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Wastewater Policy Investment Optimization for Egypt’s
Urban Mediterranean Coastal Zones
Policy Note1
June 2009
Abstract
The coastal urban population in the eight Mediterranean governorates of Egypt is bound to reach 11.5 million by 2020
with some 2.4 million remaining without any kind of municipal wastewater treatment in 2005 and some 3.5 million
constituting the incremental population to be served. Untreated effluents from various sources along the Mediterranean
coastal zone are becoming a serious concern that requires immediate attention.
Wastewater investments have been lagging behind and untreated effluents are having an increasing negative impact on
the environment, which is translated in terms of ill-health, missed recreational and tourism opportunities, diminished
ecosystem services and other unquantifiable forgone benefits in terms of real estate market improvement, increased fiscal
revenues, etc. Bringing investments to optimal levels involve tradeoffs between investing in additional wastewater
treatment plants and the associated reduction in environmental degradation. The latter however remain difficult to
calculate due to confounding factors especially when watershed pollution, industrial effluents and agriculture runoffs are
not considered. Nevertheless, orders of magnitudes of cost of environmental degradation averted associated with
improved wastewater treatment are attributed to a number of investment scenarios that increase, maintain or decrease the
BOD load over the 2005-20 period.
Tradeoffs are attained at two levels: in terms of human health improvement (reduction of diarrhea especially afflicting
children under 5) when investments target a 100 percent connection to the sewer network; and in terms of positive
environmental impact when the BOD load is reduced below the 2005 BOD untreated level thanks to a 100 percent
treatment capacity coverage with a blend of primary (5-59 percent) and secondary (range of 16-95 percent) treatment
respectively. Annualized required capital investments are respectively US$ 24 million to improve human health and at
least US$ 51-54 million in 2005 prices to start reaping marginal environmental benefits over the period. However, the
Horizon 2020 50 percent reduction in BOD as compared to 2005 is only achieved when primary and secondary
wastewater treatment covers 5 and 95 percent of the population respectively with a yearly US$ 54 million price tag.
To secure these investment needs and improve the sector governance following the sector reforms of 2004, new policy
measures need to be devised where it is suggested to disentangle sewer network from waste treatment operations: the
network extension will be funded by the Government which will also manage it --operations and maintenance costs will
however be covered by the beneficiaries; and through better partnership and awareness about common environmental
benefits, the Government will provide possibly up to an equal share of the capital and operations and maintenance costs
to attract private operators that will recoup their investment shares through more realistic tariffs and better cost recovery.
This in turn will help improve the well-being of the population, ensure the sustainability of the sector while preserving
the commons.
1
This Policy Note was prepared by Fadi Doumani (METAP consultant), Raffaello Cervigni (Senior Natural Resources
Economist in SDD MENA) and Claire Kfouri (Water and Sanitation Specialist in SSD MENA) under the
METAP/World Bank Promoting Awareness and Enabling a Policy Framework for Environment and Development
Integration in the Mediterranean with Focus on Integrated Coastal Management in association with MAP, the Blue
Plan, the UNEP/MAP/MEDU, and the European Commission Delegation in Egypt. Funding was also provided by the
Finnish Ministry of Foreign Affairs. The Policy Note builds on Erkki Ikaheimo (METAP Consultant) Background Note
on the MENA region urban wastewater projection of environmental damages and investments till 2020. We would like
to thank Eng. Mohamed el Alfy (Ministry of Housing, Utilities and Urban Development), Eng. Zeinab Mounir
(CAPWO) and Eng. El Sayed Saad Abdalla (NOPWSD) as well as our colleagues at MNSSD Sherif Arif, Alex
Bakalian, Hocine Chalal, Jaafar Friaa, N. Vijay Jagannathan and Dahlia Lotayef for their guidance, inputs and
comments.
Introduction
The European Commission launched the Horizon 2020 initiative, whose timetable for depollution of the Mediterranean Sea by 2020 was endorsed by the Euro-Mediterranean Ministers
of Environment and other heads of delegation at the Cairo Ministerial Conference in 2006.
In line with the Horizon 2020 initiative, the EC-funded SMAP III has provided a grant to
UNEP/MAP in order to promote awareness and enabling a policy framework for environment
and development integration with focus on integrated coastal zone management. Part of this grant
is to enable METAP/World Bank to prepare a policy note on major environmental issues of the
Mediterranean coast of Egypt. This policy note draws on the Egypt wastewater treatment
National Action Plan (NAP) 2 in 2006 and the Egypt’s 2006 Census to address pollution from
land-based activities produced under the UNEP Strategic Action Programme to Address Pollution
from Land-based Activities (SAP) that was adopted in 1997.
Objective and Limitations
The objective of the policy note is to provide Egyptian decision makers with environmental
economic tools to optimize choices with regards to wastewater treatment financing requirements
based on the change in the cost of environmental degradation (COED).
This policy note is based on a background study, which was partially funded by a Government of
Finland trust fund managed by METAP.3 The study reviewed the available information (NAP)
about municipal wastewater treatment capacity on the Mediterranean coastal cities of Egypt based
on two case studies that were developed for the study. The study also presented COED reduction
scenarios for the coastal urban population of Mediterranean Egypt, with different investment
amounts and based on various assumptions.
This policy note attempts to address the environmental economics of de-pollution issues within
the 2020 timeframe but remains subject to comments, adjustments, refinement of the
methodology and more importantly better data on the Egypt’s wastewater treatment investments
(see also Box 1).
