ReseaRch PaPeR Journal of Agricultural and Marine Sciences Vol. 21(1): 57 – 63 DOI: http://dx.doi.org/10.24200/jams.vol21iss0pp57-64 Received 15 Jun 2015 Accepted 19 Feb 2016 An estimate of the willingness to pay for treated wastewater for irrigation in Oman Slim Zekri*1, Samiha Al Harthi1, Hemesiri Kotagama1 and Shekar Bose1 *1 Slim Zekri ( ) Sultan Qaboos University, College of Agricultural and Marine Sciences, Dpt. of Natural Resource Economics. Box 34, Al- Khod 123. Sultanate of Oman. email: zekri@squ.edu.om Introduction Agriculture in the Sultanate of Oman depends totally on groundwater based irrigation. The Ministry of Regional Municipalities and Water Resources has indicated that the annual groundwater over-pumping exceeded 316 Mm3 (MRMWR, 2013). Further to quantitative scarcity of water, the degrading quality of groundwater has posed an added constraint (Zekri, 2008; Zekri, 2009). Land affected by groundwa- ter salinity due to over-extraction of ground water and sea water intrusion has been estimated as 70% of the ag- riculturally arable land area of the country (Al-Rawahy et al., 2010). Thus, finding alternatives to overcome the shortage of irrigation water is a national priority and use of Treated Wastewater (TW) is being considered as an alternative. There are 58 wastewater treatment plants in the Sul- tanate of Oman that treat domestic and commercial wastewater. Forty four of those are operated by Ministry of Regional Municipalities and Water Resources. Thir- teen plants are located in Muscat the capital city and are operated by Haya a Semi-Private Company and are currently producing around 100,000 m3/day of TW. It is expected that the volume of TW will increase with increased connection of houses to the sewage network. قابلية الدفع ملياه الصرف الصحي املعاجلة للّري يف عمان سليم زكري*1 ومسيحة احلارثية1 ومهيسري كوتاجاما1 وشيكار بوص1 Abstract. The volume of Treated Wastewater (TW) produced in Oman is increasing, due to increased connection of houses to the sewage network and increased construction of wastewater treatment plants. Despite 68% of the TW been used for irrigating urban landscapes, 10.3 Mm3 TW has been discharged to the sea in 2014. Wastewater treatment plants are owned and operated by private companies, which aspire to sell excess TW, particularly to farmers, in order to recover cost of wastewater treatment. This paper has used the Contingent Valuation Method (CVM) to estimate the farmers’ Willingness to Pay (WTP) for TW for farm irrigation. Seventy two farmers responded to a face-to face interview on eliciting WTP to purchase TW as irrigation water, out of a total population of 400 farmers in Seeb region who have farms in proximity to a wastewater treatment plant. The results indicated that farmers’ WTP for TW was on average 0.111 OR/m3. WTP for TW was significantly affected by the income of farmers and whether the farm is a market oriented or non-market hobby oriented farm. The percentage of farmers willing to pay the average price or higher was 38%. Most farmers are not willing to pay the price currently charged by the wastewater treatment company for landscaping irrigation (0.220 OR/m3) given the large volumes required for farm irrigation. Even rich farmers main- taining hobby farms are willing to pay only 0.128 OR/m3 versus 0.087 OR/m3 by the market oriented farmers. The WTP for TW is higher than the prices reported (OR 0.005 to 0.023 OR/ m3) for groundwater used in agriculture in Oman. . Keywords: Treated Wastewater, Contingent Valuation Method, Willingness to Pay, Irrigation, Oman. املســتخلص: يتزايــد حجــم ميــاه الصــرف الصحــي املعاجلــة يف ســلطنة عمــان نتيجــة لزيــادة ربــط املنــازل بشــبكة الصــرف الصحــي وزيــادة بنــاء حمطــات ملعاجلــة هــذه امليــاه. وعلــى الرغــم مــن أن 68٪ مــن ميــاه الصــرف الصحــي تســتخدم لــري املناطــق اخلضــراء داخــل املــدن، فقــد مت تصريــف 10.3 مليــون مــر مكعــب مــن ميــاه الصــرف الصحــي إىل البحــر ســنة 2014. وتديــر هــذه احملطــات شــركات خاصــة ، حيــث تطمــح إىل بيــع الفائــض مــن امليــاه املعاجلــة خاصــة للمزارعــن مــن أجــل تغطيــة تكلفــة معاجلــة هــذه امليــاه. وقــد اســتخدمت هــذه الورقــة طريقــة التقييــم احملتملــة لتقديــر مــدى قابليــة املزارعــن للدفــع مقابــل اســتعمال ميــاه الصــرف الصحــي املعاجلــة ثالثيــاً للــري. وقــد مشلــت العينــة 72 مزارعــا مــن جممــوع 400 مــزارع يف منطقــة الســيب الذيــن لديهــم