M&E and Cost Benefit Analysis of WEF Nexus projects in Ecuador, Peru, Niger and Uzbekistan

WEF Nexus project countries

Client: The Global Water, Energy & Food Security Nexus Secretariat

Altus Project Lead: Vanja Westerberg

Time frame: August 2021 - June 2023

Summary

The Water Energy and Food (WEF) Nexus Impact Assessment (NIA) toolkit provide a framework for monitoring, tracking and evaluating the impact of WEF Nexus interventions, and a catalogue of indicators that can be used to monitor progress towards desired outcomes. The NIA toolkit was developed in collaboration with the GIZ Global Nexus secretariat, and has been piloted in Ecuador, Peru, Niger and Uzbekistan.

Challenge

Water resources, energy generation, and food production are interdependent (Allouche et al., 2015; Muller, 2015). For example, water is used in agricultural production and along the entire agro-food supply chain (FAO 2011a). Agriculture accounts for 72 percent of total global freshwater withdrawals, making it the largest user of water (UN-Water 2021). At the same time, food production and agro-food supply chain consume about 30 percent of total global energy (FAO 2011b). Energy is required to produce, transport and distribute food as well as to extract, pump, lift, collect, transport and treat water. Efficiency measures along the agrifood chain can help save water and energy, such as drip and precision irrigation. Fossil fuel production, is highly water intensive, as is biofuel production and the growing practice of shale gas extraction (UN-Water 2022).

As global demand for water, energy and food is set to rise, due to changing consumption patterns and worldwide population growth, the pursuit of integrated problem solving is imperative.  A further stressor is that the international supply chain system must deliver products and resources on a planet where predominant risks include extreme weather events, natural disasters, and resource depletion (World Economic Forum, 2018).

The word nexus means to ‘connect’ (De Laurentiis et al., 2016). One of the main goals of the nexus approach is to reduce or avoid trade-offs resulting from policy development in institutional “silos” (Belinskij, 2015) and minimize unintended resource management risks and conflicts that arise with solely sectoral approaches. The WEF nexus approach has, however, been criticized for failing to quantify cross-sectoral resource decencies, due in part, to lack of analytical tools to support the integration of the WEF Nexus approach into resource governance and project monitoring processes (GIZ GNS 2019).

Action

Altus Impact helped develop a Nexus Impact Assessment (NIA) toolkit  to address above-mentioned concerns, and provide a framework for monitoring, tracking and evaluating the impact of WEF Nexus interventions. The NIA toolkit includes guidance on how to build an effective M&E system -  from building a theory of change, to how to structure data collection activities,  develop appropriate indicators, track these and evaluate progress towards desired objectives. The M&E framework is accompanied by a catalogue of indicators relevant to measuring WEF Nexus aspects, links to more information about how to measure each indicator, and where existing data may be retried. The NIA toolkit also includes guidelines on how to undertake Benefit Cost analysis WEF Nexus projects, whether ex-ante or ex-post, any WEF Nexus intervention.

Impact

The NIA toolkit was piloted on a set of WEF Nexus projects in Ecuador, Peru, Uzbekistan and Niger. The results reveal that all the WEF Nexus interventions, have significant positive impacts, relative to the original “no WEF-Nexus project situation” as measured by their economic returns. A peak insight into the Cost Benefit Analysis results and Profit and Loss account (for Uzbekistan) is provided below. The full publication of the CBA and M&E baseline results will be posted shortly.

In Ecuador, the WEF Nexus project ‘implementing an innovative and energy and thermal efficient solar technologies in Kallari’s agro-industrial drying chain’ is providing significant livelihoods benefits and environmental benefits to cocoa producers within the canton of Tena. By reducing cocoa drying time and ensuring a more balanced production, production quantities and sales revenues of the Kallari association has increased.  The solar dryer also replaces the use of diesel-powered equipment, thereby avoiding potential damage to the grains by the high temperature combustion gases. Adding to this, the Kallari association are making savings on operations and maintenance costs, as the cocoa drying process is reduced and maintenance costs are lower for solar powered installations, relative to diesel powered installations. Lastly, reduced reliance on fossil fuels, has lowered risks related to diesel price volatility whilst avoiding carbon dioxide emissions.  Consequently, the WEF nexus project, is projected to generate a Net Present Value benefit of nearly USD 300,000 over a 25-year time horizon (using a discount rate of 10%), with a payback period of only 1.7 years. The project is a great example of how enhanced food production and smallholder incomes are going hand in hand with increased energy security, through renewable energy.

