58404 The Zambezi River Basin A Multi-Sector Investment Opportunities Analysis Volume 1 Summary Report THE WORLD BANK The Zambezi River Basin A Multi-Sector Investment Opportunities Analysis Volume 1 Summary Report June 2010 THE WORLD BANK WATER RESOuRcES MANAgEMENT AfRicA REgiON © 2010 The International Bank for Reconstruction and Development/The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: feedback@worldbank.org All rights reserved The findings, interpretations, and conclusions expressed herein are those of the author(s) and do not necessarily reflect the views of the Executive Directors of the International Bank for Reconstruction and Development/The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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Cover and interior design: The Word Express Cover photos: © Photographer Len Abrams/World Bank © Photographer Marcus Wishart/World Bank © Photographer Vahid Alavian/World Bank Contents Acknowledgments....................................................................................................................................vii AbbreviAtions.And.Acronyms.................................................................................................................. ix the.ZAmbeZi.river.bAsin:.bAckground.And.context............................................................................1 1.1 Motivation for This Analysis ................................................................................................................. 1 1.2 Summary of Findings ............................................................................................................................. 3 1.3 Basic Characteristics of the Zambezi River Basin ............................................................................... 3 1.4 Population and Economy ....................................................................................................................... 7 1.5 Approach and Methodology .................................................................................................................. 7 1.5.1 Analytical framework .................................................................................................................. 8 1.5.2 The River/Reservoir System Model ............................................................................................. 9 1.5.3 The Economic Assessment Tool ..................................................................................................11 2.. development.in.the.ZAmbeZi.river.bAsin.......................................................................................13 2.1 Current and Potential Hydropower.................................................................................................... 13 2.2 Current and Potential Irrigation .......................................................................................................... 15 3.. scenArio.AnAlysis.And.Findings......................................................................................................19 3.1 The Development Scenarios ................................................................................................................. 19 3.2 Overall Findings ................................................................................................................................... 22 3.2.1 General observations .................................................................................................................. 22 3.2.2 Economic analysis ...................................................................................................................... 24 3.3 Findings by Development Scenario .................................................................................................... 26 4.. conclusions.And.next.steps............................................................................................................33 4.1 Conclusions ............................................................................................................................................ 33 4.2 Next Steps ............................................................................................................................................... 34 reFerences...................................................................................................................................................37 iii The Zambezi River Basin: A Multi-Sector Investment Opportunities Analysis Tables Table 1.1. Precipitation data for the Zambezi River Basin ................................................................................. 4 Table 1.2. Population of the Zambezi River Basin ............................................................................................. 7 Table 1.3. Macroeconomic data by country (2006) .............................................................................................. 8 Table 2.1. Existing hydropower projects and reservoirs in the Zambezi River Basin ................................. 14 Table 2.2. Future hydropower projects included in the analysis .................................................................... 14 Table 2.3. Existing irrigation areas in the Zambezi River Basin (ha) ............................................................. 15 Table 2.4. Identified projects: Additional irrigation areas in the Zambezi River Basin (ha) ....................... 16 Table 2.5. High-level irrigation scenario: Additional irrigation areas in the Zambezi River Basin .......... 17 Table 3.1. Development scenarios evaluated .................................................................................................... 21 Table 3.2. Main assumptions used for the economic analysis ........................................................................ 25 Table 3.3. Effect of coordinated hydropower operation on firm and average energy production ............ 29 Figures Figure 1.1. The Zambezi River Basin and its 13 subbasins ................................................................................ 5 Figure 1.2. Schematic of the Zambezi River with deregulated mean annual discharge (m3/s) and runoff (mm) ................................................................................................................................... 6 Figure 1.3. Zambezi River Basin: scenario analysis matrix................................................................................ 9 Figure 1.4. Schematic of the river/reservoir system model for the Zambezi River Basin ......................... 10 Figure 1.5. Schematic of the elements of the economic analysis tool ............................................................. 12 Figure 2.1. Irrigation levels considered in this analysis (ha) ........................................................................... 16 Figure 3.1. Potential for energy generation and irrigation by development scenario ................................ 23 Figure 3.2. Summary of economic analysis: Net present value and employment results by scenario (compared to current situation)........................................................................................................ 26 Figure 3.3. Synthesis of firm energy generation for all scenarios ................................................................... 27 Figure 3.4. Average annual irrigated area by scenario ..................................................................................... 27 Figure 3.5. Mean annual water abstractions by scenario ................................................................................. 28 boxes Box 4.1. The Zambezi River Watercourse Commission (ZAMCOM) ............................................................ 36 iv Currency Equivalents and Units Currency Equivalents Against U.S. dollar Angolan Botswana Malawi Mozambique Namibia Tanzania Zambia Zimbabwe new kwanza pula Euro kwacha metical dollar schilling kwacha dollar Kz P MK Mt N$ T Sh K Z$ 2000 5.94 5.09 1.08 47.10 15.41 6.95 799.27 2,830.00 44.40 2001 11.51 5.72 1.12 70.03 20.33 8.62 876.59 2,845.37 55.26 2002 32.41 6.26 1.06 76.24 23.24 10.52 965.27 4,360.81 55.29 2003 57.65 4.91 0.89 95.24 23.31 7.57 1,036.79 4,841.94 577.19 2004 57.65 4.68 0.80 106.74 22.03 6.46 1,088.20 4,750.53 4,499.18 2005 74.90 5.11 0.80 116.84 22.85 6.36 1,125.36 4,432.60 21,566.90 2006 86.85 5.83 0.80 135.54 25.93 6.77 1,251.28 3,586.09 58,289.86 2007 77.38 6.15 0.73 139.72 25.56 7.06 1,241.24 3,996.41 9,296.66 2008 74.97 6.84 0.68 140.91 24.14 8.25 1,199.75 3,746.63 2,638,293,338 2009 77.97 7.14 0.72 141.75 26.87 8.43 1,324.34 5,049.15 21,830,975.04 Units 1 km3 = 1,000 hm3 = 1 billion m3 1 m3/s = 31.54 hm3/year = 0.033 km3/year 1 l/s/ha = 86.4 m3/day/ha = 8.6 mm/day 1 gigawatt hour (GWh) = 1,000 MWh = 1,000,000 KWh = 1,000,000,000 Wh 1 km2 = 100 ha Unless otherwise specified, the symbol $ refers to U.S. dollars. v Acknowledgments This report provides a summary of the series of reports development partners. Their participation and input and documents prepared to assess the water resources at the regional meeting in Gaborone, Botswana in July development options and benefits of cooperation among 2009, and at the eight national