

3 VRE 0.01 _ 4 E 120,000.00 Birr/year Recreation water use charge: Registartion Fee + VRE* E 1,200.00 Birr/year 5 Economic aspect hydropower, aquaculture and recreation water use charge setting

5.1 Introduction

Water use charge would logically contribute to cost recovery and the achievement of sustainable development by putting into practice the User Pays Principle. This principle is based on the idea that watermanagement costs as well as the costs of environmental damage should be borne by those who cause them. The cost recovery is desirable from an environmental point of view, the remaining question though is to what extent it is possible to implement it.

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As a result of emotional and economic content of water some people feel strongly that water uses should be provided free or at least heavily subsidized. But, others feel that water charges should signal the scarcity of the water resource. Moreover, our cultural instincts about water charges put a huge premium on the perception of fairness. So, there is a huge range of opinion about the appropriate water charge, from zero to full long run marginal cost of services. Thus, in line with the environmental objectives the economic implications should be checked and one has to consider the willingness and ability to pay of water users.

This section presents the economic findings of water charge for Hydropower, Fishery and Recreational water uses. It asses the willingness to pay and ability to pay (affordability) of water users for water use charge.

5.2. Methods

5.1.1 Data collection methods The data collection method was comprised of detail field survey, key informant interview and collection of relevant secondary data together with WP5 technical team. In addition, field observations, spot checks and investigations on the physical situation of the basin, on the degree of problems and on existing water management practices were made through extensive traveling to different parts of the basin. The activities have concentrated on collecting more site-specific information and stakeholder consultation both with individuals in the field and with institutions.

5.1.2 Sampling Respondents were selected randomly for survey question and purposive sampling was used for key informant interview. For hydropower, Koka and Awash II & III were surveyed, for fisheries 20 experienced fishermen were surveyed and for recreation 5 centers were surveyed. In addition, a detail discussion with higher officials and experts were made from each sector.

5.1.3 Data collection instrument Three types of instruments that correspond with willingness to pay, affordability and stakeholder analysis were used in the data collection.

A. Contingent Valuation Survey / Willingness to Pay: In order to measure the Willingness to Pay of water users a Contingent Valuation survey questions were employed. The design of the survey consisted of four section. Questions in the survey's first section asked about respondents' socioeconomic conditions. Survey section 2 asked about respondents' awareness of the current situation with water management. Survey section 3 covered general environmental problems and the proposed water improvement scheme. The fourth section questioned respondents about their Willingness to Pay. The data covered socioeconomic characteristics of respondents, including gender, age, income; environmental attributes, such as level of environmental awareness and design variables, such as initial charge size and Willingness to Pay for water management.

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B. Cost-benefit / Ability to Pay: In order to measure the ability to pay of water users, their financial history was collected. As much as possible, information regarding investment costs, annual variable costs and annual profit was collected.

C. Key Informant Interview: A Key Informant Interview was made with individuals who have a well experience in each sub-category. A checklist and guiding questions were used to frame the interview within the scope of the study. The interview was used to identify the consent of stakeholders that could directly or indirectly affect the charge and capture their interest.

5.2 Findings A separate analysis for hydropower, fisheries and recreation water uses is provided in the following section.

5.2.1 Hydropower The sampled hydropower plants: i.e., Koka and Awash Melkasa (II & III),are operated by Ethiopian Electric Power (EEP).Koka Hydroelectric Power Plant has a design capacity of 43 MW with 3 units. Awash II and III Hydroelectric Power Plant has a design capacity of 64 MW and has 4 units.Initially, Koka dam was built with a chief role of hydroelectric power generation. But currently, water releases are controlled by irrigation requirements rather than energy generation. Its multipurpose aspect includes water regulation, sedimentation reduction for downstream works and production of fishery on the reservoir.

A. Willingness to pay

Interestingly, higher officials of the power plants believe that they are mainly serving AwBA's interest, by controlling water flow for downstream, and they consider the power generation as a secondary task. Thus, they are unwilling to pay for AwBA or any water resource management, instead, they insist that they should be subsidized for the service they are providing.

The interviewed higher officials also believe that it is unfeasible to introduce charges given their financial status. EEP is responsible for annual budget. al.location of all plants (Table 8). Both hydropower plants, are effectively bankrupt and have limited cash to carry out water resource management works, or to fund climate change adaptation. The respondents noted that the capital budget that the plants receive from EEP is insufficient to cover the demand for development in the sector. The three years average of money allocated for Koka is 21,374,109.37 birr and it is 24,056,457.83 birr for Awash II & III. In the second round of discussion with Koka and EEP responsible experts, they were convinced to pay for water charge provided that AwBA delivers clearly the proposed Koka reservoir water & watershed managements.

Table 8: Yearly Budget. al.located for Koka and Awash II and III Hydropower plants

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Awash Basin Authority: The Study of Water Use and WP5: Draft early charge conceptualization report for Wastewater Discharge Charge hydropower, aquaculture and recreational water uses

Koka, Year (E.C) Awash II and III,Year (E. C) Type of Expense 2007 2008 2009 2007 2008 2009

Material, Lubricant and 16,265,045.92 1,594,624.92 447,832.07 1,062,882.74 2,001,677.11 1,992,471.56 Oil

Salary and 7,564,798.34 9,207,308.65 11,134,880.73 9,726,847.53 10,256,005.72 12,300,235.19 Wage

Personnel 1,578,948.26 948,510.68 2,031,020.78 824,931.16 1,836,119.72 1,507,124.09 Costs

Others 582,341.80 237,776.80 666,806.27 376,018.36 270,772.38 580,526.75

Depreciation 4,047,672.28 3,907,380.31 3,907,380.31 11,383,396.22 9,025,022.37 9,025,022.37

Total 30,038,806.60 15,895,601.36 18,187,920.16 23,374,396.22 23,389,597.30 25,405,379.96

B. Ability to Pay

It is difficult to identify the exact ability to pay of the power plants as the economic life of the power plants has matured and as the power plants are not directly responsible for selling the generated power. To make matters worse, there is no clear financial benefit rapport/division between EEP and Ethiopian Electric Utility (EEU)4. Thus, it is difficult to separate the profit generated by each power plant as the money collected is flowing to different tasks/institutions including ongoing projects.

