Promoting Green Urban Development in Africa: Enhancing the relationship between urbanization, environmental assets and ecosystem services A PRELIMINARY INVESTIGATION OF THE POTENTIAL COSTS AND BENEFITS OF REHABILITATION OF THE NAKIVUBO WETLAND, KAMPALA Promoting Green Urban Development in Africa: Enhancing the relationship between urbanization, environmental assets and ecosystem services A PRELIMINARY INVESTIGATION OF THE POTENTIAL COSTS AND BENEFITS OF REHABILITATION OF THE NAKIVUBO WETLAND, KAMPALA Authors Jane Turpie, Liz Day, Dambala Gelo Kutela, Gwyneth Letley, Chris Roed and Kat Forsythe Prepared for AECOM on behalf of The World Bank and the KCCA Prepared by Anchor Environmental Consultants 8 Steenberg House, Silverwood Close, Tokai 7945 www.anchorenvironmental.co.za in association with Freshwater Consulting Group 2016 COPYRIGHT © 2016 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. 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Any queries on rights and licenses, including subsidiary rights, should be addressed to the Publishing and Knowledge Division, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: [email protected]. Page iv Cost-benefit analysis of rehabilitation of the Nakivubo wetland, Kampala PREFACE AND ACKNOWLEDGEMENTS This study forms one of the case studies of a larger study on Green Urban Development commissioned by the World Bank and led by AECOM. Anchor Environmental Consultants (Anchor) was subcontracted by AECOM to undertake case studies in three cities: Kampala (Uganda), Dar es Salaam (Tanzania) and Durban (South Africa). Each city was consulted as to the focus of the case study. In the case of Kampala, the city requested a study to evaluate the potential costs and benefits of rehabilitating the Nakivubo wetland to enable the development of a recreational park. The study was led by Dr Jane Turpie of Anchor Environmental Consultants (Anchor). Dr Liz Day of Freshwater Consulting Group undertook the ecological and restoration aspects of the study, assisted by Kat Forsythe of Anchor and by Chris Roed of West Coast Engineering on the engineering and costing aspects. Gwyn Letley of Anchor and Dr. Dambala Gelo Kutela of the University of Cape Town handled the econometric analyses of the water treatment costs and recreational valuation studies, respectively, while Gwyn Letley also undertook the cost-benefit analysis. Dr. David Kyamboto of Makere University and his graduate students assisted with the household survey. We are grateful to Roland White and Chyi-Yun Huang of the World Bank, Diane Dale, Brian Goldberg and John Bachmann of AECOM, and Timm Kroeger of The Nature Conservancy for inputs and discussions during the project planning phase, as well as to the inputs received from reviewers Jeff Wielgus, Mike Toman, Urvashi Narain and Glen-Marie Lange of the World Bank. We are also grateful to the Kampala Capital City Authority (KCCA) for their interest and support of this project - in particular to Najib Lukooya Bateganya for assistance with meetings and data collation. We are also grateful to Susan Namaalwa and Stephen Tumwebaze of the National Water and Sewerage Corporation (NWSC) for provision of water treatment works data and for a tour of the Ggaba water treatment works. Thanks also to the citizens of Kampala who willingly participated in the household survey. Cost-benefit analysis of rehabilitation of the Nakivubo wetland, Kampala Page v This page intentionally blank. Page vi Cost-benefit analysis of rehabilitation of the Nakivubo wetland, Kampala EXECUTIVE SUMMARY Rapid urbanisation threatens existing natural areas within An estimate was made of the design requirements and cities and the ecosystem services that they provide. This costs of the interventions outlined above in order to case study forms part of a broader study that investigates inform a high level cost-benefit analysis. These took the benefits of investing in Green Urban Development existing commitments to sanitation infrastructure in African cities. The Kampala case study focuses on the improvements into account. The overall estimated Nakivubo wetland, one of several large wetland systems capital costs amounted to $53 million, with ongoing that occur within and around the city. This wetland has maintenance and operating costs of $3.6 million per become severely degraded by polluted water from the annum. In addition, the cost of forgone agricultural city that passes through the wetland before entering production in the wetland area was estimated to be Inner Murchison Bay. In the late 1990s, it was ascertained $141,500 per year. that the water treatment service performed by the wetland yielded a significant cost saving for the nearby The benefits associated with wetland restoration that Ggaba Water Treatment Works. However, as the city were included in the cost-benefit analysis were water has continued to grow, pollution flows into the wetland treatment cost savings and recreational benefits. have increased significantly, the size and assimilative It was estimated that a reduction in phosphorous capacity of the wetland has decreased, and the costs concentrations in the lower wetland as a result of of water treatment have increased. These concerns, as the restoration interventions would have significant well as the increasing shortage of public open space impacts on the chemical costs of water treatment, areas in the city that are available for recreation, have amounting to a saving of some $1.143 million per year. led to the city’s consideration of the rehabilitation of the The overall recreational benefit was estimated using Nakivubo wetland, both to restore its functioning and survey-based revealed- and stated-preference methods, to create the opportunity for a recreational area with which suggested that the welfare gains to households associated possibilities for economic development. This in Kampala would potentially amount to about $22.05 study provides a preliminary evaluation of the state of million per annum. the Nakivubo wetland, the potential costs and benefits of its rehabilitation and the implications for the city’s The estimates derived in this study suggest that the expansion plans. interventions would have an overall net benefit. Using a discount rate of 6%, the net present value of the project Based on an analysis of the current functioning and over 15 years was estimated to be $80 million (Table 1). capacity of the Nakivubo wetland, a set of interventions This was further tested under varying assumptions of was identified that would be needed to restore the costs, benefits and discount rate. Under the worst case wetland to a level where economic benefits could scenario (upper bound estimates of costs, lower bound be realised. The primary objectives were defined as estimates of benefits), the Net Present Value (NPV) was (1) effecting a measurable improvement of water negative at discount rates of 6% and 9%. The internal rate quality passing out of the Nakivubo wetland into Inner of return (IRR) was estimated to be 20%, but sensitivity Murchison Bay, (2) ensuring sustainable management of analysis yielded a range of 4 to 34%. the Nakivubo wetland, (3) reducing water quality impacts on human health and (4) opening up opportunities Table 1 Results of the cost-benefit analysis for safe recreational use of the lower wetland. A sequential set of interventions (treatment train) was Net present value Discount Rate recommended to achieve these objectives, and included (US $ millions) both infrastructure upgrades and wetland rehabilitation and conservation measures, as well as investment in 3% 6% 9% recreational facilities: Best 220 158 83 Step 1. Prevent pollution at source through improved Base estimate 121 80 51 sanitation infrastructure and measures; Worst 4 -13 -24 Step 2. Prevent residual pollution entering the wetland; Step 3. Improve Waste Water Treatment Works (WWTW) effluent quality; Step 4. Rehabilitate the upper wetland for secondary waste water treatment / polishing; Step 5. Restore and protect the lower wetland; and Step 6. Establish recreational space and facilities. Cost-benefit analysis of rehabilitation of the Nakivubo wetland, Kampala Page 1 The following key messages emerge from the study: 4: This will require fundraising and co-ordination This study estimates that a total initial expenditure of at 1: Wetlands have limited capacity to solve urban least $53 million is required in order to achieve the goals pollution problems outlined, depending on the actual shortfall in sanitation Nakivubo wetland no longer has any positive