consultation workshops the riparian countries in the Zambezi River Basin. The held between September and December 2009 is much effort was led by a Bank Team consisting of Vahid Ala- appreciated. The financial contribution and support vian (Team Leader), Marcus Wishart, Louise Croneborg, from the Swedish International Development Coopera- Rimma Dankova, K. Anna Kim, and Lucson Pierre- tion Agency (Sida) and the Government of Norway are Charles. The initial Team Leader for this work was Len acknowledged with appreciation. Abrams, now retired. The Multi-Sector Investment Op- The World Bank peer reviewers for this work in- portunities Analysis is based on a series of reports and cluded Stephen Mink, Glenn Morgan, Daryl Fields, and model simulations prepared by a consortium of BRLi and Guy Alaerts. Francois Onimus also provided written Niras. The consultants served as partners and members comments. Their constructive inputs are very much of the team during the course of this work. appreciated. The team benefitted from the guidance of The Team gratefully acknowledges the contributions Rick Scobey, Acting Director for Regional Integration, by representatives of the riparian countries of the Zam- Inger Andersen, Director for Sustainable Development, bezi River Basin, the Southern Africa Development Com- and Ashok K. Subramanian, Sector Manager for Water munity (SADC) Water Division, and other international Resources Management, Africa Region. vii Abbreviations and Acronyms AAP Africa Action Plan ACP Agricultural Commercialization Program (Zambia) AF artificial flooding AMD acid mine drainage AMU Arab Maghreb Union ARA Administração Regional de Águas (Regional Water Administrations, Mozambique) ASDP Agricultural Sector Development Program (Tanzania) ASDS Agricultural Sector Development Strategy (Tanzania) AU African Union BIPP bankable investment project profile BOD biological oxygen demand BOS Bureau of Standards BPC Botswana Power Corporation CAADP Comprehensive Africa Agriculture Development Program CBA cost benefit analysis CEC Copperbelt Energy Corporation PLC CEMAC Central African Economic and Monetary Community CEN-SAD Community of Sahel-Saharan States CEPGL Economic Community of the Great Lakes Countries COMESA Common Market for Eastern and Southern Africa CPC Climate Prediction Center CPFAT Centro Provincial de Formação Agrária de Tete (Mozambique) CRU Climate Research Unit CS current situation CSCO current situation with coordinated operation CSNC current situation without coordinated operation CVRD Companhia Vale do Rio Doce (Brazil) DMC Drought Monitoring Center DMU Disaster Management Unit DNA Direcção Nacional de Águas (National Directorate of Water, Mozambique) DNSA Direcção Nacional de Extensão Agrária (National Directorate of Agrarian Services, Mozambique) DPA Provincial Directorate of Water DRC Democratic Republic of Congo DSS decision support system DWA Department of Water Affairs DWAF Department of Water Affairs and Forestry EAC East African Community ECCAS Economic Community of Central African States ECMWF European Center for Medium Range Weather Forecast ECOWAS Economic Community of West African States ECP Estratégia de Combate à Pobreza (Poverty Reduction Strategy, Angola) ECZ Environmental Council of Zambia EdM Electricidade de Moçambique (Electricity of Mozambique, Mozambique) EIA Environmental Impact Assessment ix The Zambezi River Basin: A Multi-Sector Investment Opportunities Analysis EIRR economic internal rate of return ENE Empresa Nacional de Electricidad (National Electricity Company, Angola) ESCOM Electricity Supply Corporation of Malawi ESIA Environmental and Social Impact Assessment ETo reference evapotranspiration ETP evapotranspiration EU European Union EUMETSAT European Organization for the Exploitation of Meteorological Satellites EUS epizootic ulcerative syndrome FAO Food and Agriculture Organization FSL full supply level GDP gross domestic product GMA Game Management Area GPZ Gabinete do Plano de Desenvolvimento da Região do Zambeze (Office of Development Planning for the Zambezi Region, Mozambique) GWh gigawatt hour ha hectare HCB HidroEléctrica de Cahora Bassa (Cahora Bassa Hydroelectrics, Mozambique) HEC Hydrologic Engineering Center HIPC Heavily Indebted Poor Countries Initiative HLI high-level irrigation HLIC HLI with cooperation hm3 Cubic hectometer HPP hydropower plant HRWL high reservoir water level HYCOS hydrological cycle observation system I&C information and communication IBRD International Bank for Reconstruction and Development ICM Integrated Committee of Ministers ICTs information and communication technologies IDF irrigation development fund IGAD Inter-Governmental Authority on Development IMF International Monetary Fund INAM Instituto Nacional de Meteorologia (National Institute of Meteorology, Mozambique) IOC Indian Ocean Commission IP identified project (for irrigation) IPC IP with cooperation IPCC Intergovernmental Panel on Climate Change IRR internal rate of return ITT Itezhi Tezhi Dam IUCN International Union for Conservation of Nature IWRM integrated water resources management JICA Japan International Cooperation Agency JOTC Joint Operation Technical Committee KAZA TFCA Kavango-Zambezi Transfrontier Conservation Area kg/ha kilogram per hectare KGL Kafue Gorge Lower Dam KGU Kafue Gorge Upper Dam km3 cubic kilometers KWh kilowatt hour l/s liters per second LEC Lesotho Electricity Corporation LRRP Land Reform and Resettlement Program (Zimbabwe) LRWL low reservoir water level LSL low supply level m3/s cubic meters per second MACO Ministry of Agriculture and Cooperatives (Zambia) MAP mean annual precipitation MAWF Ministry of Agriculture, Water and Forestry x Abbreviations and Acronyms MASL minimum active storage level MDG Millennium Development Goal MDRI Multilateral Debt Relief Initiative MEA Ministry of Energy and Water MERP Millennium Economic Recovery Program (Zimbabwe) MFL minimum flow level mg/l milligrams per liter MKUKUTA Poverty Reduction Strategy for Mainland Tanzania (kiswahili acronym) mm/yr millimeters per year MMEWR Ministry of Minerals, Energy and Water Resources MOL minimum operating level MOPH Ministry of Public Works and Housing MoU memorandum of understanding MPRSP Malawi Poverty Reduction Strategy Paper MRU Mano River Union MSIOA Multi-Sector Investment Opportunities Analysis MW megawatt MWh megawatt hour NAMPAADD National Master Plan for Arable Agriculture and Dairy Development (Botswana) NAP national agriculture policy NDMO National Disaster Management Office NDP(s) national development plan(s) NDP2 National Development Plan 2 NEPAD New Partnership for Africa's Development NERP National Economic Revival Program (Zimbabwe) NIP national irrigation plan NMHS National Meteorological and Hydrological Services NMTIPs national medium-term investment programs NOAA National Oceanic and Atmospheric Administration NPV net present value NSC north­south carrier NSC National Steering Committee NSGRP National Strategy for Growth and Reduction of Poverty (Tanzania) NWSDS National Water Sector Development Strategy (Tanzania) ODA official development assistance OWE open water evaporation PAEI Política Agrária e Estratégias de Implementação (Agriculture Policy and Implementation Strategy, Mozambique) PAR population at risk PARPA Plano de Acção para a Redução da Pobreza Absoluta (Poverty Reduction Support Strategy, Mozambique) PARPA II Plano de Acção para a Redução da Pobreza Absoluta II (2nd Poverty Reduction Support Strategy, Mozambique) PASS II Poverty Assessment Study Survey II PFM public financial management PPEI Política Pesqueira e Estratégias de Implementação (Fishery Policy and Implementation Strategy, Mozambique) ppm parts per million PPP purchasing power parity ProAgri Promoção de Desenvolvimento Agrário (National Agricultural Development Program, Mozambique) PRSP poverty reduction strategy paper PSIP program and system information protocol RBO river basin organization RBZ Reserve Bank of Zimbabwe RCC roller-compacted concrete REC regional economic communities RIAS Regional Integration Assistance Strategy R-o-R run-of-the-river RSA Republic of South Africa RSAP Regional Strategic Action Plan SACU Southern African Customs Union SADC Southern African Development Community SADC-WD SADC Water Division xi The Zambezi River Basin: A Multi-Sector Investment Opportunities Analysis SAPP Southern African Power Pool SARCOF Southern African Climate Outlook Forum SEA strategic environmental assessment SEB Swaziland Electricity Board SEDAC Socioeconomic Data and Applications Center SIDA Swedish International Development Cooperation Agency SIGFE Sistema Integrado de Gestão Financeira do Estado (Integrated Financial Management System, Angola) SMEC Snowy Mountains Engineering Corporation SNEL Société Nationale d'Électricité (National Electricity Company, Democratic Republic of Congo) SSIDS small-scale irrigation development study SWOT strengths, weaknesses, opportunities, and threats t/yr tons/year TANESCO Tanzania Electric Supply Company TVA Tennessee Valley Authority (United States) TWL tail water level UK United Kingdom UN/ISDR United Nations Inter Agency International Strategy for Disaster Reduction UNDP United Nations Development