مــزارع بالقــرب مــن حمطــة معاجلــة ميــاه الصــرف الصحــي حيــث مت إجــراء مقابــالت وجهــا لوجــه حــول اســتغالل احملطــة ومــدى القابليــة الســتعمال امليــاه املعاجلــة ثالثيــاً للــري. أوضحــت النتائــج أن معــدل القابليــة للدفــع للميــاه املعاجلــة بلــغ 0.111 م / م3 يف املتوســط. وقــد تأثــرت النتائــج بشــكل كبــر بدخــل املزارعــن ومــا إذا كانــت املزرعــة موجهــة حنــو الســوق أو غــر موجهــة حنــو الســوق. وتقــدر نســبة املزارعــن املســتعدين لدفــع متوســط الســعر أو أعلــى بـــ ٪38 وأن معظــم املزارعــن ليســوا علــى اســتعداد لدفــع الثمــن الــذي تتحملــه حاليــا شــركة معاجلــة ميــاه الصــرف الصحــي لــري املناطــق اخلضــراء )0.220 لاير / م3( و ذلــك بالنظــر إىل الكميــات الكبــرة املطلوبــة للــري الزراعــي. أمــا املزارعــن األغنيــاء الذيــن ميتلكــون مزارعــا و ميارســون الزراعــة علــى وجــه اهلوايــة فهــم علــى اســتعداد لدفــع 0.128 فقــط للمــر املكعــب مقابــل 0.087 لاير / م3 مــن قبــل املزارعــن املوجهــن حنــو الســوق. جديــر باملالحظــة أن القابليــة للدفع للمياه املعاجلة أعلى بكثر من األســعار املتعامل هبا )0.005 إىل 0.023 لاير / م3( بالنســبة ملياه األفالج املســتخدمة يف الزراعة يف الســلطنة. الكلمات املفتاحية: مياه الصرف ، أسعار املياه، طريقة التقييم احملتلم 58 SQU Journal of Agricultural and Marine Sciences, 2016, Volume 21, Issue 1 An estimate of the willingness to pay for treated wastewater for irrigation in Oman The major client of Haya is Muscat Municipality that is buying 68% of the supply of TW at a price of 0.220 OR/ m3 to irrigate public landscapes. Although TW utiliza- tion has increased due to the expansion of public land- scaping projects and some industrial uses, the volumes unutilized and disposed to the sea are also increasing. TW can be considered as an alternative or a comple- ment to groundwater for farm irrigation. Apart from the direct benefits of irrigation on improving productivity of crops and livestock, use of TW for farming will have a positive impact on the environment, reduce the depen- dency on groundwater, contribute to water scarcity alle- viation, and ensure sustainability of farming. Although Haya, the supplier of TW, is keen to charge a price for the supply of TW to ensure financial viability and sus- tainability of its business, farmers’ Willingness to Pay (WTP) for TW is unknown, as TW has not been mar- keted for farm irrigation thus far. This paper assesses the farmers’ WTP for TW for farming, using the Contingent Valuation Method (CVM). The paper is organized as fol- lows: section 2 gives an overview of the TW supply and use in Muscat, section 3 provides a review of literature particularly on the use of CVM in estimating the WTP for TW. Section 4 presents the sampling and survey methods and the econometric model used to validate the estimated value of TW. Section 5 and 6 presents the results and conclusions, respectively. Treated Wastewater supply in Muscat Table 1 shows the volumes of TW produced, market- ed (utilized for landscape irrigation) and the unutilized volumes discharged to the sea or wadis (water ways) by wastewater treatment plants in Muscat, during 2014. The total annual volume of TW discharged to the sea has been 10.3 Mm3 or 32% of the total TW produced in 2014. A new wastewater treatment plant which is ex- pected to be commissioned by beginning of 2016 in Seeb will produce initially, 55,000 m3/day and 80,000 m3/day by 2025, of TW. The expected increase in TW supply up to year 2025 is given in figure 1. The current cost of producing TW by Haya is around 0.800 OR/m3. The prices charged on sales of TW vary from 0.231 OR/m3 for commercial users to 0.154 OR/m3 for residential users (figure 2). Thus, on average Haya receives 0.170 OR/m3 on sales of TW. Figure 3 shows the subsidy paid by the government to Haya for the services provided on treating wastewater. The subsidy covers the difference between the cost of treatment and the revenue from TW sale plus the average price paid by the different users. Taking into account that 68% of the TW is marketed the net price received by Haya for each cubic meter is 0.150 OR/m3. As a result, the total governmental subsidy to Haya represents 0.481 OR/m3 or 60% of the total cost. To transform the wastewater treatment industry into an unsubsidized self-financed Table 1. Production and use of TW during 2014 in Muscat. Plant Production (m3) Utilized (m3) Discharged to sea (m3) Utilization (%) Al