In general terms, according to EEP official claim, the existing electric power generation costs are about US $0.09/KWh and the current electric tariff is at US $0.06/KWh. The remaining three US cents have long been subsidized by the government. However, this claim is inclusive of ongoing projects. A rough estimate of income of power plants can be generated to establish a comparison with the annual budgetallocation. For instance, if Koka power plant with a capacity of 43 MW is assumed to produce 15 MW per year its income would be approximately 220,752,000.00 Birr. This is a very high amount when compared to the annual budget/cost incurred by the power plants (Table 8).

C. Conclusion and recommendation

The hydropower plants do not pay for the water they use and are willing to pay charge provided that proposed water & watershed management projects are implemented by AwBA. However, a rough estimate of the hydropower plants benefit indicates that they have the ability to pay the

4EEU is responsible for provision and selling of power to the final users.

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suggested water charges. Therefore, the economic team recommends the introduction of the water charge for hydropower plants.

5.2.2 Fisheries

The Awash Basin has commercially important species of tilapia, catfish and common carp. The Basin has numerous water bodies that are suitable for fish production and there are considerable room for expansion through careful management. The common fishing methodsarebeach seine, gillnet, and long line fishingwith wooden plank boats. Fish is sold fresh or frozen, whole, gutted or filleted. At the lake site it is usually sold fresh as whole fish, but if it is to be transported, initial processing may be done at lake side. With the exception of the more remote hilly parts of Kessem reservoir, majority of fishers in the basin has a good road infrastructure and, therefore, good access to markets.

The surveyed fishermen complained that fish production is continuously declining and they have a heightened sense of fear about failing to get any fish in the near future. All the respondents considered the current water resource management to be inadequate and they expect the government to deal with it, specially, if charge is going to be applied.

A. Willingness to pay

Respondents were asked about their willingness to pay and how much they are willing to pay for sustainable water supply (Table 9). About 90% of fishermen had positive willingness to pay for water use. The average willingness to pay per fisherman per kilogram is 1.4 Birr, which is about 6% of their income. The willingness to pay ranges from zero willingness to pay as a minimum to 3.5 birr/kg as a maximum. All the respondents believe that the government should take the responsibility for controlling pollution and illegal fishermen.

B. Ability to pay

The range of income levels represent a wide range of capacity to pay from high experienced earners to very low paid commission workers (Table 9). The minimum income is 1,125 birr per annum and the maximum income is 270,000 birr per annum. The mean production and marketing period in a year is 8.35 months, ranging from 1 month at Kessem to 12 months at Besseka. The mean price of fish is about 22 birr/kg, considering all fish types and all marketing seasons. The mean annual production per fisherman is 2892 kg with mean annual income of 65,133 birr and with mean annual profit of 62,988 birr.

Table 9: Summary Financial Statistics of Fishermen Variable Mean Min Max

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Average Price (Br/Kg) 22.225 5 60

Production and marketing 8.35 1 12 Period (Month)

Annual Production (Kg.) 2891.716 56.25 9000

Annual Income (Br.) 65132.7 1125 270000

Annual Cost (Br.) 2144.737 0 4900

Annual Profit (Br.) 62987.97 500 267500

Willingness to Pay (Br/Kg) 1.3875 0 3.5

C. Conclusion and recommendation

The average willingness to pay per fisherman per kilogram is 1.4 Birr, which is about 6% of their income. Comparing this amount with the suggested range of water use charge (2% to 4%), one can conclude that the charge amount satisfies the willingness and ability to pay of fishermen. Therefore, the economic team recommends the introduction of the water charge for fishermen.

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5.2.3 Recreation

It is obvious that people love water for relaxation and aesthetics. The Awash Basin currently attracts local mainly weekend tourism at its pleasant lodges and is important center for international tourists. The Lodges at Bishoftu, Awash National Park and hot springs are promising tourist centers in the Basin. Given the well-constructed tarmac road, they can be reached easily from Addis Ababa.

Constraints to tourism development include the continuing deterioration of natural areas, the lack of understanding of tourist needs and expectations, poor management and inadequate coordination among stakeholders. The environmental problem that a given recreation center may have is usually specific and unique in nature and need a targeted intervention. For instance, Sodere Lodge was facing a periodic flooding during periods of high rainfall. However, it can be generally concluded that, the continued expansion of cultivation throughout the basin, deforestation and woodland degradation are resulting in a loss of biodiversity and ecosystem function.

A. Willingness to pay

The sample respondents indicated that the availability of the water (river/lake/hot spring) is the basis of their business and are willing to participate in any activity that will improve water resource. About 80% of the recreation centers are willing to pay for water use, provided that the necessary water resource management is introduced. The average WTP is 1% of profit with a minimum WTP of 0 and a maximum WTP of 1.5% of profit.

B. Ability to pay

Using their audited annual report, trend analysis is used in measuring the capacity to pay of recreation centers and their profit has been growing with average annual rate of 16% in the last four years. Their average annual net profit is 4,149,422 Birr, with minimum profit of 322,754.63 Birr and maximum profit of 11,560,511 birr. The huge variability is a testament that recreation centers that are closer to Addis Ababa (e.g. lodges at Bishoftu) have a relatively higher profit than those that are far away from the center (e.g. lodge at Awash National Park).

C. Conclusion and recommendation

The average willingness to pay per recreation center is 1% of profit. Comparing this amount with the suggested range of water use charge (0.6% to 1%), one can conclude that the charge amount satisfies the willingness and ability to pay of recreation centers. Therefore, the economic team recommends the introduction of the water charge for recreation centers.

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6 Social aspect hydropower, aquaculture and recreation water use charge setting

6.1 Methods of the study

6.1.1 Literature review The team has reviewed pertinent books, journals, research documents, reports, legal and policy frameworks in order to grasp the context, earlier trends and operations of water charge setting including the experiences in other countries. Secondary data and official records were collected from relevant ministries and institutions in the Awash Basin. The collection of secondary data has also considered the experiences of Addis Ababa.

6.1.2 Survey Survey method was used to collect data about irrigators’ and fishermen’s socio-economic background, water consciousness, willingness to pay, factors affecting willingness to pay, social equity and fairness, impacts of introducing irrigation water charge and environmental concern of irrigation water use.