Program UNECA United Nations Economic Commission for Africa UNESCO United Nations Educational, Scientific and Cultural Organization US$ United States dollar USAID United States Agency for International Development USGS U.S. Geological Survey VSAM Visão do Sector Agrário em Moçambique (Mozambique) WAEMU West African Economic and Monetary Union WAP Water Apportionment Board WASP Web Analytics Solution Profiler WFP World Food Program WHO World Health Organization WMO World Meteorological Organization WRC Water Resources Commission WTO World Trade Organization WTTC World Travel and Tourism Council ZACBASE Zambezi River database ZACPLAN Action Plan for the Environmentally Sound Management of the Common Zambezi River System ZACPRO Zambezi Action Project ZAMCOM Zambezi River Watercourse Commission ZAMFUND Zambezi Trust Fund ZAMSEC ZAMCOM Secretariat ZAMSTRAT Integrated Water Resources Management Strategy and Implementation Plan for the Zambezi River Basin ZAMTEC ZAMCOM Technical Committee ZAMWIS Zambezi Water Information System ZAPF Zimbabwe's Agriculture Policy Framework ZCCM Zambia Consolidated Copper Mines Ltd ZESA Zimbabwe Electricity Supply Authority ZESCO Zambia Electricity Supply Corporation ZINWA Zimbabwe National Water Authority ZRA Zambezi River Authority ZRB Zambezi River Basin ZVAC Zambia Vulnerability Assessment Committee xii 1 The Zambezi River Basin: Background and Context The Zambezi River Basin (ZRB) is one of the most diverse and valu- able natural resources in Africa. Its waters are critical to sustainable economic growth and poverty reduction in the region. In addition to meeting the basic needs of some 30 million people and sustaining a rich and diverse natural environment, the river plays a central role in the economies of the eight riparian countries--Angola, Botswana, Malawi, Mozambique, Namibia, Tanzania, Zambia, and Zimbabwe. It provides important environmental goods and services to the region and is essential to regional food security and hydropower production. Because the Zambezi River Basin is characterized by extreme climatic variability, the River and its tributaries are subject to a cycle of floods and droughts that have devastating effects on the people and econo- mies of the region, especially the poorest members of the population. 1.1 MoTivaTionForThisanalysis Despite the regional importance of the ZRB, few improvements have been made in the management of its water resources over the past 30 years. Differences in post-independence development strategies and in the political economy of the riparian countries, as well as the diverse physical characteristics of the Basin, have led to approaches to water resources development that have remained primarily unilateral. Better management and cooperative development of the Basin's water resources could significantly increase agricultural yields, hy- dropower outputs, and economic opportunities. Collaboration has the potential to increase the efficiency of water use, strengthen envi- ronmental sustainability, improve regulation of the demands made on natural resources, and enable greater mitigation of the impact of droughts and floods. Seen in this light, cooperative river basin development and management not only provide a mechanism for increasing the productivity and sustainability of the river system, but also provide a potential platform for accelerated regional economic growth, cooperation, and stability within the wider Southern Africa Development Community (SADC). 1 The Zambezi River Basin: A Multi-Sector Investment Opportunities Analysis The World Bank, other international finan- be expected from cooperative as opposed to cial institutions and development partners have unilateral development of irrigation schemes? a diverse portfolio of investments and support · Flood management, particularly in the Lower Zam- programs in the countries that share the ZRB. Still bezi and the Zambezi Delta. What options exist to lacking, however, is a sound analytical foundation permit partial restoration of natural floods and for a coordinated strategy that can optimize the Ba- to reduce flood risks downstream from Cahora sin's investment potential and promote cooperative Bassa Dam? How would those options affect the development in support of sustainable economic use of the existing and potential hydropower and growth and poverty alleviation. irrigation infrastructure on the Zambezi River? The overall objective of the Zambezi River Multi- · Effects of other projects using the waters of the Sector Investment Opportunity Analysis (MSIOA) Zambezi River (e.g., transfers out of the Basin is to illustrate the benefits of cooperation among the for industrial uses). How might these projects riparian countries in the ZRB through a multi-sectoral affect the environment (wetlands), hydropower, economic evaluation of water resources develop- irrigation, and tourism? ment, management options and scenarios--from both national and basin-wide perspectives. The Within the context of an integrated approach analytical framework was designed in consultation to the development and management of water with the riparian countries, SADC Water Division resources, all water-related sectors are important. (SADC-WD) and development partners in line with This analysis, however, focuses on hydropower and the Zambezi Action Plan Project 6, Phase II (ZACPRO irrigation because of their special potential to stimu- 6.2). It is hoped that the findings, together with the late growth in the economies of the region. Other Integrated Water Resources Management Strategy demands for water--for potable water, environmen- and Implementation Plan for the Zambezi River Ba- tal sustainability, tourism, fisheries, and navigation, sin that was developed under ZACPRO 6.2 (2008), for example--are assumed as givens. Limitations of would contribute to development, environmental assigning economic value to non-economic water sustainability, and poverty alleviation in the region. users, such as ecosystems, are noted. To the degree In this analysis, the following development paths allowed by the available, published information, they have been assessed through a series of scenarios. are incorporated into the analysis as non-negotiable. The initial findings and the various drafts of · Coordinated operation of existing hydropower facili- this analysis were discussed at a regional workshop ties, either basin-wide or in clusters. By how much and at individual country consultations with all could hydropower generation increase if existing riparian countries. Also involved in these consulta- projects were coordinated? What is the potential tions were SADC, the international development impact of coordination on other water users? partners active in the Basin, and other interested · Development of the hydropower sector as envisioned parties. The final draft version was shared with in plans for the Southern African Power Pool the riparian countries as well for comments before (SAPP). What is the development potential of finalization. The Swedish International Develop- the hydropower sector? How would its expan- ment Cooperation Agency and the Government of sion affect the environment (wetlands in par- Norway provided financial support. ticular), irrigation, tourism, and other sectors? This report consists of four volumes: What gains could be expected from the coordi- nated operation of new hydropower facilities? Volume 1: Summary Report · Development of the irrigation sector through uni- Volume 2: Basin Development Scenarios lateral or cooperative implementation of projects Volume 3: State of the Basin identified by the riparian countries. How might Volume 4: Modeling, Analysis, and Input Data the development of irrigation affect the envi- ronment (wetlands), hydropower, tourism, and This section (1.1­1.5) appears as an introduction other sectors? What incremental gain could to all four volumes. 