The State of Coastal Urban Sanitation along the Mediterranean Sea
Urbanization, population, tourism, industrial and agricultural growth have been responsible for
increased pressures on the Mediterranean coastal zone resources. In addition to agricultural
runoffs, Egypt’s Mediterranean coastal zone receives large quantities of direct or indirect
(through the Nile watershed) untreated wastewater from mainly municipal and industrial sources,
which affects ecosystem services.
There is no specific framework law dealing with the coastal zone in Egypt. Several laws and
decrees however apply to the coastal zones that are managed by a number of institutions with
unclear mandates.4 Moreover, there is no clear delineation of the coastal zone. Therefore, the
Egypt’s 2006 Land Based Sources Pollution National Action Plan (NAP).
Ikaheimo (2007).
4
Although a National Committee for Integrated Coastal Zone Management was established by a
2
3
2
coastal zone will focus on the urban cities of the eight Mediterranean coastal governorates (see
Box 1) in this analysis and will include the five major lakes along the Mediterranean Sea that are
absorbing a great deal of notably untreated urban wastewater loads.
In terms of urban wastewater load into the Mediterranean coastal zone, Egypt is one of the top
five basin’s largest polluter5 due to both a growing coastal urbanization exacerbated by a
relatively high urban population growth rate (1.9% per annum in the 8 governorates) and a
booming tourism industry. For instance, urban municipal emissions are equivalent to 180,366
tons6 of BOD5 in 2005 and when urban, rural, industrial and agricultural watershed emissions are
considered collectively, total BOD5 could reach as much as 800,000 tons per year along the
Mediterranean coastal zone.7 These other land-based pollutions are being addressed through a
number of parallel programs funded by development partners in conjunction with the Egyptian
authorities.
Based on the 2006 census, the coastal urban population reached 8.2 million in 2005, where 81.3
percent is connected to the sewer network. Also, according to NAP, wastewater primary
treatment coverage reaches 59 percent and secondary treatment 16 percent of total population in
most cities along Egypt’s Mediterranean coast in 2005. Nevertheless, the environmental pressure
is seemingly higher in 12 major cities (5.4 million) with over 10,000 inhabitants as illustrated in
the 2006 NAP.
With regards to the COED attributable to wastewater, it is difficult to determine the exact share of
wastewater discharge damages but two orders of magnitude are available at the national (2002)
and governorate (2006) levels and are illustrated in Table 1 and representing 1.3 percent and 5.2
percent of the national and local GDP respectively. These figures were extrapolated to the 7 other
governorates to come up with the coastal zone COED (see Table 2 and Annex I).
Table 1. National and Governorate COED Category Comparison in US$ million, 2005 prices
Sector or
Environmental Category
Total Categories
Subtotal water category impact
o/w wastewater effluent potential impact
National Level
Alexandria Governorate
mean COED
mean COED
2005 constant prices
2005 constant prices
(US$ million) (% of GDP) (US$ million) (% of GDP)
4,746.9
4.8
295.6
6.5
1,265.0
1.3
236.1
5.2
1,230.1
1.3
83.7
4.7
Source: Annex I; World Bank (2002); METAP (2006); and IMF (2006).
In order to optimize Egypt’s urban sanitation investments along the Mediterranean coast by 2020,
a number of scenarios are developed to help decision-makers make informed and efficient policy
choices. However, a number of calculation assumptions were considered and are spelled out in
Box 1.
Ministerial decree in 1994 and includes sixteen high-level representatives of all concerned Ministries, it does
not have however a clear mandate and real authority over the coastal zone.
5
MedPol (2005).
6
Based on a 0.06 kg/per capita/day BOD5 emission or about a total of 2 million m3 per day. Moreover, in
EEA and UNEP (2006), the Mex and Abu-Qir Bays have a total BOD5 discharge of 311,000 tons/year from
both municipal and industrial effluents in the Mediterranean Sea. Hydroplan Consult did a feasibility study
to reduce the multi-source liquid waste of lake Mayrut in Alexandria and uses a 0.041 kg/per capita/day
BOD5 emission assumption.
7
Saliot (2005).
3
Box 1. Calculation Assumptions
Scope: the policy note covers the economic aspects of urban municipal wastewater pollution abatement in
terms of BOD without dealing with: both the institutional set up, and operations and maintenance of both
the wastewater treatment plants and sewage network; and international and local tourism, agricultural,
industrial as well as rural effluent loads or unsanitary landfill leachate. Eight Mediterranean governorates
are considered and include from west to east: Matruh, Alexandria (Lake Mayrut), Al Buhayrah (Lake
Idku), Kafr El-Sheikh (Lake Burullus), Damietta (Lake Manzala), Dakahlia, Port Said and Northern Sinai
(Lake Bardawil). In the NAP, the same 8 governorates were initially considered and the focus was later
confined to Alexandria, Al Buhayrah and Port Said. At any rate, the governorates of Sharkia, Ismailia and
Cairo were not considered although they are responsible through their wastewater discharge for the
pollution of the Manzala lake and therefore the Mediterranean coastal zone.
Timeframe: the analysis spans the 2005-2020 period to accommodate Horizon 2020 initiative.
Population: the urban population is estimated at 8.9 million in 2003 of which 7.3 million live in cities
considered in the NAP. However, the population considered by NAP after focusing on 3 governorates does
not exceed 5.2 million, whereas the policy note considers the 8.2 million figure of the coastal urban
population based on the 2006 Census. The Mansourah treatment plan was added to the NAP list. Treatment
plants considered for the analysis include under construction plants in Rosetta and Baltim but not the ones
in Port Fouad, El Zoben and the two planned in Alexandria. Wastewater plants are assumed to run at full
capacity in 2005 with amortization lifespan exceeding 2020. The population urban growth rate for each
governorate is based on the 2008 UNDP HDR for Egypt.