6.1.3 In-depth interview In-depth interview was employed to collect data from irrigators (large, medium and small-scale farmers) operating in the Awash Basin. This method was used to collect data on culture of irrigation, water consciousness, willingness to pay, irrigation water management in realizing fair and equitable access to irrigation water in the Basin.

6.1.4 Key informant interview Key informant interview was held with officials and experts at different levels (Regional, Zonal and woreda levels). Managers of power plants and lodges were also interviewed. The informants were asked to offer their opinion on linkage between water and livelihoods of their community, water use and administration, water supply extraction, recreational water use, the role of introducing water charge in promoting water saving culture of the society and challenges in implementing water charge in the Basin. Furthermore, data were collected on the potential impacts of introducing/modifying water charge in the Basin and strategies to mitigate the probably negative consequences of introducing irrigation water charge.

6.1.5 Focus Group Discussion (FGD) Focus group discussions were conducted with fishermen on various topics including lake water use, management, and saving. FGD was carried out to capture communities’ view on the issue water consciousness, willingness to pay, impact of introducing or modifying water charge, challenges of implementing irrigation water charge and services needed for the community.

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6.1.6 Observation Non-participant observation was the method employed to collect data on water use, water management and administration.

6.2 Data Collection Instruments

Based on the above data collection methods and early conceptualizationof Water Abstraction and Treated Waste Water Charge Setting, four types of data collection instruments were developed: namely survey questionnaire, key informant interview (KII), in-depth interview guideline and checklist focus group discussion (FGD). The survey data collection instruments were refined through series of discussions and finally they were coded for data entry and analysis. The data collection instruments were administered according to the data type needed.

6.2.1 Sampling In a qualitative research approach,literatures suggest that interviewing 5 to 25 respondents would help to capture reasonable information. With this justification, the social team opted to take the maximum size, 25 respondents from each category, for conducting survey interviews. Thus, survey was conducted with irrigators and fishermen. The team has conducted a small survey with the fishermen in Hayq in Debubu Wollo and Beseka Hayq, South of Methara (Table 10). The number of respondents was very low since fishing was not allowed for some time so that reproduction of fish could take place. Further, the fishermen in Beseka Hayq are dispersed since they are not organized in association.

Table 10: Sample respondents by data collection methods

Data Water, Energy and Hydropower Recreation Aquaculture collection Irrigation method Department

Survey 15 fishermen Hayq, Ardibo lakes in South Wollo; and Beseka Hayq, South of Methara

Key 2 Heads of 3 Heads of Awash I, 2 lodges Awash 5 experts government offices informant Misrak Shoa and II and III ParkAwash Fall Park and chairman of fishing interview Debube Wollo Hydropower Plants Lodge and Rikum association Water, Energy and lodge Hayq lake Mines Offices (South Wollo)

Focus Group 1 FGD Members Discussion Lego-ArdiboFishing Association

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6.3 Findings (Hydropower, recreation and aquaculture)

This section deals with the findings of water abstraction for hydropower generation, recreational and fishing activities on water bodies including lakes and rivers. The findings are based on the field data collected from Koka dam and lakes such as Hyqe and Ardibo in south wollo zone and government offices at regional, zonal and woreda levels.

The conceptual framework developed earlieris used. Under each section namely hydropower, recreation and aquaculture, an attempt is made to understand respondents’ water consciousness, socio-economic, fairness, willingness to pay and impacts, social concerns and environmental concerns. Further, mitigation measures to minimize the negative impacts that may arise due to the introduction of water charges are presented. Finally, conclusion and recommendations are provided.

6.3.1 Hydropower

6.3.1.1 Water Consciousness

The team had conducted keyinformant interviews with the Operation and Maintenance Electrical Engineer, at Hydropower plant I at Koka and Head of the power plantAwash II and AwashIII. The results of the interviews corroborated that the dam has sufficient water during rainy season. There is no mechanism employed by the power plant to utilize water efficiently because of sedimentation. Discharging water from the dam is carried out in coordination with Awash Basin Authority with guidelines developedon how much water should be discharged from Koka reservoir for irrigation purpose.

Awash Power plant II has two turbines. At present, the plant gets sufficient water since only one turbine functional. The second turbine is not working due to lack of spare parts. The Head of the power plant believes that water is scarce when the plant operates in full capacity. The power plant has a mechanism to utilize water efficiently based on water level measurement.

6.3.1.2 Socio-economic, fairness, willingness to pay and impacts Although the power plants are licensed, they do not pay for the water utilized to generate power. The key informants believe that the power plants should pay for the water utilized. They noted that power plant can afford to pay the water charge if introduced. Regarding the willingness to pay, the key informants suggested that such a question should be answered by the top management at the Headquarters.

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Further, Head of Misrak Shoa Water, Energy and Mines Office strongly believes that power plants should be charged for the water they utilize since the generate income. He suggested that power plants should be charged according a framework worked out by the Awash Basin Authority. This can contribute to efficient utilization of water. He believes that the introduction of water charge will not have negative impacts.

The team had also discussion with members of the top management of Ethiopian Electric Power Corporation in Addis Ababa. They have confirmed that EEPCo is not paying for the water it utilizes to generate power. With regard to willingness to pay, they argued that EEPCo is not consuming water since it releases water after power generation. Further, it should be noted that the Dams are providing various benefits. Further, the key informants noted that the water abstraction for power generation has positive impacts in terms of irrigation water, water supply for Adama town and fishing. Consequently, they are less willing to pay the intended water charge, also they may consider the request if what AwBA contribution is clarified and implement in water and watershed managements of the reservoirs.

6.3.1.3 Environmental concern At present, water security is a key issue for the power plant. The key informants strongly agree that power plants should engage in water conservation activities. Further, they expressed that the existing power plants use water efficiently and wisely. Heads of the power plants believe that the Koka dam does not entail environmental cost. However, the power plants expect theAwash Basin Authority to work on the buffer zone by engaging in conservation and protection activities.

The Head of Misrak Shoa Water, Energy and Mines Office noted that the Koka power plant does not get sufficient water to generate power because of siltation. Watershed management is not carried out to protect the dam. About 35 hectares of land which used to be covered by water (Bahir Sheshe) is cultivated. The power plant may have environment cost when flooding occurs. His office carries out conservation activities at scheme level which is not strong enough with limited labor availability. He suggested that there should be water shed management policy.