2 The Zambezi River Basin: Background and Context 1.2 suMMaryoFFindings the Basin) would not have a significant effect on productive (economic) use of the water in the system The ZRB and its rich resources present ample at this time. But they might affect other sectors and opportunities for sustainable, cooperative invest- topics, such as tourism and the environment, espe- ment in hydropower and irrigated agriculture. cially during periods of low flow. A more detailed With cooperation and coordinated operation of the study is warranted. existing hydropower facilities found in the Basin, For the Lower Zambezi, restoration of natural firm energy generation can potentially increase by flooding, for beneficial uses in the Delta, including seven percent, adding a value of $585 million over a fisheries, agriculture, environmental uses and bet- 30-year period with essentially no major infrastruc- ter flood protection, could be assured by modify- ture investment. ing reservoir operating guidelines at Cahora Bassa Development of the hydropower sector accord- Dam. Depending on the natural flooding scenario ing to the generation plan of the SAPP (NEXANT selected, these changes could cause significant re- 2007) would require an investment of $10.7 billion duction in hydropower production (between three over an estimated 15 years. That degree of develop- percent and 33 percent for the Cahora Bassa Dam ment would result in estimated firm energy produc- and between four percent and 34 percent for the tion of approximately 35,300 GWh/year and average planned Mphanda Nkuwa Dam). More detailed energy production of approximately 60,000 GWh/ studies are warranted. year, thereby meeting all or most of the estimated Based on the findings for Scenario 8, which as- 48,000 GWh/year demand of the riparian countries. sumes full cooperation of the riparian countries, a With the SAPP plan in place, coordinated operation reasonable balance between hydropower and irriga- of the system of hydropower facilities can provide an tion investment could result in firm energy genera- additional 23 percent generation over uncoordinated tion of some 30,000 GWh/year and 774,000 hectares (unilateral) operation. The value of cooperative gen- of irrigated land. Those goals could be achieved eration therefore appears to be significant. while providing a level of flood protection and part Implementation of all presently identified na- restoration of natural floods in the Lower Zambezi. tional irrigation projects would expand the equipped The riparian countries together with their de- area by some 184 percent (including double crop- velopment partners may wish to act on the analysis ping in some areas) for a total required investment presented here by pursuing several steps, described of around $2.5 billion. However, this degree of in detail at the end of volume 1: development of the irrigation sector, without fur- ther development of hydropower, would reduce · Explore and exploit the benefits of cooperative hydropower generation of firm energy by 21 percent investments and coordinated operations; and of average energy by nine percent. If identified · Strengthen the knowledge base and the regional irrigation projects were developed alongside current capacity for river basin modeling and planning; SAPP plans, the resulting reduction in generation · Improve the hydrometeorological data system; would be about eight percent for firm energy and · Conduct studies on selected topics, including four percent for average energy. those mentioned above; and, Cooperative irrigation development (such as · Build institutional capacity for better manage- moving approximately 30,000 hectares of planned ment of water resources. large irrigation infrastructure downstream) could increase firm energy generation by two percent, with a net present value of $140 million. But com- 1.3 basiccharacTerisTicsoF plexities associated with food security and self-suf- TheZaMbeZiriverbasin ficiency warrant closer examination of this scenario. Other water-using projects (such as transfers The Zambezi River lies within the fourth-largest out of the Basin and for other industrial uses within basin in Africa after the Congo, Nile, and Niger 3 The Zambezi River Basin: A Multi-Sector Investment Opportunities Analysis river basins. Covering 1.37 million km2, the Zambezi of the last remaining protected areas extensive River has its source in Zambia, 1,450 meters above enough to support large populations of large sea level. The main stem then flows southwest mammals. into Angola, turns south, enters Zambia again, · The Gorongosa/Cheringoma/Zambezi Delta area of and passes through the Eastern Caprivi Strip in central Mozambique, which covers an area of Namibia and northern Botswana. The Zambezi enormous habitat diversity not found in such River then flows through Mosi-oa-Tunya (Victoria close proximity elsewhere on the continent. Falls), shared by Zambia and Zimbabwe, before entering Lake Kariba, which masses behind Kariba The hydrology of the ZRB is not uniform, Dam, built in 1958. A short distance downstream with generally high rainfall in the north and lower from Kariba Dam, the Zambezi River is joined by rainfall in the south (table 1.1). In some areas in the the Kafue River, a major tributary, which rises in Upper Zambezi and around Lake Malawi/Niassa/ northern Zambia. The Kafue River flows through Nyasa, rainfall can be as much as 1,400 mm/year, the Copperbelt of Zambia into the reservoir behind while in the southern part of Zimbabwe it can be the Itezhi Tezhi Dam (ITT), built in 1976. From as little as 500 mm/year. there, the Kafue River enters the Kafue Flats and The mean annual discharge at the outlet of the then flows through a series of steep gorges, the site Zambezi River is 4,134 m3/s or around 130 km3/year of the Kafue Gorge Upper (KGU) hydroelectric (figure 1.2). Due to the rainfall distribution, north- scheme, commissioned in 1979. Below the Kafue ern tributaries contribute much more water than River confluence, the Zambezi River pools behind southern ones. For example, the northern highlands Cahora Bassa Dam in Mozambique, built in 1974. catchment of the Upper Zambezi subbasin contrib- Some distance downstream, the Zambezi River is utes 25 percent, Kafue River nine percent, Luangwa joined by the Shire River, which flows out of Lake River 13 percent, and Shire River 12 percent--for a Malawi/Niassa/Nyasa to the north. Lake Malawi/ total of 60 percent of the Zambezi River discharge. Niassa/Nyasa, which covers an area of 28,000 km2, is the third-largest freshwater lake in Africa. From the confluence, the Zambezi River travels some Table 1.1. Precipitation data for the 150 km, part of which is the Zambezi Delta, before Zambezi River Basin entering the Indian Ocean. The basin of the Zambezi River is generally de- Mean annual Subbasin No. precipitation (mm) scribed in terms of 13 subbasins representing major Kabompo 13 1,211 tributaries and segments (see map in figure 1.1). From a continental perspective, the ZRB con- Upper Zambezi 12 1,225 tains four important areas of biodiversity: Lungúe Bungo 11 1,103 Luanginga 10 958 · Lake Malawi/Niassa/Nyasa, a region of impor- Barotse 9 810 tance to global conservation because of the Cuando/Chobe 8 797 evolutionary radiation of fish groups and other Kafue 7 1,042 aquatic species. Kariba 6 701 · The swamps, floodplains, and woodlands of the Luangwa 5 1,021 paleo-Upper Zambezi in Zambia and northern Mupata 4 813 Botswana, including the areas of Barotseland, Busanga and Kafue, which along with the Ban- Shire River and Lake Malawi/ 3 1,125 Niassa/Nyasa gweulu are thought to be areas of evolutionary radiation for groups as disparate as Reduncine Tete 2 887 antelope, suffrutices, and bulbous plants. Zambezi Delta 1 1,060 · The Middle Zambezi Valley in northern Zimbabwe Zambezi River Basin, mean 956 and the Luangwa Valley in eastern Zambia, two Source: Euroconsult Mott MacDonald 2007. 4 Figure 1.1. The Zambezi River Basin and its 13 subbasins IBRD 37633R Mbeya Lake ZAMBEZI RIVER BASIN Tanganyika Lake RUMAKALI Mweru EXISTING HYDROPOWER PLANTS T A N Z A N I A Saurimo CAHORA BASSA 2,075 MW DEMOCRATIC REPUBLIC SONGWE I, II & III KARIBA 1,470 MW KAFUE GORGE UPPER 990 MW OF CONGO Kasama NKULA FALLS 124 MW AN G OL A LOWER FUFU Songea VICTORIA FALLS 108 MW TEDZANI 90 MW ZAMBIA Mansa a n gwa KAPICHIRA I 64 MW Mzuzu Lu ezi Lake PROJECTED HYDROPOWER PLANTS mb Lubumbashi Bangweulu Luena Za MPHANDA NKUWA* 2,000 MW BATOKA GORGE 1,600 MW 12 Solwezi 3 KAFUE GORGE LOWER** 600 MW Kafu e 5 Lake KHOLOMBIZO 240 MW 13 Lun Malawi/ SONGWE I, II & III 340 MW gú Lush Niassa/ 11 e Ndola Bu Nyasa iwa ng s RUMAKALI 256 MW Msan o po hi di r Lichinga e m ga 7 n LOWER FUFU 100 MW bo Lu Chipata Ka HYDROPOWER PLANT EXTENSIONS e ji a MA LAWI Mu s o n d w Busanga Lukanga gw hi Swamp Swamp an as HCB NORTH BANK 850 MW LILONGWE MOZAMBIQUE Lu k us 360 MW Cu KARIBA NORTH Lu ue Kaf an Kabwe d KARIBA SOUTH 300 MW o 10 Barotse Lunsemfwa Luangin ga Floodplain embeshi ITEZHI TEZHI 120 MW Menongue Mw HCB ir e KAPICHIRA II 64 MW Sh NORTH BANK Mongu Lake KHOLOMBIDZO Kafue Flats LUSAKA 4 Cahora Bassa CAHORA BASSA 5 Luena NKULA FALLS ZAMBEZI SUB-BASIN BOUNDARIES Flats TEDZANI ITEZHI TEZHI Blantyre 9 KAFUE GORGE UPPER KAFUE GORGE LOWER MAIN PLANNED WATER WITHDRAWALS Luiana MPHANDA NKUWA KAPICHIRA I KAPICHIRA II NATIONAL CAPITALS KARIBA Tete KARIBA NORTH Z am zoe Elephant MAJOR CITIES be KARIBA SOUTH Ma Marsh z Choma i K i INTERNATIONAL BOUNDARIES w an 2 Lupata MAAMBA Lake MOATIZE Gorge yan do COAL MINE Kariba BENGA Hun 8 Caprivi-Chobe COAL MINE Lower Shire Hydropower capacity estimates are based on the Southern Africa Power Pool, AND PLANT Wetlands Katima Za Nexant (2007) Study and updated as of 2010. Livingstone Quelimane Mulilo m b * The estimate for Mphanda Nkuwa has been increased to 2,000 MW HARARE Caia ez ** The estimates for Kafue Gorge Lower are 600 MW with the potential Rundu ati Kasane 6 i ny for an additional bay of 150 MW Li VICTORIA FALLS BATOKA GORGE 1 Umnia a Sh ti anga 0 25 50 100 200 Kilometers ni elt GOKWÉ D COAL FIRED Mutare zi POWER PLANT Chimoio be 0 50 100 150 Miles Tsumeb Za m Gweru G wai Beira N A M I B I A Maun CHOBE/ ZAMBEZI Bulawayo ZIMBABWE I N D I AN TRANSFER B O T S WA N A OC E AN ZAMBEZI RIVER SHIRE RIVER & BASIN ZAMBEZI DELTA TETE LAKE MALAWI/NIASSA/NYASA MUPATA LUANGWA KARIBA KAFUE 1 2 3 4 5 6 7 IRRIGATED AREA EQUIPPED AREA IRRIGATED AREA EQUIPPED AREA IRRIGATED AREA EQUIPPED AREA IRRIGATED AREA EQUIPPED AREA IRRIGATED AREA EQUIPPED AREA