Sanitation Coverage used for the Policy Note are different than those considered by Egypt’s NAP:
For the policy note calculations in 2005,
 Total Urban coverage in terms of connection to the network is 82 percent.
 Total Urban coverage in terms of treatment is 75.5 percent of which: 59.3 percent primary and
16.2 percent secondary.
 Total Urban population un-served is 24.5 percent.
Whereas,
 NAP Urban coverage in terms of connection to the network is 100 percent.
 NAP Urban coverage (including Mansourah) in terms of level of treatment is 79.4 percent in total
of which: 59.6 percent primary and 19.8 percent secondary.
Bio-Oxygen Demand (BOD) emissions per capita per day: The figure considered is the Egypt NAP’s of
60 grams per capita per day. However, Hydroplan Consult, which conducted a recent study to reduce the
multi-source liquid waste of lake Mayrut in Alexandria, uses a 41 grams per capita per day BOD5 emission.
Treatment: Primary treatment would remove 40 percent of BOD and secondary treatment would remove
80 percent.
Investment costs (based on MNA regional averages, net of the cost of land and do not include the
replacement cost of amortized investments during the 2005-20 and the re-investment cost (cost related to
replacement of some wastewater treatment plant components after expiry of duty life):
 Connection to the network ranges between US$ 50 and 150 per capita in 2005 prices. It includes
both a household connection to the network and setting up new network in new urban areas under
development.
 Primary treatment ranges between US$ 30 and 50 per capita in 2005 prices.
 Secondary treatment ranges between US$ 100 and 150 per capita in 2005 prices, which includes
sludge treatment whereby the sludge could be reused in agriculture thereby offsetting some of the
cost of treatment.
Benefits: the national and local Cost of Environmental Degradation (COED) figures were used to derive
the benefits. The 2008 UNDP HDR for Egypt was used to derive and extrapolate the Governorate GDP:
absolute 2005 figures were used for the projection of the COED. Wastewater treatment reuse potential and
carbon funding that could be tapped for better sludge management were not considered in the benefit
calculations.
Economic Rate of Return and Net Present Value: A market rate of 10 percent was retained for the
calculations.
Source: Annex I.
4
Wastewater Investment Cost and Challenging Tariffs
New wastewater secondary treatment plants being built or planned as of 2005 onward for Greater
Cairo and Alexandria were compiled from Cairo and Alexandria Potable Water Organization
(CAPWO) in early 2009 to derive the average investment cost per installed capacity. Figure 1
illustrates the results for investment cost vs. capacity for 18 new or upgraded assets. The
secondary treatment process was not differentiated in the analysis and shows clear economies of
scale with a significant cost per m3 treated savings the larger the installed capacity. The weighted
average plant investment cost stands at US$ 0.02 per installed m3 and US¢ 0.02 per treated m3
over 20 years.8
Figure 1: Cairo and Alexandria Wastewater Treatment Investment Cost vs. Capacity, 2005 Onward
WW Secondary Treatment Investment Cost, 2008 prices
(US$/m3)
0.06
US$/m3
0.05
Cost/m 3 over a 20-year lifespan
Log. (Cost/m 3)
0.04
y = -0.004Ln(x) + 0.0404
R2 = 0.1408
0.03
0.02
0.01
1
10
100
1,000
3
Capacity (1,000 m /day)
Note: No distinction was made for secondary treatment processes. Investments per m 3 treated are
annualized and discounted at 10% as of start of operation year (after 2005) over 20 years.
Source: List of 18 new planned, underway plants or plant improvements obtained from CAPWO.
Combined together, current operations and maintenance average tariffs for water and wastewater
in Egypt do not exceed US$ 0.08 per m3 in 2005. Before the introducing the Holding Company
for Water and Wastewater (see Box 2), the return on sales of Alexandria Water General Authority
for instance was less than 60 percent of the United States’ water utilities. Furthermore, the
average tariff charged in the United States was higher than those charged in Egypt by 95 percent
while the tariff charged across the developing countries exceeded the Egyptian tariff by 66
percent, which significantly hampered the adequate management of the wastewater plants.9 When
compared to Africa, United Kingdom and United States tariffs (US$ 0.71, 1.45 and 0.8 per m3
respectively)10 Egyptian tariffs, which remain a fraction of these international tariff benchmarks,
will urgently need to be revised upward to ensure the sustainability of these future investments.
Benefits Associated with Wastewater Pollution Abatement by 2020
To help determine optimal investment levels to reduce wastewater emissions over the 2005-2020
period, future investments are gauged against future benefits. The latter are derived in terms of a
change in the absolute COED figures due to wastewater pollution, which is equivalent to US$
8
Wastewater treated was not discounted.
Hassanein and Khalifa (2006).
10
Hassanein and Khalifa (2008).
9
5
374 million in 2005 along the urban Mediterranean coast (see Table 2). A no action COED is
projected over the 2005-20 period to reach US$ 568 with assumptions listed in note of Table A5.
Table 2. Mediterranean Coast Partial COED Attributable to Wastewater, 2005 prices
Categories of COED
Health Effects due to water res. degradation
Recreational Use
Ecosystem Loss
Mediterranean Sea International Tourism
Lake Tourism
Total
Share of
GDP (%)
0.21%
0.50%
0.30%
0.25%
0.56%
1.82%
Share of Coastal GDP Total Coastal GDP
2005 (US$ million)
2005 (US$ million)
42
102
119
50
61
374
20,371
Source: Annex I; World Bank (2002); UNDP (2003); METAP (2006); and IMF (2006).