Ansab 22,476,724 15,479,297 6,997,427 69% Darsait 6,569,436 4,280,083 2,289,353 65% Shattie Al Qurum 1,470,757 415,800 1,054,957 28% Al Mabella 637,848 637,848 0 100% Al Khoudh 308,476 292,319 16,157 95% Madinat AlSultan Qaboos 432,961 432,961 0 100% Al Amerat 336,962 320,321 16,641 95% Quraiyat 138,130 107,676 30,454 78% Bawsher 79,937 47,370 32,567 59% Al Manuma 53,121 53,121 0 100% Jibroo 34,922 34,922 0 100% Hail Al Ghaf 49,182 0 49,182 0% Total 32,588,456 22,101,718 10,486,738 68% 100000 150000 200000 2012 2014 2016 2018 2020 2022 2024 Year T re at ed w at er p ro du ct io n m 3 da y− 1 Figure 1. Estimate of TW production in Muscat (m3/day) from year 2012 to 2025. Source: Haya Water Company (2012) 59Research Article Zekri, Al Harthi, Kotagama and Bose sustainable industry, users should at least pay part of the cost of wastewater treatment. One of the options is to sell part of the TW to farmers for crop irrigation. The re-use of TW in the agricultural sector is stimulated by the severe water scarcity and deteriorated water quality. Groundwater salinity in the Batinah coastal area is the consequence of over-pumping (Oman Salinity Strategy, 2011). The use of TW can partially reduce the pressure on groundwater over pumping. Literature Review Haya Water Company is interested to know how much farmers would be willing to pay for TW and how much of TW they would be willing to buy, if a project of trans- ferring water from the treatment plants to farms was im- plemented. Such estimates would enable the company to examine the financially sustainability of TW transferring investment. A large proportion of farm owners in the study area are hobby/leisure, i.e. famer owners under- taking farming as a hobby and not for financial profits. On the other hand, TW is not yet available to farmers in Oman and thus its value is wholly unknown. These cir- cumstances warrant the use of CVM to estimate the val- ue of TW. A comprehensive theoretical review (Gunati- lake, 2003) of the CVM and its applications to estimate WTP for water supply is provided by Gunatilake, et.al. (2007). CVM uses survey techniques to elicit WTP of non-marketed commodities and where revealed or in- direct methods of valuation cannot be applied. In CVM respondents express their WTP on a ‘described’ hypo- thetical situation, as in this study the supply of TW. Very few studies have been undertaken to estimate WTP for TW as compared to studies on supply of fresh water for irrigation and domestic use, using CVM. Abu-Madi (2004) has used CVM with a bidding game to determine farmers’ willingness to pay for reclaimed wastewater in Jordan and Tunisia. Farmers were asked to respond yes or no in favor of paying prices for TW varying between US$ 0 to 0.25/m3 with bids increasing by US$ 0.05/m3. A logit model was used where the di- chotomous responses to seven bids are entered as de- pendent variable. Results indicated that higher prices of conventional water as well as higher farmer’s profit increase farmers’ WTP for TW. About 84% of the in- terviewees showed interest to take reclaimed TW if the price was US$0.05/m3. The percentage declined to 47% when the price was US$ 0.10/m3. Tziakis et al., (2009) have estimated the benefits from wastewater treatment and reuse using CVM in north- west Crete. A Tobit regression model with two depen- dent variables has been used, viz; WTP for the provision of wastewater treatment and WTP for recycled water as a percentage of the price of fresh water. Their results showed that farmers WTP for recycled water on average was 61.2% of the freshwater price or $/m3 0.01 and that farmers with higher income (1200-1800 €/month) are willing to pay for recycled wastewater with higher av- erage bids than those with lower income (less than 1200 €/month). Alebel et al., (2009) have used CVM in Ad- dis Ababa, Ethiopia to determine the value of improved wastewater irrigation. The authors have found that the number of years with irrigation experience, education, total annual revenue, and the kind of policy option sig- nificantly affected farmers’ WTP for wastewater. The au- thors have highlighted that household’s WTP for waste- water for crop production increases with higher income from farming. Alcon et al., (2010) estimated Murcia’s citizens’ non-market benefits (ecological and social) of improved treatment of wastewater used in agriculture on the