IRRIGATED AREA EQUIPPED AREA IRRIGATED AREA EQUIPPED AREA (ha/year) (ha) (ha/year) (ha) (ha/year) (ha) (ha/year) (ha) (ha/year) (ha) (ha/year) (ha) (ha/year) (ha) CURRENT SITUATION (CS) 7,664 6,998 52,572 35,159 60,960 42,416 21,790 14,200 17,794 10,100 44,531 28,186 46,528 40,158 IDENTIFIED PROJECTS (IP) 106,774 84,053 108,193 65,495 162,126 101,927 30,356 20,060 28,857 16,230 228,919 147,778 67,048 53,768 UPPER LIMIT POTENTIAL (HLI) 231,774 184,053 508,193 265,495 766,755 451,927 30,356 20,060 73,814 41,230 948,825 591,578 104,448 78,768 8 CUANDO/CHOBE 9 BAROTSE 10 LUANGINGA 11 LUNGÚE BUNGO 12 UPPER ZAMBEZI 13 KABOMPO This map was produced by the Map Design Unit of The IRRIGATED AREA EQUIPPED AREA IRRIGATED AREA EQUIPPED AREA IRRIGATED AREA EQUIPPED AREA IRRIGATED AREA EQUIPPED AREA IRRIGATED AREA EQUIPPED AREA IRRIGATED AREA EQUIPPED AREA World Bank. The boundaries, colors, denominations and (ha/year) (ha) (ha/year) (ha) (ha/year) (ha) (ha/year) (ha) (ha/year) (ha) (ha/year) (ha) any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the CURRENT SITUATION (CS) 765 620 340 200 1,000 750 1,250 1,000 3,250 2,500 595 350 legal status of any territory, or any endorsement or IDENTIFIED PROJECTS (IP) 1,215 920 12,753 7,208 6,000 5,750 1,875 1,500 8,250 7,500 11,314 6,650 acceptance of such boundaries. UPPER LIMIT POTENTIAL (HLI) 19,215 15,920 30,466 17,208 18,500 15,750 14,375 11,500 20,750 17,500 28,328 16,650 NOVEMBER 2010 The Zambezi River Basin: Background and Context The Zambezi River Basin: A Multi-Sector Investment Opportunities Analysis Figure 1.2. Schematic of the Zambezi River with deregulated mean annual discharge (m3/s) and runoff (mm) Zambezi River Sub River Discharge Runoff Catchment mean annual river Sub River Discharge Runoff Catchment basin BV bank Tributary (m3/s) (mm) area (km2) flow (m3/s) basin BV bank Tributary (m3/s) (mm) area (km2) Kabompo 273 13 13-1 left/right Kabompo 273.0 109.4 78,683 Subtotal 273.0 109.4 78,683 Upper Zambezi 12 12-1 left/right Zambezi 742 256.2 91,317 1,015 Subtotal 742 256.2 91,317 Lungúe Bungo 11 11-1 left/right Lungúe Bungo 114 80.8 44,368 1,129 Subtotal 114 80.8 44,368 Luanginga 10 10-1 left/right Luanginga 69.4 61.0 35,893 1,198 Subtotal 69.4 61.0 35,893 Kwando/Chobe 8 8-1 left Kwando 32.5 9.0 113,393 8-2 left/right Chobe ­32.5 ­28.8 35,601 1,198 Subtotal 0.0 0.0 148,994 Barotse 9 9-1 left/right Zambezi ­17.6 ­4.8 115,753 1,180 Subtotal ­17.6 ­4.8 115,753 Kariba 6 6-1 right Gwayi 84 30.1 87,960 1,386 Kafue 6-2 right Sanyati 104 44.0 74,534 7 7-1 left/right Itezhi Tezhi 336 98.1 108,134 6-3 left/right Lake Kariba 18 55.6 10,033 1,758 7-2 left/right Kafue Flats 35.0 23.4 47,194 Subtotal 206 37.6 172,527 7-3 left/right Kafue D/S 0.7 47.6 477 Subtotal 372 75.3 155,805 Mupata 4 4-1 left/right Chongwe 4.1 71.6 1,813 1,812 4-2 left/right Zambezi 49.9 72.6 21,670 Subtotal 54.0 72.5 23,483 Luangwa 2,330 5 5-1 left/right Luangwa 518 102.3 159,615 Subtotal 518 102.3 159,615 Tete 2 2-1 right Manyame 26.5 20.6 40,497 2-2 right Luenya 180 99.4 57,004 Shire River and Lake Malawi/Niassa/Nyasa 2-3 left/right Zambezi 987 301.1 103,393 3,523 3 3-1 right Rumakali 12.5 954.4 414 Subtotal 1,193 187.3 200,894 3-2 left Songwe 35.2 273.4 4,060 3-3 left S. Rukuru+ 47.0 118.7 12,483 N. Rumphi 4,021 3-4 left/right Tributaries 528 207.5 80,259 3-5 left/right Lake Malawi/ ­287 ­314.4 28,760 Niassa/Nyasa evaporation 3-6 left/right Lake Malawi/ 336 84.1 125,976 Niassa/Nyasa Zambezi Delta outlet 1 1-1 left/right Zambezi 113 191.3 18,680 4,134 3-7 left/right Shire 162 220.4 23,183 Subtotal 113 191.3 18,680 Subtotal 498 105.3 149,159 INDIAN OCEAN Note: Excludes the operational influence at the Kariba, Cahora Bassa, and Itezhi Tezhi dams. 6 The Zambezi River Basin: Background and Context 1.4 populaTionand The eight riparian countries of the Basin repre- sent a wide range of economic conditions. Annual econoMy gross domestic product per capita ranges from $122 The population of the ZRB is approximately 30 in Zimbabwe to more than $7,000 in Botswana. million (table 1.2), more than 85 percent of whom Angola, Botswana, and Namibia have healthy cur- live in Malawi, Zimbabwe, and Zambia within four rent account surpluses, chiefly due to their oil and subbasins: Kafue, Kariba, Tete, and the Shire River diamond resources (table 1.3). and Lake Malawi/Niassa/Nyasa. Of the total population, approximately 7.6 mil- lion (25 percent) live in 21 main urban centers (with 1.5 approachand 50,000 or more inhabitants). The rest live in rural MeThodology areas. The proportion of rural population varies from country to country, from over 50 percent in Water resources development is not an end in itself. Zambia to around 85 percent in Malawi. Rather, it is a means to an end: the sustainable use The ZRB is rich in natural resources. The main of water for productive purposes to enhance growth economic activities are fisheries, mining, agriculture, and reduce poverty. The analysis reported here was tourism, and manufacturing. Industries depend on undertaken from an economic perspective so as to the electricity produced in the hydropower plants better integrate the implications of the development (HPPs) of the Basin, as well as on other sources of of investment in water management infrastructure energy (primarily coal and oil). into the broad economic development and growth Table 1.2. Population of the Zambezi River Basin (in thousands, 2005­06 data) Subbasin Angola Botswana Malawi Mozambique Namibia Tanzania Zambia Zimbabwe Total % Kabompo (13) 4 -- -- -- -- -- 279 -- 283 0.9 Upper Zambezi (12) 200 -- -- -- -- -- 71 -- 271 0.9 Lungúe Bungo (11) 99 -- -- -- -- -- 43 -- 142 0.5 Luanginga (10) 66 -- -- -- -- -- 56 -- 122 0.4 Barotse (9) 7 -- -- -- 66 -- 679 -- 752 2.5 Cuando/Chobe (8) 156 16 -- -- 46 -- 70 -- 288 1 Kafue (7) -- -- -- -- -- -- 3,852 -- 3,852 12.9 Kariba (6) -- -- -- -- -- -- 406 4,481 4,887 16.3 Luangwa (5) -- -- 40 12 -- -- 1,765 -- 1,817 6.1 Mupata (4) -- -- -- -- -- -- 113 111 224 0.7 Shire River - Lake Malawi/Niassa/ -- -- 10,059 614 -- 1,240 13 -- 11,926 39.8 Nyasa (3) Tete (2) -- -- 182 1,641 -- -- 221 3,011 5,055 16.9 Zambezi Delta (1) -- -- -- 349 -- -- -- -- 349 1.2 Total 532 17 10,281 2,616 112 1,240 7,568 7,603 29,969 -- % 1.8 0.1 34.3 8.7 0.4 4.1 25.3 25.4 -- 100 Source: Euroconsult Mott MacDonald 2007; SEDAC 2008. 7 The Zambezi River Basin: A Multi-Sector Investment Opportunities Analysis the focus of this analysis is on major water-related Table 1.3. Macroeconomic data by country (2006) investments being considered by the riparian Population GDP GDP/cap Inflation countries in their national development plans. Country (million) (US$ million) (US$) rate (%) Development scenarios for other stakeholders can Angola 15.8 45.2 2,847 12.2 be superimposed on this analysis at a later time. Botswana 1.6 11.1 7,019 7.1 For the time being, however, water supply and sanitation, as well as environmental imperatives, Malawi 13.1 3.2 241 8.1 are considered as givens in nearly all scenarios con- Mozambique 20.0 6.8 338 7.9 sidered. In other words, hydropower and irrigation Namibia 2.0 6.9 3,389 6.7 development are superimposed over the continued Tanzania 38.2 14.2 372 7.0 provision of water for basic human needs and envi- Zambia 11.9 10.9 917 10.7 ronmental sustainability. This approach differs from Zimbabwe 11.7 1.4 122 >10,000 the conventional one of assuming basic water needs Source: Euroconsult Mott MacDonald 2007; SEDAC 2008. and environmental sustainability as constraints on the optimized use of water. It should be noted that the scenarios for full basin-wide hydropower potential and full irriga- objectives of the riparian countries and the Basin as a tion development are primarily of analytical inter- whole. An international river system such as the ZRB est, rather than for practical application. They are is extremely complex. That complexity is reflected used here to help bracket the range and scope of in, but also compounded by, the large number of the analysis and to provide reference points. The initiatives being undertaken within the Basin and scenarios are based on identified projects in national by the large volume of data and information that and regional plans, and are dependent on enabling already exists. To analyze such a complex system, political and economic preconditions for their full simplifications and assumptions are unavoidable. implementation. The full potential for hydropower Those assumptions and their potential implications and irrigation in the Basin is not expected to be are acknowledged throughout the report. achieved in the time horizon of this analysis, which is based on the current national economic plans of 1.5.1 analyticalframework the riparian countries. The scenario analysis is carried out for the Operating within the framework of integrated water primary objective of determining and maximizing resources management, this analysis considers the economic benefits while meeting water supply and following water users as stakeholders: irrigated environmental sustainability requirements. Full co- agriculture, hydropower, municipal development, operation among the riparian countries is assumed. rural development, navigation, tourism and wildlife The