Coastal Urban Sanitation Cost Scenarios by 2020
Increasing the pace of adequate sanitation coverage remains challenging: the urban population of
8.2 million along the Mediterranean coast in 2005 is bound to reach 11.5 million by 2020 (see
Figure 1). This would leave about 5.9 million people including the actual un-served and
unconnected in need of new sanitation coverage by 2020, provided treatment investments that
were amortized during the period and require new investments are not considered.
Five wastewater collection and treatment investment scenarios were developed to achieve various
levels of coverage for Egypt’s urban Mediterranean coastal zones between 2005 and 2020 in 2005
constant prices (see Figures 2 and 3 as well as Annex I).
Investment scenarios A to E do not include the replacement cost of amortized investments during
the 2005-20 period and assume that the capacity to abate the current BOD5 emission level will
remain unchanged over the period. The scenario assumptions are:

Scenario A also considered as the without treatment intervention: The untreated
BOD level increases by 60 percent over the period. Treatment capacity remains the same
with no new installed capacity over the period. All unconnected and incremental
population will be connected to the sewer network over the period. Cost: US$ 24 million
per year (undiscounted) and US$ 359 million over the period.

Scenario B: The untreated BOD level increases by 33 percent over the period. Treatment
capacity covers 83 percent of the population with 60 percent and 23 percent of the
population with primary and secondary treatment respectively. All unconnected and
incremental population will be connected to the sewer network over the period. Cost:
US$ 37 million per year and US$ 550 million over the period.

Scenario C: The untreated BOD level remains the same over the period. Treatment
capacity covers 100 percent of the population with 60 percent and 40 percent of the
population with primary and secondary treatment respectively. All unconnected and
incremental population will be connected to the sewer network over the period. Cost:
US$ 43.6 million per year and US$ 697.0 million over the period.

Scenario D: The untreated BOD level decreases by 33 percent over the period.
Treatment capacity covers 100 percent of the population with 24 percent and 76 percent
of the population with primary and secondary treatment respectively. All unconnected
and incremental population will be connected to the sewer network over the period. Cost:
US$ 51 million per year and US$ 771 million over the period.
6

Scenario E: The untreated BOD level decreases by 50 percent over the period. Treatment
capacity covers 100 percent of the population with 5 percent and 95 percent of the
population with primary and secondary treatment respectively. All unconnected and
incremental population will be connected to the sewer network over the period. Cost:
US$ 54 million per year and US$ 843 million over the period.
Optimizing Coastal Urban Sanitation Investments by 2020
Reaching a point where investment costs generate excess benefits in terms of COED averted will
help optimize investments. Over the 2005-2020 period, this marginal figure remains difficult to
calculate due to the COED confounding factors especially when watershed pollution, industrial
effluents and agriculture runoffs are not considered. Nevertheless, orders of magnitudes of cost of
environmental degradation averted associated with improved wastewater treatment are attributed
to the investment scenarios that increase, maintain or decrease BOD loads over the 2005-20
period.
The scenario outcomes by 2020 are illustrated in Table 3 and Figure 2:
 Scenario A (100% connection and +60% BOD as compared to 2005) can only reap health
benefits but with a high economic rate of return (significantly more than 10 percent over
the period).
 Scenarios B (100% connection and +33% BOD) and C (100% connection and ±0 BOD)
reap the same health benefits as in Scenario A without however any positive impact on the
environment when compared to 2005 (economic rate of return less than 10 percent
equivalent to the cost of funds despite the health benefits).
 Scenarios D (100% connection and -33% BOD) and E (100% connection and -50% BOD)
reap both health and marginal environmental benefits that start accruing to society
(economic rate of return greater than 10 percent in both cases but difficult to pinpoint due
to the uncertainty with regards to the reduction in the COED magnitude, which is in the
order of 30 to 50 percent of the 2005 COED but where the associated water-related disease
costs could be averted by more than 95 percent).
Figure 2. Annual Investment, BOD Reduction and ERR over the 2005-20 period
WW Annualized Investments and Residual BOD by 2020
60
ERR >1
(US$ million and BOD 000' tons)
ERR >1
ERR <1
180
50
160
140
40
120
30
100
80
20
10
60
Health
Benefits
Environmental
Benefits
A nnualized Netwo rk & WW Investment
A nnualized Netwo rk Investment
Residual B o D
0
40
20
-
Scenario A
100%Net.
No new WW Invest.
Scenario B
100%Net.
60%-23%WW
Scenario C
100%Net.
60%-40%WW
Scenario
Source: Authors.
7
Scenario D
100%Net.
24%-76%WW
Scenario E
100%Net.
5%-95%WW
Residual BOD
(000' tons)
WW Investments
(US$ million)
200
Table 3. Annual Cost/Benefit and 2005-2020 ERR in US$ million, 2005 prices
Item
A
B
24
37
Cost (US$ million)
61
61
Benefit (US$ million)
Confidence interval (US$ million)
(52-70)
(52-70)
Economic rate of return (%)
>10%
<10%
Note: Benefits do not accrue on the same year of the investment.
Source: Authors.
Scenario
C
42
61
(52-70)
<10%
D
51
195
(166-224)
>10%
E
54
240
(204-276)
>10%
In terms of investment decisions, Scenario A, D or E should be retained because they reap social
benefits and have economic rates of return higher than the cost of funds.
Policy Implications
By 2005, urban wastewater investments along the Egyptian Mediterranean cost were lagging
behind. This has increasingly being translated into forgone private and public benefits. Gauged in
terms of environmental externalities, these environmental pressures are negatively affecting the
financial and economic profitability (economic rate of return) of both public and private projects
therefore hampering private sector investments and sustainable economic growth.