6.3.2 Recreation

6.3.2.1 Water consciousness Soder, Bisheftu, Adulala and Haile resort are some of the recreational facilities connected with water bodies in Misrak Shoa Zone. There is no experience of paying water charge for using water for recreational purposes.

The Awash Fall Park Lodge is located in Eastern Shoa, Fentale Woreda, Egatere kebele. It is in middle stream of Awash Basin. The Awash Park was established in 1969. The team had key-informant interview with the manager of the lodge and park guide. The Lodge has 27 rooms, with 25 workers. Foreign visitors constitute 98 percent. The lodge pumps about 20,000 of liters 84 | Page

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of water from Awash River for cleaning purposes. The pumped water is not used for drinking and cooking. It transports clean water for human consumption from Methara town. The lodge does not pay for the water pumped from Awash River.

6.3.2.2 Socio-economic, fairness, willingness to pay and impacts Key informants underlined that organizations engaged in recreational activities by using water should pay. The introduction of water charge on the recreational industry will not have negative impact since the customers can afford. Head of South Wollo Zone Water, Energy and Mines, has strongly suggested that the recreational use of water bodies are areas where human beings interact with nature and require conservations that must be compensated through the payment of users. He noted income of people and amount of resources under use should be taken as parameters in setting charges for recreational uses water bodies in the Awash Basin.

It appears from the discussion that the lodge is not willing to pay for the abstracted water. The manager said that the “lodge is serving the public under harsh environment. Such investors should be encouraged rather than charging water. Before the introduction of water charge, the challenges of a recreation industry must be identified”.

The team had also key informant interview with the manager of Lake Hayq Rikum Lodge. It is located in South Wollo zone, Tewledere Woreda, Kebele 05. It was established in 2001. The lodge with three rooms has license. It does not pay water charge. The youth are organized to give boating recreation. The lodge is willing to pay water charge since it would contribute to sustain the fish. However, he noted that it may be difficult to pay the water charge since the lodge pays tax to the government. The manger indicated that if water charge is introduced, the lodge will shift it to customers to pay. He underlined that when water charge is introduced the availability of fish should be studied.

6.3.2.3 Social concern One of the key informants, Head of Debub Wollo Zone Water, Energy and Irrigation Department, believes that water charge should be introduced for those utilizing lakes. He recognizes that the availability of water charge will contribute to protection of water bodies. He noted that recreational centers could shift water charge to customers to minimize their cost. This may bring about negative impact on the part of the customers since the services cost could increase. In the introduction of water charge, services of the recreational centre, profitability, number of customers, and awareness of the customers should be considered. He noted that awareness creation could avoid conflict over the introduction of water charge.

6.3.2.4 Key informants underlined that organizations engaged in recreational activities should conserve the waterEnvironmental resources. Further, concern they are of the opinion that they should contribute to the sustainability of the water resources. Head of Water, Energy and Mines, has strongly suggested

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that the recreational use of water bodies are areas where human beings interact with nature and require conservations that must be compensated through the payment of users. The team had also key-informant interview with the Director of Culture and Art at Wollo University. She noted that the Awash Basin Authority should engage in the protection of water bodies before the introduction of water charge, which encourages water users to pay.

6.3.3 Aquaculture

6.3.3.1 Water consciousness Fishing is carried out in the south of Methara, on a small lake created by Beseka River. It is located in Fentale Woreda, Arwadi kebele, which is in the middle Awash Basin. There are 30 fishermen with fishing experience between 5 and 20 years. They are organized in association and pay 300 Birr tax for the local government. They don’t pay water charge for fishing.

The Hayq Woreda office gives license to fishermen. It has issued license for Lego-Ardibo Fishing Association in 2009. The Woreda office facilitates the provision of fishing boat and fishing net for the fishermen. There are 530 fishermen who are fishing without license in Lake Hayq. Teleapi, Koroso and others are commonly fished in lake Hayq. About 7.5 tons fished is harvested in one month. They sell fish in Dessie and Kombolcha.

Focus Group Discussion was held with management committee of Logo-Ardibo Hayq fishermen association. The association was established in 2004 with 156 members. At present the association has 84 members fishing only in Ardibo Hayq. Recently, Ambo Fishermen association is established in Ardibo Hayq. The fishermen do not pay for the water used. However, they pay 500 Birr when a new boat starts operation. The respondents indicated that illegal fishing is carried out in the lake.

Sabure Fishing Association is located in Afar Region, Gebiriso zone, Awash 7 woreda, Sabure kebele. The association was established in 2016 with 40 members. The team had key-informant interview with the chairman of the association. The fishing activity started without any support including fishing boat and training. The Sabure fishermen were trained by fishermen who came from Ziway for fishing. They use fishhook instead of net. The fishing is carried out for one and half months during the fasting time. They fish about 100 to 150 kgs in a day. The fish dealers come from Ziway to purchase. The fishermen do not catch fish for eight and half months since there is no demand for fish. The association does not pay money for fishing. The chairman expressed that the fishermen are willing to pay if the government provides all round support including training, market and fishing equipment.

6.3.3.2 Socio-economic, fairness, willingness to pay and impacts The fishermen noted that they are willing to pay water charge if illegal fishing halted. The intended water charge should consider the income of fishermen. They reported that opposition can take place if water charge is introduced. However, this can be mitigated through meeting 86 | Page

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with the concerned people. Finally, the participants of the focus group discussion indicated the importance of technical and other support for the association.

6.3.3.3 Social concern Fishing means hand-to-mouth existence for many fishermen. Thus, the income of fishing communities should be considered before the setting water charge. The introduction of new water charge will not encounter opposition from fishermen. The fishermen believe that the new water charge will sustain fishing activities and will also improve the security of living things in the water bodies.

6.3.3.4 Environmental concern The team had key-informant interview with the Head of Animal and Fishery Development Office, Tewldere Woreda. He recognizes the need to introduce water charge since the lake is being polluted. Conservation and protection activities should be carried.

All the 82 members of Lego-Ardibo Fishing Association work in Lake Ardibo. They use 12 fishing boats. Fishing is carried out according the program set by the association. They pay tax. The fishermen in Lake Hayq, are not willing to form association since they will be obliged to work according the standard fishing net required by the Woreda Office. However, they do not use such a net since they cannot catch small fish. Thus, they prefer to use reduced size of net to catch small fish. Whereas, in Ardibo lake, the organized fishermen fish using the standard net. It is possible to introduce water charge in Lake Ardibo. The water charge could contribute to the protection of the lake. The legally organized fishermen have noted that the water charge parameters should include income of the fishermen, protection of the water body, and creation of buffer zone and provision of awareness creation for local people how to utilize the water properly.

