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Economic Study of Possible Uses Of ECONOMIC STUDY OF POSSIBLE USES OF ADDITIONAL WATER ON THE KOMATI RIVER, SWAZILAND VOLUME I : THE MAIN REPORT VOLUME iI : PRE-FEASIBILITY ANALYSIS OF THE KOMATI RIVER IRRIGATION PROJECT VOLUME III : MARKETS IND MARKETING Submitted to : Mr. Paul Daly Agricultural Development Officer USAID, Mbabane Swaziland Submitted by : Peter F.M. McLoughlin (Team Leader) Ian Matthews Rekha Mehra Edward Norum Gayarti Tewari DEVRES, INC. 2426 Ontario Road, N.W. Washington, D.C.20009 (202) 797-9610 Cable: DEVRES Telex: 440184 Contract No. : USAID PDC-1406-I-04-4092-00 August 31, 1985 ACKNOWLEDGEMENTS Many people contributed to the successful completion of Particularly concerned and helpful were: this report. Ministry of Natural Resources, Land Use and Energy 1. Mr. A. Maseko, Under Secretary 2. Mr. J. Vilnkati, Land Usc Planning Officer and Leader, Government of Swaziland (GOS) Counterpart 3. Team Mr. W. Gibson, Land Use Planning Advisor and Deputy Leader, GOS Counterpart Team 4. Mr. Robert Thabede, Senior Water Engineer 5. Mr. Noah Nkambule, Senior Land Planning Officer 6. 11r. Nlusa Shongwe, Soil Scientist 7. Mr. Caleb Bhembe, Irrigation Engineer 8. Mr. Stephen Dlamini, Water Control Officer 9. Mr. David Jenkins, Hydrologist, Water Resources Branch Ministry of Agriculture and Cooperatives 10. Mr. Robert Thwala, Under Secretary 11. Miss Funekile Simelane, Rural Sociologist 12. Miss Nonhlanhla Thwala, Agricultural Economist 13. Mr. Gail Dunn, Irrigation Agronomist (Research) Economic Planning Office of the Prime Minister 14. Miss Ruth Griswold USAID 15. Mr. Paul Daly, Agricultural Development Officer 16. Mr. Neil Cohen, Regional Economist 17. Dr.E.V. Richardson, Irrigation Engineer (Consultant) Other 18. Mr. J.R. Bond, Impompi (Swaziland) Ltd, Irrigation Engineers and Suppliers 19. Mr. Geoff Morling, Chief Civil 20. Eningeer, SIE Mr. Charles Sellick, Engineer, Chunnett, Fourie and Partners. We are also appreciative of the assistance provided officials and representatives by the numerous in other governmental firms and private agencies, and enterprises, especially those connected with the sector, e.g. irrigation agricultural projects and processing establishments. LIST OF ACRONYMS AND ABBREVIATIONS ACP Africa, Caribbean arid Pacific BLS Botswana, Lesotho and Swaziland CAP Common Agricultural Policy CDC Commonwealth Development Corporation CET Common External Tariff (1i Crop Intensity CIDA Canadian International Development Agency CSO Central Statistical Office EDB European Development Bank EDF European Deve]opment Fund EEC European Economic Community EIRR Economic Internal Rate of Return FAO Food and Agricultural Organisation (of the UNO) FIRR Financial Rate of Return GOS Government of Swaziland GM Gross Margin GSP Generalized System of Preferences GDP Gross Domestic Product IBRD World Bank IDU IrrIgation Development Unit IFAD International Fund for Agricultural Development IRR Internal Rate of Return ITC International Trade Centre, UNCTAD/GATT ITF Individual Tenure Farms JPTC Joint Permanent Technical Committee KOMAPRO Komati Agricultural Products Marketing Authority MAR Mean Annual Runoff MOAC Ministry of Agriculture and Co-operatives MSL Mean Sea Level NAMB National Agricultural Marketing Board NIDCS National Industrial Development Corporation of Swaziland NRLUE Ministry of Natural Resources, Land Use and Energy PY Project Year RDA Rural Development Area RDAP Rural Development Area Programme RSA The Republic of South Africa SAAGA South African Avocado Growers Association SACE South African Citrus Exchange SACU South African Customs Union SAMB South African Maize Board SAMGA South African Mango Growers Association SATS South African Transport Services SCB Swaziland Citrus Board (Swaziland Cotton Board) SI Shortage Index SIS Inyoni Yami Swaziland Irl-igation Scheme SNL Swazi Nation Land STABEX Export Stabilization Fund, EEC TDF Title Deed Farm ii TDL Title Deed Land TLTS (T AND L) Tate and Lyle Technical Services TOR Terms of Reference UK United Kingdom UNDP United Nations Development Programme USAID United States Agency for International Development USCOE United States (Army) Corps of Engineers VA Value Added iii CURRENCIES, WEIGHTS AND MEASURES, CONVERSIONS CURRENCY EQUIVALENTS (END JUNE, 1985) USA Dollar $1.00 = Emalangeni E1.85 Lilangeni 1 = RSA Rand 1 (Rand is also legal tender in Swaziland) WEIGHTS AND MEASURES The international system of units (SI) are used throughout this report. Base units for this system are: Metre (M) - unit of length Second (s) - unit of time Kilogram (kg) - unit of mass/weight Ampere (a) - unit of electric current Celsius (c) - unit of temperature Litre (M) - unit of liquid volume Hectare (ha) - unit of space SI UNIT PREFIXES USED ARE AS FOLLOWS Multiples & Submultiples Prefix SI