This presentation was given at IEEP's capacity building for environmental tax reform conference on 5 October 2017 in Brussels, Belgium. Speaker: Christos Zoumides (The Cyprus Institute)

1. Water Supply and
Irrigation Water Pricing in
Cyprus
Capacity building for environmental tax
reform Brussels, 05 October 2017
Christos Zoumides

2. Water Stress
 Water exploitation index
(WEI) is defined as the
mean annual total
abstraction of fresh water
divided by the long-term
average freshwater
resources.
 It describes how the total
water abstraction puts
pressure on water
resources.
 Countries having high
abstraction in relation to
their resources are prone
to suffer problems of water
stress.
 Cyprus ranks as the most
water-stressed nation Source: Eurostat, 2017

3. Rainfall patterns
Source: WDD, 2017

4. Water supply approach
 “No drop of water to the sea”
 Currently 108 dams with 332 Mm3 storage capacity
Source: WDD, 2017

5. Actual surface water availability
Source: WDD, 2017 Average: 119 Mm3 (ranging 13 – 274 Mm3)

6. Water Supply - Gov. Water
Projects
Source: WDD, 2017

7. Water use by sector
Total Water Consumption (Mm3) by Sector [average 2005-
2007]
Service Within GWP
Outside
GWP
Total
Domestic 68.68 11.22 79.90
Irrigation 38.24 105.01 143.25
Sewerage drainage 20.64 20.64
Recycled Water
Supply
9.91 9.91
Source: WDD, 2011
 Agriculture consumes more that 60% of total water
use
 More than 70% of irrigation outside GWP  private

8. Crop production water footprint
214 205 188 195 193 186 180 172 176
204 193 185 176 174 160
0
100
200
300
400
500
600
0
100
200
300
400
500
600 1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Precipitation
(mm)
WaterFootprintcropproduction
(Mm3/yr)
CWU blue [IR] CWU green [IR] CWU green [RF] Precipitation
Source: Zoumides et al. (2012; 2013)

9. Crop water footprint composition
(avg.)
187
Mm3/yr
37%
319
Mm3/yr
63%
506
Mm3/year
Cereals
40%
Roots
3%
Pulses
1%
Nuts
4%
Oil crops
8%
Veg.
3%
Fruits
22%
Fodder
19%
Tobacco
0%
Cereals
2%
Roots
8%
Pulses
1%
Nuts
5%
Oil crops
14%
Veg. 9%
Fruits
53%
Fodder
8%
Tobacco
0%
Source: Zoumides et al. (2012)

10. Annual Groundwater Use
 GW contribution to irrigation
use
 Max: 91% in 2008 (159 Mm3/year)
 Min: 66% in 2003 (116 Mm3/year)
 Avg: 81% per year (151 Mm3/year)
0
50
100
150
200 1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
TotalBlueWaterUse
(Mm3/year)
Dams Recycled Groundwater Use Groundwater Overpumping
 GW overpumping (ρgw)
 Wet: 1.12  13 Mm3/year
 Dry: 1.53  56 Mm3/year
 Avg: 1.45  47 Mm3/year
Source: Zoumides et al. (2013)

11. Water services and uses
Services Suppliers Uses Water Sources
Domestic
Water Development
Department, Water Boards,
Municipalities and
Communities
Households Surface water
(dams),
Groundwater,
Desalination,
Imported water
Tourism
Industry
Other uses
Irrigation
Water Development
Department, Irrigation
Associations, individual
farmers
Crop prod. Surface water
(dams and
streams),
Groundwater,
Recycled water
Livestock
prod.
Industry
Other uses
Sewage
wastewater
collection &
treatment;
secondary
Sewage Boards
Households
Effluent from
households,
Tourism and
Industrial units
Tourism
Industry
Water Development Crop prod. Secondary treatedSource: WDD, 2011

12. Water Pricing Policies 1960 -
2003
 A long tradition in domestic & irrigation sector from the 1960s.
 Volumetric pricing started with the implementation of the first
GWP and gradually became the usual practice for all water
providers
 The aim was to recover the projects’ financial cost, according
to the National Law and Loan Agreements for financing the
GWP (IBRD).
 Drinking water pricing (wholesale) Full (financial) cost recovery;
based on Balanced Budget method.
 Irrigation water pricing to individual farmers: the price should reach
at least 38% of the cost but not exceed 40% (or 65% under special
conditions); based on Present Worth Value method.
 Irrigation water pricing was subsidized due to the importance of
the primary sector, food security, preservation of rural
landscape, avoidance of urbanization
 Private groundwater abstraction was (and still is) not
charged. The full financial cost is paid by the well owner; this
cost is thought to be high due to the depth of the wells.