Until recently, wastewater sector policy choices have been ineffective. Lacking a firm political
commitment, wastewater investment needs were usually much larger than the various
Government-tiers (i.e., loans or budget) can realistically afford and prevent any optimization of
investments. Moreover, short of civic awareness and moral suasion, depressed wastewater tariffs
and poor cost recovery have contributed to unsustainable operations and maintenance of
wastewater treatment plants. These distorted policies have also raised serious governance and
accountability concerns of public operators over the years. The Government of Egypt has
embarked upon a sector reform in 2004 (Box 2) that included notably the establishment of the
Holding Company and Subsidiaries (Presidential Decree 135/2004). The government transferred
all municipalities to the holding, which introduced its own regulations and by-laws to operate on
a commercial basis and try to achieve a phased cost-recovery not only of operations and
maintenance but also depreciation and new capital investments in the future.
Box 2. Water and Wastewater Sector Reform in Egypt
Sector Reform Building Blocks:
 Holding Company for Water and Wastewater (HCWW) treat, transport, distribute and sell drinking
water in addition to collecting, treating and safely releasing wastewater.
 National Organization for Potable Water and Sanitary Drainage (NOPWSD) is responsible for the
investments of all water and wastewater sector to all the governorates except Cairo and Alexandria.
 Cairo and Alexandria Potable Water Organization (CAPWO) is responsible for the investments of
water and wastewater sector in Greater Cairo and Alexandria governorates.
 Egyptian Water Regulatory Agency (EWRA) is responsible for supervising, reviewing and
monitoring all water and wastewater sector activities.
Source: HCWW website <www.hcww.com.eg>.
Yet, looking into new policy measures could further improve the efficiency of the sector such as
the disentanglement between the network and treatment financing/management in the case of
wastewater whereby:
8



The main priority is to focus on connecting all urban dwellers to the collection network
(highest economic rate of return because of health benefits), which could generate both
public (public health/welfare) and private benefits (better well-being especially for
children under 5). This could be financed by both the various Government-tiers for the
network and the beneficiaries for the dwelling connection to the network and operations
and maintenance cost: beneficiaries could reveal a high willingness to pay acceptability.
Network management will be entrusted to the Government lower-tier.
The second priority is to: (i) determine phased and select level of treatment based on
trade-offs that generate environmental benefits;
The third priority consists of financing/management partnerships. Leveraging of public
funding will help attract private operators to partly finance (private or international
financing institution loans) and manage wastewater treatment plants on the basis of
monitorable output-based targets. The contractor will be paid on the basis of volume (m3)
treated to the standard level that is required: built-in incentives will force the operator to
become more efficient. Other financing could be recouped through more realistic albeit
flexible (income differentiation) tariffs and higher cost recovery levels: also,
environmental benefit awareness campaigns could help increase the beneficiary
willingness to pay acceptability. As a matter of example, an interesting program exists in
Brazil whereby the Federal Government encourages the construction of wastewater
treatment plants by local private utilities by promising to pay up to 50 percent of the cost
of capital and operations and maintenance for every m3 of sewage treated.
This new financing/management scheme also requires improving the utilities governance and
accountability stance, which in turn will definitely help improve the well-being of the
population, ensure the sector sustainability and preserve the commons by generating
additional environmental benefits in the long run hence fulfilling the objective of Horizon
2020 initiative.
9
References
Arab Republic of Egypt Central Agency for Public Mobilisation (CAPMAS). 2008. Egypt 2006
Census results. Cairo < accessed CAPMAS website: <www.capmas.gov.eg>.
Egypt LBS National Action Plan. 2005. Implementation of the Strategic Action Programme to
Address Pollution from Land-Based Activities, National Action Plan Egypt. Mediterranean
Action Plan MED POL. UNEP/MAP, Athens.
European Environment Agency and UNEP. 2006. Priority Issues in the Mediterranean
Environment. EEA Report number 4/2006. Brussels.
Fewtrell, Lorna and John M. Colford Jr. 2004. Water, Sanitation and Hygiene: Interventions and
Diarrhoea. Health, Nutrition and Population Discussion Paper. The World Bank, Washington,
D.C.
Hassanein, Amr A.G. and R. A. Khalifa. 2006. Financial and operational performance
assessment: water/wastewater Egyptian utilities. Building Services Engineering Research and
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Ikaheimo, Erkki. 2007. Egypt Policy Background Study on Wastewater Treatment Investments
on the Mediterranean Coast. METAP co-financed by the Ministry of Foreign Affairs of
Finland. Washington, D.C.
International Monetary Fund. 2006. Article VI Consultation: Egypt Country Report. Washington,
D.C.
International Monetary Fund. 2007. International Finance Statistics. Washington, D.C.
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Plan Bleu. 2006. A Sustainable Future for the Mediterranean: Environment and Development
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Saliot, Alain (ed.). 2005. The Mediterranean Sea: the Handbook of Environmental Chemistry.
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10
Annex I
This policy note relies on a number of assumptions that are illustrated below and in the notes of
each table.
The national COED based on 1999 figures was the first attempt at valuing environmental damage
that was further refined with the second COED generation based on 2002 figures in terms of
methodology, scope and results with a main focus on coastal zone degradation. The national
water resource-related degradation figure reaches 1.3 percent of total GDP whereas at the
Alexandria Governorate level, the figure shows an increase in relative terms to reach 5.2 percent
of local GDP. This is due to the location of the Alexandria Governorate that lies at the
intersection of the Nile delta and the coastal zone where urban, industrial and agricultural
pressures converge. The elevated environmental pressure is translated by a relative increase of
most environmental degradation variables including a novel inclusion of lake tourism and
recreational (2.8 percent) as well as wetland (0.3 percent) losses (see Table A1).
