African Water Development Report 2006 - United Nations Economic ...

Impact of New Valuation of IrrigationWater on Water Use in MoroccoEl Yacoubi Z. and Mohamed Belghiti M (2002)assessed the financial viability of water supplyRegional Offices for Agricultural Development.These are public institutions whose budget issplit into investment and operating budgets, thefirst in accordance with the Law of Finance andthe second approved by the Board of Directorsof the Offices. Where there is a deficit in the operatingbudget, a balancing subsidy is allocatedby the Ministry of Finance. Since the earnings ofthe Offices come mainly from water fees paid byusers as well as from State subsidies, they need tobe able to recover their operating, maintenanceand renewal expenses if they are to remain financiallyviable. How they achieve this can be seenin the balance of earnings report and the reporton State budgetary transfers.Water Supply Earnings ReportThe Offices’ establishment of an accounting systemsimilar to that of a corporate body helps itto calculate the overall water supply costs recoveredthrough proceeds from water sale (invoicedamounts). The development of this system since1994 is shown in the table 12.1.made and applied resulted in a surplus balance ofwater supply earnings (excluding depreciation)in the 1996/1997 agricultural season despite anincrease in the costs of water supply. The adjustmentalso increased total water earnings despitea drop in the rate of recovery of water fees. Itmade it possible to achieve average earningsof about DH 540 million during the last threeagricultural seasons. Even with this, budgetarytransfers in favour of water supply were limitedto about DH 50 million per annum, althoughwater supply costs increased by more than 26 percent during the period 1995-2000.Budgetary Transfers for Water SupplyThe earnings from water sold (including arrearsrecovered), were more than 90 per cent of thesupply costs (excluding depreciation and includingindirect expenses). Budgetary transfers to theOffices for operating and maintenance expenseswere steady during 1994-2000 despite an increasein tariffs since 1996. The impact of thistariff increase was offset by a drop in water feesrecovery rates.VALUING WATERThe irrigation water tariff adjustment that wasTable 12.1: Earnings report and budgetary transfers in the ORMVA(Amounts in DH million) 1994 1995 1996/97 1997/98 1998/99 1999/00Water supply costs (1) 462 467 514 532 646 584Proceeds of water supply (2) 409 434 554 588 655 609Balance of water supply earnings report(2)-(1)-53 -33 40 56 9 25Water supply proceeds/expenses 89 % 93 % 108 % 111 % 101 % 104 %Water earnings (3) 423 415 480 490 594 532W.S.budgetary transfers (1)-(3) 39 52 34 42 52 52W.S. earnings/expenses 91.6 % 88.9 % 93.4 % 92.1 % 92.0 % 91.1 %(1) Expenses excluding depreciation and including indirect expenses(2) Corresponds to turnover (volume sold x tariffs applied)(3) Earnings from the sale of water during the fiscal period283