The small survey of opinion of fishermen indicates that 80 percent are not worried about water security for fishing. Large majority (86.6%) of the fishermen are fishing without licence and are not paying for the water bodies used. This group of fishermen are also willing to pay for fishing. Further, over 90 percent of them are willing to accept the introduction of new water charge for using water for fishing. Among the respondents (46.6%) noted that the introduction of new water charge will face opposition from fishermen. Over 90 percent of the fishermen believe that the introduction of water charge will sustain fishing.

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Table 11: Respondents’ opinion on water consciousness, water charge and environment

Water Consciousness N=15

YES NO

Frequency Percentage Frequency Percentage

Are you in worry of water security for 12 80 3 20 your fishing?

Do you have license for fishing on water 2 13.3 13 86.6 bodies? Are you paying water charge for fishing 2 13.3 13 86.6 on the water bodies (lake, river)? Are you willing to pay for using water 13 86.6 2 13.3 bodies for fishing? Socioeconomic Fairness and Impacts

Do you accept the introduction of new 14 93.3 1 6.6 water charge for using water for fishing?

Are you willing to pay for the water used 14 93.3 1 6.6 for aquaculture/fishing activity? Do you think introduction of new water 2 13.3 7 46.6 charge face opposition by fishermen? Do you believe that the introduction of 14 93.3 1 6.6 water charge for fishing sustain fishing?

Do you think setting water charge ensure 12 80 3 20 survival of other spices?

Does setting water charge will improve 13 86.6 2 13.3 the security of living things in water body?

Source: Survey, 2018

However, they demand that the government should create conducive working conditions for fishing. The introduction of new water charge will not encounter opposition from fishermen. The fishermen believe that the new water charge will sustain fishing activities and will also improve the security of living things in the water body.

Focus Group Discussion was held with management committee of Logo-ArdiboHayq fishermen association. The respondents indicated that illegal fishing is carried out in the lake. At present, water is pumped from the lake for irrigated agriculture. Local people are cultivating land very close to the lake which contributes to siltation of the lake. 88 | Page

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The team had also key-informant interview with the Head of Animal and Fishery Development Office, Tewldere Woreda. He recognizes the need to introduce water charge since the lake is being polluted. Conservation and protection activities could be carried.

The fishermen in Lake Hayq, are not willing to form association since they will be obliged to work according the standard fishing net required by the Woreda Office. However, they do not use such a net since they cannot catch small fish. Thus, they prefer to use reduced size of net to catch small fish. At present, water is pumped from Ardibo Hayq for irrigated agriculture. Local people are cultivating land very close to the lake which contributes to siltation of the lake. Further, Lodges managers indicated that water shade management activities should be carried out in the lake sides.

The survey conducted with the fishermen in Hayq in Debubu Wollo and BesekaHayq, South of Methara indicated that 80 percent of the fishermen are not worried about water security for fishing.

6.4 Mitigation of perceived negative impacts on charge

Key informants and survey respondents have indicated the measures to be taken to minimize the negative impacts as follows.

• In the case of hydro power plants, the negative consequences of water charging could be minimized by considering the age of the power plant, consumed water and power generated should be considered.

• The government should create conducive working conditions for fishing communities. Opposition can take place if water charge is introduced. However, this can be mitigated through consultation of people, designing alternatives and participation of people.

6.5 Concluding Remarks and Recommendations

The study has focused on hydropower plants, recreational centers and fishing communities. The hydropower plants, the recreational centers using water bodies and the fishing communities do not pay for the water they use. They have shown interest to pay water charges if introduced. However, many of them have set conditions to be fulfilled by the Awash Basin Authority such as protecting the water bodies by creating buffer zones. They have suggested that water charge setting should consider including income and power generated. The introduction of water charge will not have significant negative impacts on paying organizations and environment.

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Finally, cognizant of the opinion of various respondents, the social team recommends the introduction of water charge with respect to hydropower plants, recreational centers and fishing communities.

7 Conclusions and recommendations

The institutional and legal aspects are treated in a separate volume produced by the WP1 group experts.

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Annex I:

1 Stakeholder consultation findings

1.1 Objective of the field visit The objective of the field visit is to assess the current level of understanding on water use charge of the operators/companies of hydropower, aquaculture, and recreation.Specifically during the field visit how water use is monitored and valued (engineering level) are assessed for hydropower sites (including reservoirs), aquaculture and recreation facilities. Furthermore, the challenges the operators/companies faced in utilizing the Awash basin water resources was assessed and their expectation (regulation/management of the water they use), and their need from the AwashBasin Authority in was assessed.

Investigation of reservoir operator practice whether favors fish production and conserve the environment as well as other developments. Ask if the HP system allows such variations? In what way fluctuation is reduced?Recreation facilities most of them located in around lakes in Deberzeit areas (Resorts) was visited to assess their sources of water, how they measure, their water conservation approach, license issue, and waste release approach.

AAiT charge study team lead by the five Work Package team leaders conducted the initial field visit in the Awash basin from 29 May to 3 June 2017. WP5 hydropower, aquaculture, and recreational water use team visited six sites namely: AwBA head office at MelkaWorker, TendahoDam and reservoir, Awash National Park, Koka reservoir and hydropower, East Shoa Zone water office, and two Lodges in Bishoftutown. Detail observations and findings including operators view regarding Awash basin role and their view on water use license and charge if asked to pay are given below.

Figure A1: Location map of visited sites 29 May- 3 June 2017 in red circle (Tendaho -Dubti-Assaita, Melakwere area, Metehara and Awash National Park, Koka-Adama, Bishoftu areas) 96 | Page

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1.2 Consultation with AwBA head office at MelkaWorer On 29 May 2017 afternoon the team made detailed discussion with General Manger of the AwBA, AtoGetachew who explained that water use licensing and chargeis set to enhance water saving and create asense of ownership for the finite critical natural resources of water.