Se- gura River. They used CVM to determine citizens’ WTP to preserve the river’s ecological status. The maximum WTP was elicited through an open-ended question while the payment vehicle is a monthly increase in the water bill. A Tobit model was used and the independent variables were the age, education level, gender, income size of the household and visits to the Segura River. Re- sults showed that the average WTP was $0.34/m3. Re- spondents with larger families were willing to pay less while those who use the river for recreation are willing to pay more than people who do not. Alfarra et.al., (2013) analyzed farmers’ WTP for TW in the Jordan Valley in order to evaluate the future de- 0.154 0.193 0.231 0.17 0.8 0.0 0.2 0.4 0.6 0.8 Residential Governmental Commercial Average Treatment Cost O m an i R ia ls m −3 Figure 2. Cost of water treatment and prices paid by users for TW. 0 60 19 21 100000 0 25 50 75 100 Pe rc en ta ge s Item Charges for wastewater treatment Price for TW reuse Subsidy Wastewater treatment cost Figure 3. Subsidy (in %) to wastewater treatment in Mus- cat. 60 SQU Journal of Agricultural and Marine Sciences, 2016, Volume 21, Issue 1 An estimate of the willingness to pay for treated wastewater for irrigation in Oman mand of TW given the expansion in supply and wheth- er farmers will be paying a higher price in the future so as to cover a greater portion of the cost. Farmers were paying 0.01 $/m3 for both fresh and TW. Six bids were presented to farmers with prices of TW ranging from the current price to a price ten times higher. An ordered logit model which is an extension of the logistic regres- sion model for dichotomous dependent variables was used. The WTP was used as a dependent variable and 12 independent variables ranging from cultivated area to religious prohibition were used in the model. The main findings were that; higher farm profits related to higher bids; low water prices negatively influences the farmers‘ decision on WTP and farmers with high concerns on health made low bids on WTP. Azahara et al., (2012) in Spain and Tang et al. (2013) in China used CVM to estimate the WTP for ‘guaran- teed’ water supply for irrigation under scarcity condi- tions and the willingness to pay for irrigation water, re- spectively. Azahara et al., (2012) have indicated that the respondents with higher gross income per hectare were willing to pay more for the improvement of the service of guaranteed water supply than farmers with lower in- come. Tang et al., (2013) have indicated that, as expect- ed of economic theory, households with higher income have a higher mean WTP for irrigation water. Methodology The objectives of this paper were to estimate the farm- ers’ WTP for TW and to identify the socio-demographic factors affecting WTP. Shakhakhit, the study area is lo- cated in the Batinah coastal region, in northern Oman as shown in the map (figure 4). The area is very close to the new Seeb water treatment plant where a main TW network connection already exists as shown in figure 4. But the sub-connections to the farms are expected to be provided subject to farmers’ WTP and the finan- cial viability of such an investment. There are about 400 farms ranging from 1 to 36 acres/farm in the study area. Palm dates are the dominant crop due to its tolerance to groundwater salinity. Most of the farms are individual- ly owned whilst the rest are family farms with multiple owners. Survey Design and Data collection A random sample of 100 farmers out of a total population of 400 farmers was targeted. The list of farm owners and their phone numbers was provided by the Ministry of Agriculture and Fisheries. Appointments were arranged with the farm owners for a face to face interview at the farm. Only 72 farmers responded to the interviews. The questionnaire was divided into four sections. Section (1) provided the background and purpose of the survey; Section (2) covered the demographic, socioeconomic profile of the households, and socioeconomic profile of Figure 4. Study Area and Al Seeb treatment plant (STP). 