Table A1. National and Governorate COED Category Comparison in US$ million, 2005 prices
Sector or
Environmental Category
Health effects due to water resource degradation
Recreational Use
Ecosystem Loss
Erosion Protection
Red Sea International Tourism
Mediterranean Sea International Tourism
Lake Maryut Local Tourism (South of Alexandria)
Loss of fish catch Mediterranean Sea
Loss of fish catch Red Sea
Subtotal water category impact
o/w wastewater effluent potential impact
Other Categories
Total Categories
Memorandum item:
GDP (1999 and 2004 respectively --base 2005)
Population (1999 and 2002 respectively --million)
National Level
Alexandria Governorate
mean COED
mean COED
2005 constant prices
2005 constant prices
(US$ million) (% of GDP) (US$ million) (% of GDP)
795.5
0.8
37.3
0.8
66.1
0.1
24.2
0.5
81.8
0.1
22.1
0.5
NC
NC
0.7
0.0
236.5
0.3
NA
NA
50.1
0.1
NC
NC
NA
NA
130.8
2.8
21.0
0.5
34.9
0.0
NA
NA
1,265.0
1.3
236.1
5.2
1,230.1
1.3
83.7
4.7
3,481.9
3.5
59.5
1.3
4,746.9
4.8
295.6
6.5
98,771.0
66.0
4,540.4
3.7
Note: Totals may not add up due to rounding. NA means Not applicable. NC means Not Calculated. Mediterranean Sea
International Tourism was set at 1.8 million averted days due to the sea pollution without however any explanation: a
reduction of Cairo tourist was set between 10-15 percent of total tourists planning to visit Cairo due to the seasonal
husk burning in the Delta that produces a haze. Underlined categories are those with a potential impact stemming from
wastewater effluents into the sea. Sea fishing is not considered because the figure is based on over fishing or due to
industrial pollution or agricultural runoff that could lead to extensive eutrophication.
Source: World Bank (2002); METAP (2006); and IMF (2006).
11
Table A2. Annual Investment Mid-point Cost Needed for Wastewater Treatment to Meet Different
Wastewater Treatment Targets in Egypt’s Mediterranean Coastal Urban Areas, 2005 prices
Item
1. Coastal urban population, 2005 (million) 1
Coastal urban population un-served, 2005 (million)
Coastal urban population unconnected, 2005 (million)
Incremental coastal urban population by 2020 (million) 1
2. Cost of Treatment (US$ million)
Unit cost of primary treatment, US$/pop. equivalent 2
Unit cost of secondary treatment, US$/pop. equivalent 2
Target level of primary treatment (%)
Target level of secondary treatment (%)
3. Cost of Network (US$ million)
Unit cost of connecting to network, US$/pop. equivalent 2
Population not connected to the sewer network (%) 3
Target level of connection to the sewer network
4. Total Cost of Sanitation Investments (2. + 3.)
Number of years
Average annual treatment investment costs
Average annual network investment costs
5. Average Annual Investment Costs (4. / 15)
A
8.2
1.5
0.3
3.5
0
40
125
0
0
359
100
19
100
359
15
0
24
24
B
8.2
1.5
0.3
3.5
191
40
125
60
23
359
100
19
100
550
15
13
24
37
Scenario
C
8.2
1.5
0.3
3.5
276
40
125
60
40
359
100
19
100
635
15
18
24
42
D
8.2
1.5
0.3
3.5
412
40
125
24
76
359
100
19
100
771
15
27
24
51
E
8.2
1.5
0.3
3.5
484
40
125
5
95
359
100
19
100
843
15
30
24
54
Note: Scenario unit costs are mid points with Low case: assuming that 35% in cities with up to 50,000 population,
50% in 50,000-100,000 and 55% in over 100,000; and High case: assuming all the treatment plants are for 50,000
population units. Lows and Highs are meant to gauge the cost sensitivity per capita: average range between US$ 50150 for sewer connection, US$ 30-50 for primary treatment and US$ 100-150 for secondary treatment.
Source: 1 NAP (2006) and UNDP (2008); 2 Expert estimates; and 3 CAPMAS (2008).
Table A3. Mediterranean Coast Partial COED Attributable to Wastewater, 2005 prices
Categories of COED
Health Effects due to water res. degradation
Recreational Use
Ecosystem Loss
Mediterranean Sea International Tourism
Lake Tourism
Total
Share of
GDP (%)
0.21%
0.50%
0.30%
0.25%
0.56%
1.82%
Share of Coastal GDP Total Coastal GDP
2005 (US$ million)
2005 (US$ million)
42
102
119
50
61
374
20,371.2
Note: Total 2005 Coastal GDP uses Egypt’s actual GDP growth rate and projects the following coastal Mediterranean
Governorates GDP based on 2003/2004 UNDP (2005) figures (from west to east): Matruh, Alexandria (Lake Mayrut),
Al Buhayrah (Lake Idku), Kafr El-Sheikh (Lake Burullus), Damietta (Lake Manzala), Dakahlia, Port Said and
Northern Sinai (Lake Bardawil). Coastal GDP is assumed to be equal to national GDP although the northern
Governorates have a higher growth rate than the national average. To make things easier, benefits are assumed to
accrue after investments are made. Health effects reduction is based on Fertwell et al. where a 26 percent in risk
reduction is attributable to improved sanitation alone, which is applied on the 0.8 percent associated with water
degradation as calculated in both 2002 and 2006 COED. Recreational use and ecosystem loss are derived from COED
2005. As for tourism, it is derived from the 2002 COED that calculated the losses for the whole Mediterranean coast.
Incidentally, the Mediterranean coast boasts only 10 percent of Egypt hotel room count and authorities are planning to
increase this share to 14 percent by 2014. However, this variable is not taken into account in the COED calculations
because no real hotel room night figure increase was associated with the increased share. Tourism Lakes were
assigned a 1/3 weight reduction for Lakes Mayrut and Manzala because industrial and agricultural pollution
represents a large share of the discharge and 1/4 weight reduction for Lakes Ikdu, Burullus and Bardawil because
their pollution is relatively lower when compared to the two other lakes.