Symbol 109 Giga G 106 Mega M 103 Kilo K 10- 3 Milli M CONVERSIONS The following conversions are offered: From old Units Multiply by (approx.) To SI Units Ft2 0.0929 M2 Acre 0.4047 ha Mile2 2.590 Km2 lb/ft 16.018 kg/M3 Ft/s 0.0283 M3 /s gpm 0.0631 L/s Mile 1.609 km iv Ft 0.3048 in M 25.4 mm Ton(long) 1.016 Ton(short) t,Mg 0.907 t,Mg lb 0.4536 hp kg 0.746 kw psi 6.895 Mii/h kPa 1.609 km/h Yd 0.765 M3 Bushel 35.24 Gallon L 3.785 L MOST COMMONLY USED I hectare (ha) = 2.47 acres 100 ha. = 1 sq. kilometre 1 tonno (t)(MT) 1 1000 kg 1 kg - 2.2 pounds (ib) 1 km = 0.62 miles 1 metre (m) = 3.28 feet (ft) V TABLE OF CONTENTS Page ACKNOWLEDGEMENTS ..................................................... LIST OF ACRONYMS AND ABBREVIATIONS ............................ ........ CURRENCIES, WEIGHTS AND MEASURES, CONVERSIONS ........................... iv TABLE OF CONTENTS .................................................... vi LIST OF TABLES ....................................................... xii LIST OF FIGURES ...................................................... xiii EXECUTIVE SUMMARY .................................................... xv A. Introduction ............................................. xv B. Main Findings ............................................ xv C. Main Recommendations ......................................... xxii 1. Economics and economic feasibility analysis ........ xxii 2. Institutional analysis ................................ xxii 3. Research needs ..................................... xxiii 4. Package for external funding ........................ xxiv I. INTRODUCTION .................................................... 1 A. Study Project History and Background ........................ 1 1. Overall historical perspective ........................ 1 2. Some underlying economic elements of irrigation development ............................................ 1 B. Purpose and Objectives of the Komati Basin Study ......... 3 C. Structure of the Main Report (Volume I) ..................... 3 II. ALTERNATIVE USES FOR INCREASED KOMATI WATER ....................... 4 vi 1 Page A. Introduction.......................................... 4 B. Consumptive Uses 4.........................................4 1. Smallholder-nucleus estate irrigation projects ..... 4 2. Firming up existing schemes ........................... 4 3. Expansion of existing private estates ................. 5 4. Coal thermal plants ................................ 5 5. Forestry ........................................... 5 a. Background ................................... 5 b. Some quick forestry economics ................... 7 6. Peak power at Maguga Dam .............................. 8 7. Other consumptive uses............................. 8 C. Non-consumptive Uses.....................................8 1. Base power at Maguga Dam .............................. 8 2. Fishery/aquaculture ..................................... 9 3. Recreation/tourism................................. 9 II. SWAZILAND DEVELOPMENT OBJECTIVES AND NEEDS, AND ALTERNATIVE WATER USES .......................................... 10 A. National Objectives, Needs and Policies ..................... 10 1. Introduction ........................................ 10 2. Balance of payments and foreign exchange ............. 10 3. Population growth and unemployment .................... 11 4. Food self-sufficiency ................................. 11 B. Land and Water Sectoral Objectives .......................... 13 1. Optimize land resources ............................... 13 2. Optimize water resources .............................. 13 vii Page C. People Productivity Objectives .............................. 14 D. Summary and Dynamics ........................................ 15 1. General ................................................ 15 2. Corc elements/dynamics for the future .............. 15 3. Conclusions for irrigated agriculture generally and the Komati Project in particular ............................................. 16 IV. SUMMARY FINANCIAL AND ECONOMIC ANALYSIS OF THE KOMATI RIVER IRRIGATION PROJECT ................................ 18 A. The Pre-Feasibility Study: Background and Description ..... 18 1. Background ............................................. 18 2. Description ............................................ 18 B. Project Costs and Revenues (Benefits)........................ 20 C. Financial and Economic Analysis ............................. 20 V. THE ECONOMIC ANALYSIS OF SIS FIRMING UP ........................... 26 A. Background and Recent Issues ................................ 26 1. Historical ............................................. 26 2. Reported economic impacts of shortages ............. 27 3. Water shortage indexes ................................ 27 4. Water
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