13. Water Pricing Policies 2004 to
date
 The WFD was transposed to national legislation in 2004 (Law
13(Ι)/2004).
 After the final payment of the loans and in the light of WFD
requirements (adaptation preparation), irrigation water pricing from
GWP was revised in 2004.
 prices increased considerably (in some GWP were doubled) but kept at
affordable levels
 a unified price in all GWP
 Prices for non-agricultural use (e.g. green areas or play courses) are
considerably higher, reflecting the financial cost.
 Overconsumption charges are applied for the quantities exceeding the
yearly permissible; multiple of the regular price  strong barrier to
overconsumption
 Despite the price reform in 2004 and the considerable price increase
no change in the consumers’ behavior in the GWP could be observed
with regard to water usage
 Prices for recycled water are set to considerably lower levels despite
the high cost  environmental benefits from the use; enter in the
water balance; motives to use.

14. Irrigation Prices (GWP) 2004 to
date
Description / Use
Price
(€/m3
)
GWP(Surface&Groundwater)
To Agricultural Organisations for agricultural production 0.15
To individuals for agricultural production 0.17
For industrial consumption 0.19
For animal husbandry consumption 0.17
For consumption after overflow 0.05
For irrigation of football and golf courses 0.34
For irrigation of other sports places, hotels and house gardens 0.34
For fish breeding 0.17
For over consumption (if quantity exceeds the annual approved by more than 10%) 0.56
Other prices/ rates
Fixed yearly rate (€/ha) 17.10
For connection: Water meter (€/meter) 68.00
For connection: Filter (€/filter) 5.00
For reconnection 25.50
RecycledWater
To Agricultural Organisations for agricultural production 0.05
To private individuals for agricultural production 0.07
For sports activities 0.15
For irrigation of green spaces, parks and hotel gardens 0.15
For irrigation of golf courses 0.21
For abstraction from groundwater aquifers, which have been enriched with recycled
water

15. Cost assessment (Art. 9)
 A special study was undertaken (2008-2010) to re-estimate
the total water service cost (financial, environmental &
resource costs)Cost Assessment (in 2007 prices)
Unit Cost
(€/m3
) Within GWP Outside GWP
Domestic
Financial 1.17 (96%) 1.00 (89%)
Environmental 0.04 (3%) 0.03 (3%)
Resource 0.01 (1%) 0.09 (8%)
Total 1.22 (100%) 1.12 (100%)
Irrigation
Financial 0.34 (76%) 0.30 (61%)
Environmental 0.10 (22%) 0.16 (33%)
Resource 0.01 (2%) 0.03 ( 6%)
Total 0.45 (100%) 0.49 (100%)
Sewage
Financial 1.21 (100%)
Environmental -
Resource -
Total 1.21 (100%)
Recycled
Financial 0.15 (65%)
Environmental 0.08 (35%)
Resource -
Total 0.23 (100%)
Cost recovery level (2005-2007)
Within
GWP
Outside
GWP
Domestic 99% 75%
Irrigation 41% 61%
Sewage* 227%
Recycled 38%
* High levels of cost recovery due to
sewage charges, prepaid by
consumers that contribute to
revenues.
Cost Recovery = Revenues / Costs
Source: WDD, 2011

16. Proposed Irrigation Prices in
2011
 For GWP keep the two part tariff system: fixed cost
plus variable volumetric charge
 Fixed annual cost to increase 17.10  61.10 €/ha
 Volumetric change to increase from 0.17 €/m3 (41%) in
2010:
0.24 (54%) in 2011  0.26 in 2013  0.28 (72%) in 2015
 Same rates for livestock and fish breeding
 Full cost recovery (i.e. 0.45 €/m3) for all other irrigation uses
 Recycled: introduce two part tariff
 Fixed cost 0  49.60 €/ha
 Volumetric change to increase from 0.07  0.18 €/m3
(88%)
 For irrigation outside GWP:

17. In practice…
 On top of the WFD transposition to national legislation (Law
13(Ι)/2004), the WFD’s full cost recovery provisions on water
pricing were included in Regulation 128/2014 (linked to the
above mentioned Law)
 In practice, the proposed prices have not been activated yet
 Political cost
 Economic downturn 2013-2015
 Reaction from farmers
 Decreasing farming activity
 Technical difficulties
Source: Cystat, 2017

18. Public consultation (2009-2015)
 Public participation in environmental matters is something
new for the Cypriot society
 The public consultation in the 1st implementation cycle
(2009-2015) consisted of multiple meetings of authorities
with a broad range of stakeholders
 consumer associations, farmer associations, local authorities,
academics, environmental NGOs, etc.
 These meetings served as information events for the River
Basin Management Plan
 Although the public had the chance to raise concerns,
there was not much engagement by the civil society in the
design of pricing instruments; most participants opposed
the proposed pricing
 Only environmental NGOs and some academics supported

19. Public consultation (2016-2021)
 Merged public consultations for the WFD with the FD
 The process became even more lengthy; difficult to
keep people’s attention for a full day.
 Although the necessary procedures outlined by the EU
were overall satisfied with the process, these meetings
were not as widely attended.
 The approach was more top-down compared to the
public consultation for the 1st cycle
 loss of enthusiasm, limited staff and budget following the
economic crisis, etc.
 In general, a more participatory approach is needed
for the public consultation process.