Source: World Bank (2002); UNDP (2008); METAP (2006); and IMF (2006).
12
Table A4. Mediterranean Governorate GDP and Partial COED, 2005 prices
Governorate
Population
GDP
GDP/Cap
West to East
Matruh
Alexandria
Al Buhayrah
Kafr El-Sheikh
Damietta
Dakahlia
Port Said
Northern Sinai
Med. Coast
Total
2005 (000')
323.4
4,123.9
4,747.3
2,620.2
1,097.3
4,990.0
570.6
343.7
18,816.4
Urban
2005 (000')
217.9
3,998.9
891.5
593.8
401.8
1,371.2
559.8
201.1
8,235.9
Total GDP
Urban
Annual growth
rate (%)
2005/6 (LE)
3.7
6,328.6
1.3
5,840.4
1.8
8,395.5
2.2
6,269.9
3.0
6,933.0
2.6
6,769.1
1.6
6,822.7
3.5
5,667.8
6,889.9
2005 (LE)
2,046,548,997
24,085,044,508
39,855,814,427
16,428,442,139
7,607,851,287
33,777,788,693
3,893,053,088
1,947,915,172
129,642,458,310
COED
Total GDP
Exchange rate
2005 (LE
US$ million
million) US$ 1 = LE 5.78
2,046.5
354.1
24,085.0
4,167.0
39,855.8
6,895.5
16,428.4
2,842.3
7,607.9
1,316.2
33,777.8
5,843.9
3,893.1
673.5
1,947.9
337.0
129,642.5
22,429.5
Lakes
Text
Maryut
Ikdu
Burullus
Manzala
Bardawil
Diarrhea Recreation
(%)
0.002
0.002
0.002
0.002
0.002
0.002
0.002
0.002
(%)
0.005
0.005
0.005
0.005
0.005
0.005
0.005
0.005
Lakes
(%)
0.009
0.007
0.007
0.009
0.007
Ecosys.
Diarrhea
Recreation
Lakes
Tourism
Ecosystem
US$ million US$ million US$ million US$ million
2005 prices 2005 prices 2005 prices 2005 prices
0.7
1.8
8.7
20.8
38.9
14.3
34.5
48.3
5.9
14.2
19.9
2.7
6.6
12.3
12.2
29.2
1.4
3.4
0.7
1.7
2.4
46.7
112.1
121.7
50.1
(%)
0.003
0.003
0.003
0.003
0.003
0.003
0.003
0.003
US$ million
2005 prices
1.06
12.50
20.69
8.53
3.95
17.53
2.02
1.01
67.29
Source: Table A3; World Bank (2002); UNDP (2008); METAP (2006); and IMF (2006).
Table A5. Coastal COED Possible Increase with no Action in US$ million, 2005 prices
COED No intervention
Diarrhea +1.89% (+-% pop.)
Recreation (+1.89%)
Lakes (+1.89%)
Tourism ( +7% world)
Ecosystem (+1.89%)
COED
2005
47
112
122
50
67
398
2006
48
114
124
54
69
408
2007
48
116
126
57
70
418
2008
49
119
129
61
71
429
2009
2010
50
121
131
66
73
441
51
123
134
70
74
452
2011
52
125
136
75
75
464
2012
53
128
139
80
77
477
2013
54
130
141
86
78
490
2014
55
133
144
92
80
504
2015
56
135
147
99
81
518
2016
57
138
150
105
83
533
2017
58
140
152
113
84
548
2018
60
143
155
121
86
564
2019
2020
61
146
158
129
87
581
Note: In a no action COED projection and since a large share of the COED is based on local and international tourism as well as recreation, these categories are usually function of consumer’s
preferences and income. Nevertheless, these factors will not be considered in the projection because they are unavailable over time. Therefore health effects, recreational use, ecosystem loss and
lake tourism increase at the rate of the urban population growth: 1.89% per annum. Mediterranean sea tourism increases at the global tourism growth: 7 percent.
Source: Tables A3 and A4; World Bank (2002); METAP (2006); and IMF (2006).