He further explained that presently there is no charge / licensing issued by AwBA for hydropower recreation and aquaculture water uses. However, commercial irrigation with areas > 1 ha is charged by avolumetric approach that is at avery small rate of 3 birr for 1000 m3 water use. Area based fee rate of 78.15 birr/ha is also practiced. Additional fee of administrative cost is also imposed. The AwBA manages the offtakes through its Irrigation Water Distribution technicians. The manager advised the team that charges should account land productivity and use of technologies which saves water. Moreover, fee exemptions applicable categories are identified carefully.

The manager also noted that in general water users are inclined to be licensed as this legally insure them water supply / their allocation and possible get support in flood protection.

Charge for aquaculture could take a form of % of payment based on the kg of fish sold.

1.3 Consultation with Tendaho reservoir – fish production On 30 May 2017 the team visited TendahoDam is used primarily for irrigation and water supply purposes. Fish production increasingly practices but not to commercial scale. In June 2016 fishes in the reservoir were dead due to theoccurrence of drought and the reservoir was allowed to drawdown below the minimum operating level in order to release the minimum requirements for the downstream community up to Assaita town.

Commercial recreational use of Tendhao reservoir has not been yet developed.

1.4 Consultation with Awash National Park

1.4.1 Summary Awash National Park main office is located about 11 km off the Metehara-Awash Sebat Kilo road near the Awash fountain administer now about 591 km2 area. On 1 June 2017 the Team discussed with chief Warden of Awash national park AtoShiferawMengiste (0911068566 [email protected]). He explained that in the last 9 months the Awash national park was visited by 4719 visitors with thecomposition of 2493 Foreign visitors, 544 Foreign Ethiopia residing visitors, and 1682 national visitors. The park forced to transport water from Metehara town for drinking and other purposes for its 64 staff due to deteriorated water quality of AwashRiver and unreliability of water. During water scarce months, Metehar sugar farm fully utilizes the Awashflow reaching to its two diversion sites and could not release the minimum environmental flow. The Warden indicated that wildlife has suffered major losses due to these water quality deterioration.

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The Chief Warden indicated that provided the AwBA guarantee good quality flow with right quantity to pass through the Park, the National Park is ready to pay for reasonable water charges set by AwBA.

The team also learned that Lake Beseka is now supporting commercial level of fish production which is sold for the private lodge operating in the Park near the fall.

1.4.2 Details of the consultation 64 workers 5-day trip to bring water for use (Drinking and washing water) added to 6 reservoirs and 4 containers. 4 Jericans/person (Abt. 0.5birr/Jerican) There are no wells in the park. Two lodges pump water from the river (total number of Lodges 3, 1 is not functional). Operational details of the Park are:

Entrance Fees

• 90 birr/non-citizens • 50 birr/person- non-citizens who live in the country • 20 birr/person –citizens Income

• Average; 285,210 birr/year • Max 720,000 birr/year (60,000 Birr/month) • Min 240,000 birr/year (20,000 Birr/month) 9-month data (2009 EC) can be considered as the average number of visitors

• Non-citizens (>12 years); 2493 • Citizens(>12 years);1195 • Non-citizens but lives in Ethiopia, 544 • Citizens(<12 years);487 Attitude towards the charge

• Considers it to be highly beneficial (reduces the cost of not having a clean water with enough quantity). Key Issues discussed

• Problems related to water in the park • Institutional setup of the park • Expectation from AWBA 98 | Page

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• Attitude towards the charge study and the charge to be set

Existing Charge System

No existing charge system for using water from Awash river

Existing Institutional Setup

General

• The park is under EWCA/Ethiopian wildlife conservation authority/ which is under Ministry of culture and tourism • Private lodges are present within the park

Charge Specific

No existing setup

Challenges /problems in relation to water charge

• Quantity of water especially in dry seasons is very low(starting from January), Water purchase is the only way the park meets its demand (drinking and bath water) • Quality of water is a major problem; Water purchase is the only way the park meets its demand (drinking and bath water) Suggested Preconditions for Charge Setting

• AWBA should provide and secure the quantity and quality of water coming towards the park

Recommendations for Early Conceptualization of Charge

• The Water use abstraction licensing and thechargeis recommended to be set for the works AWBA does to ensure the quality and quantity of the Awash River that reaches the park.

1.5 Consultation with Koka hydropower and reservoir

1.5.1 Summary Koka hydropower plant Manager, Engineer Shiferaw, explained, on 2 June 2017, that KokaDam (now generating about 14 MW) is now fully operation for irrigation purpose releasing water as it generates electricity. However, due to the plant age and lack of priority from Ethiopian Electric Power (EEP), critical maintenance could not be done in time. Already Awash II and III power plants stopped operation due to basically the same reasons. Timely delivery of critical spare parts can lead to total closures of the plant which will shutdown the downstream releases in case the water level in Koka reservoir is below 104.6 m (local datum). 99 | Page

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In addition, sedimentation at the Koka power intake is alarmingly increasing and this will lead also to the power closure which the AwBA should take control as the downstream users are fully relying on the water allocation made by the AwBA.

Regarding water charge, the Manager explained that personally, he accept for water charge provided the AwBA gives service in floating weed control, reduce sediment entering Koka reservoir, and dredg reservoir near the power intake.

He also noted that licensing for hydropower operation is provided by Ethiopia Energy Agency and AwBA should clarify overlapping mandate.

1.5.2 Details of the consultation General

• The dam operates based on D/s irrigation and water supply demand • The dam works for AWBA as regulatory body; operation cost of the dam should be considered in the charge • Small independent fishers work around the reservoir • One unit releases about 40m3/sec which is enough for downstream max irrigation demand • Total energy generation capacity is 80GWhr Key Issues discussed

• Problems related to water in the dam • Institutional setup of the dam • Expectation from AWBA • Attitude towards the charge study and the charge to be set

Existing Charge System

• No charge was set for water use by hydropower Existing Institutional Setup

General

• EEP owns the dam, hydropower plants • There is an existing license provided to EEP by Ethiopia Energy Agency • New professional structure is developed for the hydropower dam operation

Charge Specific

• No charge set for use of water for electric generation

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Challenges /problems in relation to water charge

• Low quality water comes to the dam thus affecting the cooling system features by clogging them. Algae affects the dam operation • Environmental flow concept is considered in the dam design, 20inch pipe; however the release is not functional now. • There is a problem in receiving enough amount of water as the reservoir is silted • Large quantity of water comes in summer (June to September). There is High dam siltation near the dam Suggested Preconditions for Charge Setting

• AWBA should secure the quantity and quality of water coming to the dam

Recommendations for Early Conceptualization of Charge

• Charge system is good, it shares responsibility between stockholders • AWBA should take over the general management of the dam as we are mainly operating for irrigation • DAM--EEPMOWIEAWBA is the current institutional setup for information flow; this should be modified

1.6 Consultation with East Shoa, Adama Water Office

1.6.1 Summary The team on 2 June 2017 visited East Shoa, Adama Water Office and discussed water charge issues with TigistAmare (0911224206) Water Resources Management team leader. She explained the following points:

(a) The East Shoa water office give licenses for water abstractors in the zone for irrigation, water supply purposes from river, lakes or from groundwater.