scenarios are tested using a coupled hydro- conservation, and the environment. The analytical economic modeling system described in volume framework considered here is illustrated graphically 4. The purpose of the modeling effort is to provide in figure 1.3. The present context of the natural and insight into the range of gains that may be expected developed resource base, as well as cross-cutting from various infrastructure investments along the factors, of the ZRB (rows in the matrix) is assessed axes of full hydropower and irrigation development against the water-using stakeholders (columns (while continuing to satisfy requirements for water in the matrix) for a set of development scenarios. supply and environmental sustainability). Those development scenarios are focused on two Additionally, the analysis examines the effects key water-using stakeholders that require major of conjunctive or coordinated operation of existing investments in the region: hydropower and irrigated facilities, as well as potential gains from the strate- agriculture. gic development of new facilities. The analysis also While the need to consider the details of the in- addresses the potential impact of the development teraction among all stakeholders is acknowledged, scenarios on the environment (wetlands), tourism, 8 The Zambezi River Basin: Background and Context Figure 1.3. Zambezi River Basin: scenario analysis matrix Regional Assessment Analytical framework applied to the development and analysis of scenarios. The regional assessment explores the eight riparian countries, 13 subbasins and three zones of the Basin to de ne scenarios based on optimized and collaborative water resource management Zambezi River Basin Management and Development Biophysical setting Zambezi River Basin cross-cutting factors Agriculture, Livestock and Forestry Macroeconomic setting Potable Water and Sanitation Environmental Sustainability Fisheries and Aquaculture Energy and Hydropower Mining and Industry Sociological setting Navigation Tourism Institutional setting Bene cial uses of water resources flood control, guaranteed minimum river flows in growth and on poverty reduction. With that in mind, the dry season, and other topics. the analysis considers the entire Basin as a single Specific attention is also given to the opera- natural resource base while examining potential tional and investment options for reducing flood sectoral investments. This approach is appropriate risks downstream of Cahora Bassa Dam and to the for initial indicative purposes and provides a com- possibility of partial restoration of natural floods to mon point of reference for all riparian countries. manage the impact on the Zambezi Delta of exist- The complexities inherent in national economics ing dams on the Zambezi River. In this analysis, the and transboundary political relationships are not impact of climate change on the hydrology of the directly addressed in this analysis. This is left to ZRB and on the investment options assessed are the riparian countries to address, informed by the addressed through a rudimentary incremental varia- results of this and other analyses. tion of key driving factors. Climate change is deemed a risk factor to developments and more detailed 1.5.2 Theriver/reservoirsystemModel analysis is warranted for an in-depth understand- ing of impact. The ongoing efforts by the riparian The modeling package adopted for the analysis is countries and the development partners on assessing HEC-3, a river and reservoir system model devel- the impact of climate change on the Zambezi River oped by the Hydrologic Engineering Center of the Basin will provide guidance in due course. U.S. Army Corps of Engineers. The version of the Looming large in the analysis are the economics model used in this study, illustrated in figure 1.4, of different options, conceived in terms of the effect was modified by the consultants to improve some of potential investments on national and regional of its features. The same software package was 9 Figure 1.4. Schematic of the river/reservoir system model for the Zambezi River Basin LEGEND Kabompo River Kafue Flats Flood plain Control point for irrigation abstraction Lake / reservoir / pondage Rumakali Control point for water supply abstraction 43 I.03.12 Rumakali 20 Hydropower plant (Tanzania) 34 35 35 Control point for mining & industrial abstraction 34 Existing control point Humage 34 Future control point Name of the abstraction line in the abstraction database I.03.05 25 I.07.01 Stream ow gauging station, (Tanzania) Songwe I Songwe II Songwe III I.07.02 Songwe Lake Malawi/Niassa/Nyasa Final number to distinguish di erent abstraction lines 15 reservoir in ow,hydropower I.03.06 Net In ow plant turbine ow + spill (Malawi) 36 37 37 38 38 39 39 21 Subbasin Mwandenga I.03.10 I: irrigation, W: drinkable water, M: mining & industry 26 Net evaporation series over reservoir Lake located at control point 26 Other rivers of Lake Malawi/Niassa/ I.03.08 (Tanzania) (Tanzania) 22 I.03.09 (Malawi) 40 Malawi/ 43 I.03.11 Zambezi Nyasa catchment Land discharge (Malawi) The following water abstraction points will be modeled with reservoirs in order to anticipate the regulation needs: 1.13, 1.12, 1.11, 1.10, Lower Fufu Niassa/Nyasa 1.08.1, 1.05.1, 1.05.2, 1.07.1, 1.06.7, 1.06.8, 1.02.2, 1.02.3. South Rukuru I.03.07 43 Future control points for irrigation are to a degree already used at present. 23 41 42 42 2 I.12.01 Phwezi 26 Naturalised discharges of Lake Chavuma Malawi/Niassa/Nyasa at Liwonde Mission North Rumphi 02 24 44 Kholombizo Lungúe Bungo Kabompo 3 01 1 Chiweta 45 I.03.04 I.11.01 Watopa Pontoon I.13.01 19 20 Nkula Falls M.07.01 46 Copperbelt mines, water W.07.01 46 I.07.01 16 abstractions Lusaka I.03.03 Zambezi & dewatering water 47 Luanginga supply The Zambezi River Basin: A Multi-Sector Investment Opportunities Analysis Luangwa 4 03 I.07.03 17 48 Tedzani I.10.01 Kalabo 19 20 10 I.05.01 26 I.05.02 48 I.07.02 I.07.04 Kafue Gorge Upper 19 Lunsemfwa 49 I.03.02 Kafue 17 Shire Barotse 10 11 Kafue 20 25 Itezhi 17 18 20 21 Kapichira Flood Plain Tezhi Flats 50 Itezhi Tezhi Kafue Flats Luangwa Valley in ows 15 Kafue Gorge 22 in ows 50 Lower 22 I.05.03 5 I.09.01 M.06.01 (Zambia) 27 Chikwawa I.06.11 Cuando I.07.05 I.05.04 M.02.01 (Zambia) Maamba Colliery & 23 27 Moatize I.03.01 11 I.06.12 thermal station (Mozambique) 51 6 I.08.01 04 I.06.01 (Zambia) I.06.07 12 M.02.02 (Zimbabwe) Great 13 Benga Coal Licuari I.06.02 (Zimbabwe) (Zambia) 31 Kafue Katima Mulilo 15 East 29 Elephant 28 05 I.06.03 (Namibia) I.06.08 mines & thermal 15 Road Great East power stations Marsh Nacuadala Campo (Zimbabwe) Victoria Falls I.06.04 (Botswana) Mphanda Nkuwa bridge Road bridge Chongwe Kongola Chobe-Caprivi- I.02.03 Batoka Gorge I.01.01 Luangwa Lake Liambezi 7 15 29 Cuando / Chobe Flood Plain 11 09 15 16 31 17 Zambezi Zambezi 8 06 9 9 10 11 12 Kariba 15 24 Cahora Bassa 29 30 31 33 19 52 53 Delta Victoria Lower I.04.01 Cahora Bassa Tete - Selinda I.08.02 W.06.01 I.06.05 Catchment Cahora Bassa I.02.04 Lupata Falls (Zambia) reconstituted out ows Matundo I.01.02 Spillway (Zambia) Gaborone (Zambia) reconstituted Cais I.08.03 water supply I.04.02 local in ows 18 I.06.06 in ows 08 (Zimbabwe) Mutoko I.02.05 (Namibia) (Zimbabwe) 07 Road Brdge 32 (Zimbabwe) Okavango Copper Queen M.06.02 28 29 Swamps - Kamativi I.02.02 I.02.06 Okavango Gokwé I.02.01 (Mozambique) Okavango I.06.10 14 15 15 thermal Delta Pandamatenga Plains I.06.09 13 power Luenya Shawanoya W.06.02 Mazowe Manyane station Bulawayo water supply Gwayi 14 Sanyati Chivero The Zambezi River Basin: Background and Context adopted during the SADC 3.0.4 project that inves- Zambezi River downstream from the Kariba and Ca- tigated joint operation of the Kariba, Kafue Gorge hora Bassa dams, like the Zambezi Delta, has been per- Upper, and Cahora Bassa dams. The model is still manently altered by river-regulation infrastructure. being used by the Zambezi River Authority (ZRA). To take into account e-flows in the various The fact that water professionals in the ZRB were reaches of the Zambezi River, some assumptions familiar with the earlier version of the model partly had to be made related to the amount of water accounts for its selection. A detailed description of available at all times. The following e-flow criteria the model appears in volume 4 of this report. were used in the river/reservoir system model in In the present analysis, the modeling time step almost all the scenarios: the flow should never fall adopted is one month. All inputs, inflows, evapo- below historical low-flow levels in dry years of the ration, diversions or withdrawals, downstream record,1 where records are available. Moreover, the flow demands, and reservoir rule curves are on a average annual flow cannot fall below 60 percent monthly basis. The outputs of the model--reservoir of the natural average annual flow downstream storage and outflows, turbine flow, spill, and power from Kariba Dam. The minimum flow in the generation--are also on a monthly basis. The simu- Zambezi Delta in February was set at 7,000 m3/s lation period spans 40 years--from October 1962 to for at least four out of five dry years. September 2002--long enough