13
62
149
161
138
89
599
Table A6. Population and BOD Projection in 000’ and Tons, 2005-20
+-% 2005
Emission
2005
8,236
7,543
4,495
1,492
1,306
251
693
413
137
130
13
181
181
2006
8,422
7,672
4,495
1,492
1,306
380
750
447
137
130
36
186
367
2007
8,608
7,803
4,495
1,492
1,306
511
804
479
137
130
58
186
553
2008
8,798
7,937
4,495
1,492
1,306
645
861
513
137
130
81
191
743
2009
8,994
8,074
4,495
1,492
1,306
782
920
548
137
130
105
195
939
2010
9,194
8,213
4,495
1,492
1,306
921
981
584
137
130
129
200
1,139
2011
9,400
8,355
4,495
1,492
1,306
1,063
1,044
622
137
130
155
206
1,345
2012
9,611
8,500
4,495
1,492
1,306
1,208
1,110
662
137
130
182
211
1,556
2013
9,827
8,648
4,495
1,492
1,306
1,355
1,179
703
137
130
210
216
1,772
2014
10,049
8,798
4,495
1,492
1,306
1,506
1,251
745
137
130
239
222
1,994
2015
10,277
8,952
4,495
1,492
1,306
1,659
1,325
790
137
130
269
228
2,222
2016
10,511
9,108
4,495
1,492
1,306
1,816
1,402
836
137
130
300
234
2,456
2017
10,751
9,268
4,495
1,492
1,306
1,976
1,483
884
137
130
332
240
2,696
2018
10,998
9,431
4,495
1,492
1,306
2,138
1,567
934
137
130
366
247
2,943
2019
11,251
9,597
4,495
1,492
1,306
2,305
1,654
986
137
130
401
253
3,196
2020
11,511
9,767
4,495
1,492
1,306
2,474
1,744
1,040
137
130
438
260
3,456
Total Emission Load (BOD tons)
180,366
184,437
188,507
192,681
196,961
201,350
205,852
210,471
215,210
220,073
225,063
230,186
235,445
240,846
246,391
252,087
Baseline Scenario A (75% coverage) No Intervention (BOD tons)
Residual BOD from 1st treatment (59% of population)
Residual BOD from 2nd treatment (16% of population)
Residual BOD from no treatment
Total Untreated
65,565
5,228
40,208
111,001
66,018
5,228
43,536
114,782
66,451
5,228
46,896
118,575
66,902
5,228
50,331
122,461
67,370
5,228
53,843
126,441
67,857
5,228
57,434
130,519
68,363
5,228
61,107
134,698
68,890
5,228
64,862
138,980
69,437
5,228
68,704
143,369
70,006
5,228
72,633
147,868
70,598
5,228
76,653
152,480
71,214
5,228
80,767
157,209
71,855
5,228
84,976
162,059
72,521
5,228
89,283
167,033
73,215
5,228
93,693
172,135
73,936
5,228
98,206
177,370
60
Scenario B (83% coverage) residual BOD Tons
Residual BOD from 1st treatment (60% of population)
Residual BOD from 2nd treatment (23% of population)
Residual BOD from no treatment
Total Untreated
64,932
8,297
32,466
105,695
66,397
8,484
33,199
108,080
67,863
8,671
33,931
110,465
69,365
8,863
34,683
112,911
70,906
9,060
35,453
115,419
72,486
9,262
36,243
117,991
74,107
9,469
37,053
120,629
75,770
9,682
37,885
123,336
77,476
9,900
38,738
126,113
79,226
10,123
39,613
128,963
81,023
10,353
40,511
131,887
82,867
10,589
41,434
134,889
84,760
10,830
42,380
137,971
86,704
11,079
43,352
141,136
88,701
11,334
44,350
144,385
90,751
11,596
45,376
147,723
33
Scenario C (100% coverage) residual BOD Tons
Residual BOD from 1st treatment (60%)
Residual BOD from 2nd treatment (40%)
Residual BOD from no treatment
Total Untreated
64,391
14,610
79,000
65,844
14,939
80,783
67,297
15,345
82,642
68,787
15,684
84,471
70,315
16,033
86,348
71,882
16,390
88,272
73,489
16,756
90,246
75,138
17,132
92,270
76,830
17,518
94,348
78,566
17,914
96,480
80,348
18,320
98,668
82,176
18,737
100,914
84,054
19,165
103,219
85,982
19,605
105,587
87,962
20,056
108,018
89,995
20,520
110,515
(0)
Scenario D (100% coverage) residual BOD Tons
Residual BOD from 1st treatment (24%)
Residual BOD from 2nd treatment (76%)
Residual BOD from no treatment
Total Untreated
25,973
27,416
53,388
26,559
28,034
54,593
27,145
28,653
55,798
27,746
29,288
57,034
28,362
29,938
58,300
28,994
30,605
59,600
29,643
31,290
60,932
30,308
31,992
62,299
30,990
32,712
63,702
31,690
33,451
65,141
32,409
34,210
66,619
33,147
34,988
68,135
33,904
35,788
69,692
34,682
36,609
71,290
35,480
37,451
72,932
36,301
38,317
74,618
(33)
Scenario E (100% coverage) residual BOD Tons
Residual BOD from 1st treatment (5%)
Residual BOD from 2nd treatment (95%)
Residual BOD from no treatment
Total Untreated
5,411
34,270
39,681
5,533
35,043
40,576
5,655
35,816
41,472
5,780
36,609
42,390
5,909
37,423
43,331
6,041
38,257
44,297
6,176
39,112
45,287
6,314
39,989
46,304
6,456
40,890
47,346
6,602
41,814
48,416
6,752
42,762
49,514
6,906
43,735
50,641
7,063
44,735
51,798
7,225
45,761
52,986
7,392
46,814
54,206
7,563
47,897
55,459
(50)
Urban Wastewater Treatment Scenarios
Population (000')
Population NAP Long List + Mansourah
Population NAP served Primary (60%)
Population NAP served Secondary (20%)
Population NAP connected and unserved (17%)
1. Incremental Population NAP unconnected and unserved
Population non-NAP
Population non-NAP served Primary (60%)
Population non-NAP served Secondary (0%)
Population non-NAP connected and unserved (20%)
Population-NAP unconnected and unserved (18.7%)
2. Incremental Population non NAP unconnected and unserved
3. Total Incremental Population uncon and unser
4. Total Cum. Incremental Population uncon and unser.
Source: Table A2.; NAP (2006); UNDP (2008); and CAPMAS (2008).
14