(b) No water charge is collected due to lack of water measurement (metering). The office is instructing the users to install water meters.

The role of AwBA to allocate Awash river basin is acknowledged by the office. However, she has the opinion that tributaries, one their water allocation are done, be better managed by the Zonal / Woreda water offices including water fee collections.

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1.6.2 Details of the consultation Description of Stakeholders

Lemma Markos/sociologist and head of water construction and supervision head

• License for water use is given in zone level and regional level TigistAmare/water resource management team leader/hydrologist; 0912224206

Key Issues discussed

• Problems related to water in the zone • Institutional setup of the licensing and charging • Expectation from AWBA • Attitude towards the charge study and the charge to be set • Relationship with AWBA

Existing Charge System

• Most water users don’t have water use license; 70 birr /year is used for licensed users • Isolated lodges are not charged; license is given by the Bureau • There is no functional abstraction payment • There are no enough measuring devices to use volumetric charges Existing Institutional Setup (General/Charge Specific)

• The network is weak to control investments in the sub-basins and basin. • The relationship with AWBA is weak • Waste water discharge is reported to zonal water bureau Challenges /problems in relation to water charge

• There is no well yield data • There is no control of treatment of waste water discharge • There is lack in considering environmental flow • >400 wells available in the zone Suggested Preconditions for Charge Setting (Institutional/Legal/ Capacity Development…)

• Legal institutional setup should be strong to enforce and control water abstractors • Water quality and quantity delivered to end users must be secured

Recommendations for Early Conceptualization of Charge (issues to be incorporated)

• Legal institutional setup should be strong to enforce and control water abstractors 102 | Page

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• AWBA and zonal and regional bureaus must have a platform to work together

1.7 Consultation with Isolated lodges Kuruftu and Adulala

1.7.1 Summary On 3 June 2017 the team visited Kuriftu and Adulala private developed lodges which are located on LakeKuriftu and Babogaya.

Team findings on Kuruftu lodge according to the operating manager, EskenderGetachew (0911673253), are as follows:

(a) Kuruftu lodge by its effort is refilling Kuriftulake by canalizing flood water to the lake. Initial in 1980 the lake level was significantly raised by diverting Belebelariver with Ciba government support. Presently the Addis-Adama expressway blocked the significant amount of flood naturally going to the lake. They are now trying to re-direct the flood water and they need assistant from the AwBA and local administration as canalization is passing through many farm lands.

(b) Kuriftu lodge does not give boat service for recreation only hiking is practiced.

(d) The sources of the water supply areself-developed deep well (96 m) with acapacity of 15 l/s supplying 92 rooms and 2 major restaurants. They also have amunicipal connection with about 7000 Birr/month payment.

(e) He expressed willingness to pay for reasonable water charge provided the AwBA conserve the Kuriftulake (recharge the flood) and manage the lake watershed. They indicated that their investment will be lost if the lake dries out or its water quality significantly deteriorates.

The team findings on Adulala lodge according to the General Manager & owner, Dr.AsratLegesse, are as follows:

(a) Adulala lodge relies on LakeBabogaya. He indicated that last year the lake level dropped by 2 m. According to Dr.Asrat, the probable cause is the drying up of LakeCheleleka due to the construction impact of the expressway (disconnecting it with theflood coming from Yerer mountains). Similar to Kuruftu, Adulala is now trying to re-direct the flood water and they need assistance from the AwBA and local administration as canalization is passing through many farm lands.

Adulala lodge is willing to work together with thelocal community to manage the lake catchment. AwBA assistance in developing catchment, management plan and coordinating the watershed management issues is welcomed.

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(b) Do not give boat service for recreation only hiking is practiced.

(d) The source of the water supply is self developed deep well (66 m) with capacity supplying 46 units/rooms and 2 major restaurants.

(e) He expressed willingness to pay for reasonable water charge provided the AwBA conserve the BabogayaLake (recharge the flood) and manage the lake watershed especially those small resorts joining the lake peripheral. They indicated that their investment will be lost if the lake dries out or its water quality significantly deteriorates.

1.7.2 Details of the consultation KuriftuResort - Current condition

• Plastic boats are used for live saving • There are fishes in the lake • Septic tanks are used for waste water discharges • Municipality delivers water with 1-inch pipe; not enough • One 15 lit/sec well at 96m is dug for drinking and other uses • 92 rooms and 2 restaurants • There is no use of the lake for fishing • There is a payment for the land used Key Issues discussed (summary)

• Problems related to water in the park • Expectation from AwBA • Attitude towards the charge study and the charge to be set

Existing Charge System

• No existing charge setup for water abstraction and release of treated water

Existing Institutional Setup (General/Charge Specific)

• No institutional setup

Challenges /problems in relation to water charge

• The lake is exposed to wastewater discharges from flower industries • There is 3-4m reduction in the water level of kuriftu

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Suggested Preconditions for Charge Setting (Institutional/Legal/ Capacity Development…)

• AWBA securing flow to the lake can be a scenario for charge • The objectives of the charge should be clearly defined • Quality and quantity of water should be secured Recommendations for Early Conceptualization of Charge (issues to be incorporated)

• Win Win scenario should govern the charge study

AdulalaResort / Babogaya Lake

Description of Stakeholders

Dr. AsratLegese, Owner and General Manager of Adulala resort;0911491055;0910320388;0113715511