20. New Regulation 48/2017
Description / Use
Financial
Env&
Resource
Total (€/m3)
GWP(Surface&Groundwater)
To Agricultural Organisations for agricultural production 0.10 0.02 0.12
To individuals for agricultural production 0.15 0.02 0.17
For industrial consumption 0.23 0.02 0.25
For animal husbandry consumption 0.15 0.02 0.17
For irrigation of football and golf courses 0.34 0.02 0.36
For irrigation of other sports places, hotels and house
gardens
0.21 0.02 0.23
For fish breeding 0.15 0.02 0.17
For over consumption - agriculture 0.45
For over consumption - other uses Double
Fixed yearly rate (€/ha) 24.00
For connection: Water meter (€/meter) 200.00
For connection: Filter (€/ha) 50.00
For reconnection 20.00
Recycled
To Agricultural Organisations for agricultural production 0.01 0.01 0.02
To private individuals for agricultural production 0.06 0.01 0.07
For industrial consumption 0.15 0.02 0.17
For sports activities 0.10 0.02 0.12
For irrigation of green spaces, parks and hotel gardens 0.15 0.02 0.17
For irrigation of golf courses 0.15 0.08 0.23
For over consumption Double

21. New Regulation 48/2017
 The new regulation will be implemented as of April 10th 2017
 For GWP, fixed price increased, but volumetric price remain
unchanged or lower
 But, for the first time the type of cost are distinguished (financial,
environmental & resource)
 The new regulation imposes the environmental and resource
cost for the first time to private (mostly groundwater)
consumers:
 0.01 €/m3 for agricultural use, 0.02 €/m3 for gardens, 0.10 €/m3 for
industry and hotels
 If volumes are not metered, charges will be imposed either by
area, crop type, or time of irrigation; billing on annual basis
 Volumes abstracted will require prior approval by WDD 
relevant also for cross compliance with RDP funds and
agricultural subsidies

22. Summary
 Cyprus is the most water-stressed nation in Europe
 Water supply is enhanced by non-conventional resources
 Groundwater over abstraction and aquifers’ deterioration is severe.
Although easily accessible, it is not anymore a secure water resource.
 Volumetric water pricing has been used for many decades.
 Full cost recovery applies to domestic water use – high acceptance
 Irrigation water pricing within GWP is metered & changed but below FC
 Private groundwater pumping until now uncharged  effectiveness of
the new regulation remains to be assessed in practice
 Although there are water use efficiency measures at the farm level,
there is room for improvement  smart irrigation technologies, crop
diversification, etc.
 Affordable irrigation pricing  further incentives for water savings?
 A more participatory approach is needed for the public consultation

23. Reference
 Cystat (2017). Statistical Abstract 2015. Nicosia, Cyprus.
 Charalambous, K., Bruggeman, A., Giannakis, E. and Zoumides, C. (2017). Improving public
participation processes for the Floods Directive and flood awareness: Evidence from Cyprus.
Journal of Flood Risk Management (under review).
 Eurostat (2017). Water exploitation index. URL: http://ec.europa.eu/eurostat/en/web/products-
datasets/-/TSDNR310
 WDD (2011). Cost assessment and pricing of water services in Cyprus – Summary. WDD,
Nicosia, March 2010.
 WDD (2017) Statistical Data. URL:
http://www.moa.gov.cy/moa/wdd/Wdd.nsf/statistics_gr/statistics_gr?OpenDocument
 Zoumides, C. and Zachariadis, T. (2009). Irrigation Water Pricing in Southern Europe and
Cyprus: The effects of the EU Common Agricultural Policy and the Water Framework Directive.
Cyprus Economic Policy Review, Vol. 3(1): 99–122.
 Zoumides, C., Bruggeman, A. and Zachariadis T. (2012). “Global versus local crop water
footprints: the case of Cyprus”, in Zhang et al (eds.) Solving the Water Crisis: Common Action
Toward a Sustainable Water Footprint. Value of Water Research Report Series No. 60,
UNESCO-IHE, pp. 7-27.
 Zoumides, C., Bruggeman, A., Hadjikakou, M. and Zachariadis, T. (2014). Policy-relevant
indicators for semi-arid nations: The water footprint of crop production and supply utilization of
Cyprus. Ecological Indicators 43, pp. 205-214.
 Zoumides, C., Bruggeman, A., Zachariadis, T. and Pashiardis, S. (2013). Quantifying the poorly
known role of groundwater in agriculture: the case of Cyprus. Water Resources Management

24. Thank You
Christos Zoumides, PhD
Energy, Environment and Water Research
Centre
The Cyprus Institute
P.O.Box 27456,
1645 Nicosia, Cyprus
Tel. +357 9987 3748
Email: c.zoumides@cyi.a.c.cy