61Research Article Zekri, Al Harthi, Kotagama and Bose the respondent; Section (3) addressed the current water supply conditions and consumption behaviors; Section (4) presented the Contingent Valuation (CV) market scenarios followed by questions eliciting WTP values. Econometric model To validate the estimate of WTP, the following regression model was developed with variables that were expected to be related to farmers’ WTP for treated wastewater. WTP = α 0 +α 1 (income)+α 2 (year)+α 3 (area) α 4 (cost)+α 5 (D 1 )+α 6 (D 2 )+ε t , ε t ∼N 0,σ 2( ) (1) Where: WTP = Willingness to pay (OR/m3) income = Monthly Income of household (OR) year = Years owning the farm area = Farm Area (Acres) cost = Monthly Cost of alternative water (OR) The dummy variables D1 and D2 are defined as follows: D1= 0, if the respondent live in the farm and ‘1’ other- wise D2= 0, if hobby farm and ‘1’ if business oriented farm and εt is the error term. A general-to-specific modelling procedure was ap- plied by including all independent variables in the initial step and then search for the best combination of inde- pendent variables that yielded the best model based on the highest R2 value, lower sum square error (SSE) of residuals, expected sign and significance of coefficient estimate, joint significance of the variables, and residual normality (Jarque and Bera, 1987). Results The average age of the farm owners was 47 years. The average number of years of owning the farm was 18.5. Most farms are family owned with several owners. Sixty three percent of the families are living in the farms and the remaining visit their farms only during weekends or holidays. All the farms are managed and operated by expatriate workers. None of the farmers interviewed depended on farming exclusively as a source of income. Farmers are engaged in their own business or employed in the government or private sector. Thirty three per- cent of the interviewees were self-employed, with 31% of them earning a monthly income of above 3,000 OR (1  Omani Rial = 2.6 US$). The average farm area was 10.2 acres while the average cropped area was 4.64 acres. Eighty eight percent of the farmers use groundwater de- spite the high salinity. Fifty eight percent of the farmers declared that the quality of groundwater was extremely poor. Some farmers used desalinated groundwater or bought TW supplied by bourses. On average the month- ly cost of water used for irrigation is 70 OR per farm re- gardless of the source of water. The survey showed that the dominant crops are date palm in 94% of the farms followed by alfalfa and Rodhes grass cultivated for ani- mal feed. These crops are grown as they could tolerate water salinity. A number of other crops were cultivated in a very limited area that were not productive due to high water salinity. On being asked if they would accept to use TW for irrigation, 86% of the respondents agreed to use TW, whilst 8% were undecided and 6% disagreed. Farmers considered the use of TW as an opportunity to bring back or improve farm production in farms that have been heavily affected by salinity. The respondents who were undecided and disagreed about using TW were asked to justify the reasons for their response. Only 44% of them mentioned concerns of adverse health impact and distrust about the water quality. A bidding game was used to elicit the farmers WTP for TW and the estimated average WTP for TW was 0.105 OR/m3. In order to identify the factors affecting the WTP a regression analysis was done. Results are shown in Table 2. Two variables (Income and the farm type as hobby farm or commercial farm) are significant at 5% level. The positive relation between WTP and income validates the WTP estimate. Although not all variables are individually significant they are jointly sig- nificant since the F-stat is higher than F-critical (2.505 > 2.37). A normality test was conducted and the Calculat- ed JB was 5.1179 < 5.999 table affirming that the resid- uals were normally distributed. The observed mean of WTP was found to be 0.105 OR/m3 and the predicted mean WTP was 0.111 OR/m3. The mean WTP (0.128 OR/m3) for hobby farmers (40% of the sample) is much higher than WTP (0.087 OR/m3) expressed by the market oriented farmers (60% of the sample). Correlation analysis showed that the WTP of hobby farmers was significantly related with in- come. The higher the income the higher the WTP to pay was. However for the market oriented farms there was no correlation between income and WTP. Figure 5 shows the demand curve for TW of the farmers in Shakhakhit area. The volume of TW (m3) purchased by each farmer was estimated based on farm- er’s current expenditures on water for irrigation