to obtain a realistic The development scenarios, the state of the estimate of energy production. The main inflow basin, and the modeling, analysis, and input data series, from the Zambezi River at Victoria Falls, are described in detail in volumes 2, 3, and 4, re- shows that the flow sequence from 1962 to 1981 spectively. Together, they strengthen the analytical is above normal, while the sequence from 1982 to knowledge base available for making informed 2002 is below normal. The flow data available to the decisions about investment opportunities, financ- study team were insufficient to consider extending ing, and benefit sharing. Moreover, the analysis can the simulation period beyond 2002. Information on assist the Zambezi River Watercourse Commission groundwater (e.g., status of aquifers and abstraction awaiting ratification (ZAMCOM), SADC, and ripar- levels) was too insufficient to allow for sufficient ian countries by providing insight into options for conjunctive analysis. joint or cooperative development as well as associ- While the focus of this analysis is on hydro- ated benefit sharing. power and irrigation, the river/reservoir system model takes into account all sectors concerned 1.5.3 TheeconomicassessmentTool with water management, notably tourism, fisheries, environment such as environmental flows (e-flows) The economic assessment approach used here in- and specific important wetlands, flood control, and corporates the inputs from the various projects for industry. Details of the guidelines and rule curves sector analysis to provide an overall analysis of the used in the model for reservoir operations, flood economic implications of development and invest- management, delta and wetlands management, ment scenarios. A schematic of the elements of the environmental flows, tourism flows, and fisheries development scenario is given in figure 1.5. The flows are given in volume 4 of this series. development scenarios were compared to assess the Maintaining e-flows throughout the system was relative viability of a given option. For hydropower a major consideration in this analysis. Reaches of the and irrigation, the basic elements of the analysis are Zambezi River upstream of the Kariba and Cahora the projects identified by the riparian countries. This Bassa dams are generally considered in near-pristine analysis is multi-sectoral by design; the major link condition. The tributaries rising in Zimbabwe are among the sectors (and associated projects) is the highly developed, with river-regulation infrastructure allocation or use of water. for irrigation. The Kafue River is also regulated and The economic analysis uses input from the sustains a large number of water-using sectors. The river/reservoir system model. 1 The statistical dry year considered here is the natural flow with a five-year return period. 11 The Zambezi River Basin: A Multi-Sector Investment Opportunities Analysis Figure 1.5. Schematic of the elements of the economic analysis tool Scenario Power sector Agriculture sector Other sectors Other major projects Hydropower plants Irrigation schemes ­ Tourism ­ Chobe/Zambezi transfer ­ Fisheries ­ Maamba coal mine ­ Environment ­ Gokwé coal mine ­ Moatize Benga coal mine ­ Lusaka water supply · Hydropower. The model uses the production · Scenario level ­ starting date, time horizon; figures from the hydropower installations · Sector ­ sector-specific parameters and prices, (described in detail in the section on the hydro- the specific irrigation models used in sector power in volume 3) and attributes these to the projects (e.g., crop budgets); and various hydropower projects. · Project ­ project time frames, project-specific · Irrigation. Based on the allocated water and costs and benefits. development scenarios, the appropriate models for the relevant irrigation projects are used at Details of the economic analysis assumptions specific abstraction points in the river/reservoir can be found in volume 4. system model, and the associated costs and The economic assessment tool provides, as benefits are calculated. output, a summary table, which includes: · Other sectors. Data on flows at Victoria Falls is used to assess their impact on tourism. Financial · Hydropower generation and agriculture output, and economic values of different flood manage- presented in the agricultural and irrigation ment options and their impact on the Zambezi calculations; Delta are calculated. The value of wetlands used · Cash flows based on project cash flows; in the analysis tool is derived from the analysis · Economic internal rate of return and net present of the environmental resources (details are pro- value (NPV) by development scenario, based on vided in volume 3). the appropriate time frame and project imple- · Other major projects. Water-transfer schemes as- mentation schedule; sociated with these major projects are included · Employment impact (jobs) calculated as the ra- in the scenario analysis. tio of jobs to gigawatt hours of installed capac- ity or jobs to hectares of a particular crop; and, The economic assessment is based on a number · A sensitivity analysis that was carried out for of assumptions regarding its parameters. It includes variations in investment costs, prices, and pro- the following: duction values. 12 2 Development in the Zambezi River Basin The two key users of water considered in this analysis of growth- based water investments are hydropower and irrigated agriculture. Water needs for other sectors are considered as given and are used as inputs. The potential for the development of the water-using sec- tors, as identified by the riparian countries, is reviewed here for the purpose of identifying investment opportunities. 2.1 currenTandpoTenTialhydropower The Zambezi River Basin has close to 5,000 MW of installed hydropow- er generation capacity (table 2.1). Potential plans for the construction of new plants or the expansion of existing plants were identified from various sources and are compiled in table 2.2. These are included in the analysis. The base case described in table 2.2 reflects the addition of hydropower units called for in national power generation plans, while the alternative case reflects additions called for in the least-cost power generation plan of the integrated regional SAPP. Under the full hydropower potential development scenario, which would include some 53 projects (NEXANT 2008), the potential produc- tion of firm energy2 would be doubled, from 22,776 to around 43,000 GWh/year. Average energy production would also double--from 30,000 to around 60,000 GWh/year. The increase is due to the exten- sion of existing facilities and the addition of new infrastructure.3 A factor considered in the analysis is that new hydropower facilities with storage would increase river regulation and evaporation, potentially affecting the overall water balance. 2 Firm energy is defined as the dependable amount of energy produced by a hydropower plant at a given reliability level, which in the present study is de- fined as the energy available 99 percent of the time. In the case of plants with an annual or carry-over reservoir, this energy is produced when the reservoir goes from full supply level to minimum operating level during the critical dry-flow sequence. 3 One identified program may be an agglomeration of many smaller neighbor- ing projects. For instance: "Rehabilitation/optimization of the use of reservoirs in the Luenya subbasin in Zimbabwe" is considered as one program, whereas it may involve many different schemes. 13 The Zambezi River Basin: A Multi-Sector Investment Opportunities Analysis Table 2.1. Existing hydropower projects and reservoirs in the Zambezi River Basin Name Utility River Country Type Capacity (MW) Victoria Falls ZESCO Zambezi Zambia Run-of-river 108 Kariba ZESCO, ZESA Zambezi Zambia, Zimbabwe Reservoir 1,470 Itezhi Tezhi ZESCO Kafue Zambia Reservoir n/a Kafue Gorge Upper ZESCO Kafue Zambia Reservoir 990 Mulungushi ZESCO Mulungushi Zambia Reservoir 20 Lunsemfwa ZESCO Lunsemfwa Zambia Reservoir 18 Lusiwasi Private Lusiwasi Zambia Pondage 12 Cahora Bassa HCB Zambezi Mozambique Reservoir 2,075 Wovwe ESCOM Wovwe Malawi Pondage 4.35 Nkula Falls A&B ESCOM Shire Malawi Pondage 124 Tedzani ESCOM Shire Malawi Pondage 90 Kapichira stage I ESCOM Shire Malawi Pondage 64 Source: NEXANT 2008. Table 2.2. Future hydropower projects included in the analysis Base case Alternative case Capacity Operating Capacity Operating NEXANT project name Utility River Country Type (MW) Year (MW) Year Tedzani 1 & 2, refurbishment ESCOM Shire Malawi Pondage 40 2008 40 2008 Kariba North, refurbishment ZESCO Zambezi Zambia Reservoir 120 2008­2009 120 2008 Kafue Gorge Upper, refurbishment ZESCO Kafue Zambia Pondage 150 2009 150 2009 Kapichira II ESCOM Shire Malawi Pondage 64 2010 64 2010 Kariba North, extension ZESCO Zambezi Zambia Reservoir 360 2010 360 2012 HCB North Bank HCB Zambezi Mozambique Reservoir n/a n/a 850 2012 Itezhi Tezhi ZESCO Kafue Zambia Reservoir 120 2013 120 2013 Kariba South, extension ZESA Zambezi Zimbabwe Reservoir 300 2014 300 2014 Songwe I, II & III ESCOM Songwe Malawi, Reservoirs 340 2014­2016 340 2024 Tanzania Batoka Gorge South ZESA Zambezi