In Peru, a set of complementary WEF nexus interventions have been implemented within landscape of San Pedro de Casta, including the building of a solar powered greenhouse for vegetable and fruit production, a guinea pig rearing facility and the rehabilitation of ancient water ponds. These activities, are helping increase food production throughout the year, provide diversified diets and enhance nutrition. The interventions are also contributing to increasing groundwater infiltration and resilience to flood risks. Focusing exclusively on the value of the ‘provisioning ecosystem services’ to communities, the Cost Benefit Analysis, shows that

Project beneficiaries (comuneros) stand to enjoy a Net Present Value benefit - from enhanced vegetable, crop production and guinea-pig production - of USD 136'492 over a 30-year time horizon (using a 4% discount rate). This amounts to an average annual net benefit of USD 4'550 per annum for the 237 comuneros. Considering that the average annual household income, including salaried activities, is in the order of USD 370 without the WEF Nexus intervention (baseline data in Evia Salas 2022), the WEF Nexus project is likely to improve agricultural incomes by approximately 40%. As such, the project provides an excellent demonstration of how targeted investments into both water and energy security can improve food security and livelihoods without compromising the availability of either resource.

In Niger, the Kollo Women’s Garden is a 1.2 ha land plot is managed by an association of women in Kollo. It is located in the village terroir of N'Dounga Tarey, some 20 km from Niamey. The garden is part of the high zones that are characterized by a lack of consistent irrigation. However, the garden is located in the valley near the minor bed of the Niger River. With the installation of a solar powered irrigation pump (replacing a diesel-powered pump) and complementary training in good agricultural practices, the Kollo Women’s Garden WEF project in Niger has improved the women’s access to irrigation, reduced their input costs from energy and pesticides, and increased food production.  Without the WEF Nexus project, the women earned an average of $1,562 in annual crop revenues balanced against $638 of annualized fuel costs and $148 in societal costs from GHG emissions. In contrast, the Kollo Women’s Garden Project is will generate approximately $5,905 in annual crop revenues, $638 in fuel savings, and $148 in avoided emission damages, balanced against $5,035 of project investment costs. Overall therefore, Women’s Garden WEF Nexus project will generates a net annual benefit of $1,656 compared to $776 without the WEF Nexus project, resulting in $1.4 benefits for every $1 invested. The Kollo WEF Nexus project demonstrates how clean energy can contribute to increased access to water, that can further improve food security, incomes and reduce GHG emissions.

In Uzbekistan, the Tuyamuyun Hydroelectric Complex (THC) is suffering from significant sedimentation and will cease to function within 20 years if no further action is taken, thus compromising water, energy and food security of the region.  At the same time, there is an imminent supply crisis of sediment materials, especially sand, referred to as the unrecognized hero of our development, used for roads, buildings, infrastructure, land reclamation, electronics, glass etc. Gravel and sand account for the largest volume of solid material extracted globally with demand set to increase by over 300% across lower- and middle-income regions by 2060. But supply of the kind of sand that can be used in the construction industry is limited. There is consequently an important opportunity to capitalise on sediments that are trapped in the THC reservoirs, and use this bankable component of sediment re-use to help finance the dredging and processing of sediments. The economic analysis demonstrates that there is ample scope for recovering the investment, operation and maintenance costs, from sales revenues of dredged materials associated with a first maintenance dredging phase. This experience could serve as a pilot for a much larger reservoir storage recovery program that would help safeguard water, energy and food security, enhance disaster resilience and provide a sustainably supply of raw materials for the construction industry.

Further project context may be found here: EUROPEAN UNION SUPPORTS WATER RESERVOIR SEDIMENTATION TREATMENT EFFORTS IN CENTRAL ASIA

Publications and materials:

The case for re-using sediment from the Tuyamuyun Hydropower Complex, Presentation

The economic case for re-using sediment from the Tuyamuyun Hydropower Complex, Main report 

The Seventh EU-Central Asia High Level Conference in Rome:Investment needs and opportunities for the Water-Energy-Food (WEF) Nexus projects 

The Nexus Impact Assessment Toolkit

Other country studies are in press and will be uploaded asap.

WEF Nexus project countries