Current condition

• No water supply from municipality • 1 well 66m deep for water supply • No water is pumped from the lake for any purpose; however pumped in high flow seasons; summer. • The lake has good water quality, but deteriorating • There are 3 access places for the surrounding livestock • The LakeBishoftu and Babogaya are believed to be interconnected • Septic tanks are used for waste water discharge from 46 units; minimum distance from the lake is 50m. Key Issues discussed (summary)

• Problems related to water in the park • Expectation from AWBA • Attitude towards the charge study and the charge to be set

Existing Charge System

• No existing setup for water abstraction and release of treated water

Existing Institutional Setup (General/Charge Specific)

• No existing setup for water abstraction and release of treated water

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Challenges /problems in relation to water charge

• Management of fishery catch which the public consider free to catch • Lake level is dropping significantly Suggested Preconditions for Charge Setting (Institutional/Legal/ Capacity Development…)

• Ok to pay for the conservation works AWBA does in the future Recommendations for Early Conceptualization of Charge (issues to be incorporated)

• The study must be in alignment with the reality • Charge for extraction from wells should consider the investment cost by the lodge and thus be less than the municipality

1.8 Field visit in Addis Ababa area

1.8.1 General Description of Field Visit (where, when, which, whom) A. Ministry of Water, Irrigation and Energy on May 30, 2017 B. Addis Ababa EPA on June 2, 2017 C. Ministry of Environment, Forest and Climate Change (Global Green Growth Institute) on June 2, 2017

1.8.2 Description of Stakeholders (contacted/identified who are relevant to water/waste charge and their interest in water charge) A. Ato Abiti and Ato Dereje from the Research and Development Directorate B. Ato Adugna Wondimu from Addis Ababa River Rehabilitation Project C. Ato Tsegaye Tadesse from Global Green Growth Institute (GGGI) • All are relevant institutions and interested and supportive of the water charge, which would give value to the water used and also assist in protecting the environment.

1.8.3 Key Issues discussed (Summary)

A. Ministry of Water, Irrigation and Energy • Policies and strategies of water use are available, but are relatively old and need to be updated/revised (actually revision has started) • Some documents available on water use

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o On irrigation project of Koga (near Bahir Dar) o Draft cost-benefit analysis of the Nile water prepared by EDRA?? o Payment for ecosystem services o Farm gate price for irrigation projects (Minutes available) • There is no reuse/discharge charge • No soft-wares for water management information system • No structure for collecting water charge

o The case of Alwero Reservoir has been raised as example in which the owner of the irrigation farm was ready to pay; however, the Ministry was not ready to collect.

o Basin authorities may be potentials to do the job. o New structure at Directorate level is sought for drinking water supply and sanitation including waste water. • National Integrated Master Plan to be developed • Minimum payment is expected from fishermen and individual irrigation users

o Avoid discouraging charge o No subsidy should be encouraged o Willingness to pay has to be seriously considered • Initial development cost is not expected to be recovered; only operational costs are expected to be recovered

o The case of Tendaho Dam has been raised as example of an inflated development cost, which is unimaginable to be recovered through charge. • Flow irrigation should be discouraged and pressurized irrigation should be encouraged. • Institutional inter-and intra-connectivity is very weak; although there is good relation with basin authorities

o No functional platform so far o There is conflict of interest between region water bureaus and drainage basin authorities

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Awash Basin Authority: The Study of Water Use and WP5: Draft early charge conceptualization report for Wastewater Discharge Charge hydropower, aquaculture and recreational water uses

. A case in point is regulating water use and discharge of recreational areas such as Sodere.

o There is also actual and potential conflict between upstream and downstream of Awash basin as well as the Rift valley basin. • The Ministry is mandated by EPA to conduct environmental impact assessment studies regarding aquatic resources.

B. Addis Ababa EPA • The mandate of the institution is regulatory. • There are facilities including laboratories for the regulatory work. • Major polluters of the aquatic environment include leather and textile industries, hotels and health facilities. • Some of the factories and industries were constructed 50-60 years back and no Environmental Impact Assessment was done for them. • Although warnings have been repeatedly given, there is no major change in their operations. • Although there is proclamation on pollution, there is no detailed regulation, which remains the problem in implementations and penalizing polluters.

C. Ministry of Environment, Forest and Climate Change • They have prepared a document on forest based ecosystem service payments (attached). • It is based on drainage basins

o They have identified two pilot sites for their studies . Abay Basin—Koga watershed . Keffa Biosphere • They are also trying to organize a workshop for water bottling and beer factories to test “willingness to pay” for water used. • They believe that the “Beneficiary Pays” principle should be enforced.

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• They believe that Environmental Impact Assessment study should be given for an independent body. The regulatory and implementing body should not be the same.

1.8.4 Existing Charge System • Some documents available on water use

o On irrigation project of Koga (near Bahir Dar) o Draft cost-benefit analysis of the Nile water prepared by EDRA o Payment for ecosystem services o Farm gate price for irrigation projects (Minutes available) • There is one document on forest based ecosystem service payments

1.8.5 Existing Institutional Setup (General/Charge Specific) • None or very loose institutional set up

1.8.6 Challenges /problems in relation to water charge • Willingness to pay • Capacity to pay • Institutional arrangements

1.8.7 Suggested Preconditions for Charge Setting (Institutional/Legal/ Capacity Development…) • Decentralize water supply and sanitation as well as Irrigation institutions

1.8.8 Recommendations for Early Conceptualization of Charge (issues to be incorporated) o Minimum payment is expected from fishermen and individual irrigation users i. Avoid discouraging charge ii. No subsidy should be encouraged iii. Willingness to pay has to be seriously considered

1.9 Summary

The initial field visit in the Awash basin from 29 May to 3 June 2017 at six sites namely AwBA head office at MelkaWorer, TendahoDam and reservoir, Awash National Park, Koka reservoir and hydropower, East Shoa Zone water office, and two Lodges in Bishoftu town revealed that they are

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willing to pay water charges provided that the Awash Basin Authority manages the water they need in good quantity and quality through licensing to guarantee their sustainable use.

Stakeholder consultation made at Addis Ababa at the Ministry of Water, Irrigation and Energy, at Addis Ababa EPA, and at Ministry of Environment, Forest and Climate Change (Global Green Growth Institute) raised issues related to willingness to pay, charge level (avoiding discouraging charge) and charge implementation easiness.

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