divid- Table 2. Results of the regression analysis. Variables Estimated coefficients t-statistics Income 0.0254 2.56* Live -0.0169 -0.92 Area -0.0001 -0.07 Cost 0.0000 0.54 D2 -0.0354 -2.21* Summary statistics: R2 = 0.16, SSE = 0.06, F-test (joint test) = 2.51*, MSE = 0.004 62 SQU Journal of Agricultural and Marine Sciences, 2016, Volume 21, Issue 1 An estimate of the willingness to pay for treated wastewater for irrigation in Oman ed by his WTP for TW. The curve shows that the total demand would reach 545,563 m3/year when prices vary from 0.310 to 0.055 OR/ m3. This volume is very small compared to the capacity of Seeb plant which will start at 20 Mm3/year. In case Haya Water Company uses the average WTP of 0.111 OR/m3 the demand will reach around 300,000 m3/year. Finally if the price of water will be 0.055 OR/m3 it is expected that demand will reach 609,000 m3/year. The estimates show that the expected demand volumes are too small compared to the Seeb plant capacity even at low price. Consequently, in such a situation, Haya Water Company will have to propose a regressive TW price for farmers. The lower the price the higher the volume demanded by farmers will be. The objective is to distribute the fixed costs over the larg- est possible volume of water. Experiences from the long active agricultural water markets in Oman show that the water prices are rather on the low side varying from 0.005 to 0.023 OR/m3 (Zekri et al. 2006). Further inves- tigations are required, such as through use of linear pro- gramming farm models, to estimate the value of WTP and confirm the results obtained in this study. Conclusions Groundwater quality is worsening in the Batinah re- gion of Oman due to over-pumping of water for farm- ing. Some of the highly productive farms have become unproductive over time. Given the increased salinity TW is being viewed as an alternative to groundwater for farm irrigation. Volumes of TW in Muscat are increas- ing due to more houses being connected to the sewage network and increased construction of treatment plants. Currently 32% of the TW is discharged to the sea and it would increase in the future. The potential to use TW to irrigate farms is considered, whilst charging a price that would enable the private companies supplying TW to be financially viable and sustainable. CVM was used to evaluate the farmers’ WTP for TW in Shakhakhit, Seeb. The study area was chosen because of its close proximity to the new water treatment plant constructed in Seeb. Seventy two questionnaires were completed for the study from a total number of 400 farms which represents 18% of total population. The average calculated WTP is OR 0.111 per m3. The percentage of farmers willing to pay above this price is 38%. Sixty two percent of the farmers are willing to pay this price and below. Haya Water Company is currently selling the TW at 0.220 OR/m3 which most of farmers do not accept to pay as it would make farming unprofitable. Hobby farm- ers are willing to pay more for TW than commercial farms. The mean WTP was 0.128 OR/m3 for the hobby farms and 0.087 OR/m3 for the market oriented farms. The demand that could be generated by conveying the TW up to Shakhakhit farms is very small compared to the Seeb treatment plant estimated to 20 Mm3/year and represents less than 5% of total plant capacity. The estimated WTP was validated by an econometric model in which WTP for TW was the dependent vari- able and farmer’s income, whether farmer lived in the farm, years owning the farm, farm area, cost of alterna- tive irrigation water and the whether the farm is a hobby or market oriented farm were independent variables. The results as expected indicate that farmers’ WTP for TW is significantly affected by income and whether the farm is a market oriented or hobby farm and thereby val- idates the WTP estimate. References Abu-Madi M.O.R. (2004) Incentive systems for waste- water treatment and reuse in irrigated agriculture in the MENA region: Evidence from Jordan and Tuni- sia. PhD thesis, Delft University of Technology, Delft, The Netherlands. Alcon F., Pedrero, F., Martin-Ortega, J., Arcas, N., Alar- con, J.J., de Miguel. M. D. (2010)The non-market val- ue of reclaimed wastewater for use in agriculture: a contingent valuation approach. Spanish Journal of Agricultural Research 2010 8(2). 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