Zimbabwe Pondage 800 2017 800 2023­2024 Batoka Gorge North ZESCO Zambezi Zambia Pondage 800 2017 800 2023­2024 Kafue Gorge Lower ZESCO Zambezi Zambia Pondage 750 2017 750 2017­2022 Mphanda Nkuwa EdM Zambezi Mozambique Pondage 1,300 2020 2,000 2024 Lower Fufu ESCOM S. Ruhuru Malawi Run-of- n/a n/a 100 2024 River Kholombidzo ESCOM Shire Malawi Pondage n/a n/a 240 2025 Rumakali TANESCO Rumakali Tanzania Reservoir 222 2022 256 n/a Source: NEXANT 2008. Note: The estimated capacity of Kafue Gorge Lower is 600 MW with an additional bay for 150 MW. The estimate for Mphanda Nkuwa has been increased to 2,000 MW. 14 Development in the Zambezi River Basin 2.2 currenTandpoTenTial irrigation schemes of the Kafue Flats (with regula- tion provided by the Itezhi Tezhi reservoir); irriga- irrigaTion tion schemes downstream from the Lake Malawi/ Estimates of current irrigation areas in the ZRB Niassa/Nyasa, Lake Kariba, and Lake Cahora are presented in table 2.3. The area equipped for Bassa; and irrigation schemes that withdraw water irrigation is also known as the command or irrigable from the Zimbabwean tributaries (with regulation area, and the irrigated area is also referred to as the provided by reservoirs). cropped area. Depending on the intensity of use, an Two levels of irrigation development are used irrigable area could potentially be cropped twice a for this analysis: a lower level based on identified year. For example, a hectare planted with irrigated projects and a much higher level based on poten- wheat in the dry season may also be irrigated for tial projects (projects not yet proposed, let alone maize in the wet season of the same year. In this case, underway). the cropping intensity is doubled, and the irrigated Identified projects. Almost 100 irrigation proj- area is twice the equipped area. ects or programs were identified from various The area currently equipped for irrigation in the bibliographical sources and from meetings with ZRB is approximately 183,000 hectares. The average stakeholders in all riparian countries (table 2.4). The annual irrigated area is around 260,000 hectares. That additional equipped irrigation area promised by the includes 102,000 hectares of irrigated perennial crops identified projects is approximately 336,000 hect- (76 percent sugarcane), representing about 56 percent ares. If added to the presently equipped irrigation of the total irrigable area. A detailed description of area, the equipped area would be around 520,000 these irrigation parameters is given in volume 4. hectares--almost triple the present level. Detailed Identified irrigation projects. Over a large part descriptions are provided in volume 4 of this series. of this irrigated area, climatic conditions generally High-level irrigation. Potential irrigation projects permit two productive seasons: a summer season beyond those already identified make up the high- (or wet season, November or December to March or level irrigation scenario. These potential projects April), and a winter season (or dry season, April­May were identified by each riparian country for this to September­October). In the summer season, little analysis. As shown in table 2.5, the additional area irrigation is needed because of precipitation. In the equipped for irrigation in the high-level irrigation winter, irrigation is the main source of water for crops. scenario is around 1,209,000 hectares--more than Some of the irrigated areas are associated with three times the area in the identified projects scenar- flow-regulation facilities. This is the case for the io and more than six times the area now equipped, Table 2.3. Existing irrigation areas in the Zambezi River Basin (ha) By country Countries Irrigated area Equipped area Dry season Wet season Perennial Angola 6,125 4,750 3,375 1,375 1,375 Botswana 0 0 0 0 0 Malawi 37,820 30,816 7,066 7,004 23,750 Mozambique 8,436 7,413 1,023 1,023 6,390 Namibia 140 120 120 20 0 Tanzania 23,140 11,600 11,540 11,540 60 Zambia 74,661 56,452 18,448 18,209 38,004 Zimbabwe 108,717 71,486 39,210 37,231 32,276 Total 259,039 182,637 80,782 76,402 101,855 15 The Zambezi River Basin: A Multi-Sector Investment Opportunities Analysis Table 2.4. Identified projects: Additional irrigation areas in the Zambezi River Basin (ha) Projected increases compared with current situation Irrigated Equipped Dry season Wet season Perennial Countries area (ha) Increase (%) area (ha) Increase (%) (ha) (ha) (ha) Angola 10,625 173 10,500 221 5,375 125 5,125 Botswana 20,300 -- 13,800 -- 6,500 10,800 3,000 Malawi 78,026 206 47,911 155 36,791 30,115 11,120 Mozambique 137,410 1,629 96,205 1,298 41,205 41,205 55,000 Namibia 450 321 300 250 300 150 0 Tanzania 23,140 100 11,600 100 11,540 11,540 60 Zambia 61,259 82 37,422 66 23,837 23,837 13,585 Zimbabwe 183,431 169 118,464 166 64,967 64,967 53,497 Total 514,641 199 336,202 184 190,515 182,738 141,387 bringing the total area that could potentially be in the ZRB. The degree of realism in the high-level equipped for irrigation to almost 1,730,000 hectares. development scenario cannot be known, but the These figures are based on estimates provided three levels of irrigation development considered by the riparian countries and are used in this analy- here are depicted in figure 2.1 to illustrate relative sis to mark the upper limit of irrigated agriculture magnitudes. Figure 2.1. Irrigation levels considered in this analysis (ha) Annual irrigated area, in hectares 700,000 600,000 500,000 400,000 (ha) 300,000 200,000 100,000 0 Angola Botswana Malawi Mozambique Namibia Tanzania Zambia Zimbabwe Current situation Identi ed projects High-level irrigation 16 Development in the Zambezi River Basin Table 2.5. High-level irrigation scenario: Additional irrigation areas in the Zambezi River Basin Projected increases compared to current situation, together with identified projects Irrigated Increase Equipped area Increase Dry season Wet season Perennial area (ha) (%) (ha) (%) (ha) (ha) (ha) By subbasin Kabompo (13) 17,014 159 10,000 159 7,014 7,014 2,986 Upper Zambezi (12) 12,500 250 10,000 200 7,500 2,500 2,500 Lungúe Bungo (11) 12,500 2000 10,000 2000 7,500 2,500 2,500 Luanginga (10) 12,500 250 10,000 200 7,500 2,500 2,500 Barotse (9) 17,713 143 10,000 143 7,713 7,713 2,287 Cuando/Chobe (8) 18,000 4000 15,000 5000 3,000 3,000 12,000 Kafue (7) 37,400 182 25,000 184 12,400 12,400 12,600 Kariba (6) 719,906 390 443,800 371 276,106 280,406 163,394 Luangwa (5) 44,957 406 25,000 408 19,957 19,957 5,043 Mupata (4) 0 0 0 0 0 0 0 Shire River ­ Lake Malawi/ 604,629 598 350,000 588 273,110 254,630 76,890 Niassa/Nyasa (3) Tete (2) 400,000 719 200,000 659 200,000 200,000 0 Zambezi Delta 125,000 126 100,000 130 25,000 25,000 75,000 Total 2,022,120 393 1,208,800 360 846,801 817,620 357,699 By country Angola 37,500 353 30,000 286 22,500 7,500 7,500 Botswana 20,300 100 13,800 100 6,500 10,800 3,000 Malawi 504,888 647 300,000 626 223,369 204,888 76,631 Mozambique 525,000 382 300,000 312 225,000 225,000 75,000 Namibia 18,000 4000 15,000 5000 3,000 3,000 12,000 Tanzania 99,741 431 50,000 431 49,741 49,741 259 Zambia 491,524 802 290,000 775 201,524 201,524 88,476 Zimbabwe 325,166 177 210,000 177 115,166 115,166 94,834 Total 2,022,120 393 1,208,800 360 846,801 817,620 357,699 17 3 Scenario Analysis and Findings 3.1 ThedevelopMenTscenarios In order to explore the development potential of various degrees of expansion of hydropower and irrigation, and consistent with the analytical framework described in section 1.5, a series of development scenarios were devised. A basic set of five primary scenarios takes the current situation as the base case (Scenario 0) and builds upward, reflecting increasing levels of cooperation, hydropower development, and irrigation development. Additional scenarios also evaluate other water-use projects (e.g., interbasin transfers and flood management and the potential impact of climate change). Two more scenarios are added to address options related to flooding in the Lower Zambezi and investment and management options in the Delta (e.g., partial restoration of natural flooding). Because the scenarios are complex, several were divided into sub- scenarios. The impact of climate change in this analysis is shown as a scenario superimposed on Scenario 8. In practice the impact of climate change is treated as a constraint, rather than a scenario. Moreover, due to the highly uncertain nature of climate change projections in the Basin, the results of the single variable approach to climate change impact (i.e., change in temperature) should be viewed with the nor- mal assumption and caution in mind. In all, 28 scenarios beyond the current situation were evaluated. As indicated in table 3.1, all of them take water supply for domestic use, and most take e-flows as givens (based on information available in current literature). The development scenarios considered and their respective in- vestment levels (described in terms of level of development and total cost) are designed and assessed to explore the following development paths and to help answer the questions associated with each. · Coordinated operation of existing hydropower facilities, either basin-wide or in clusters. By how much could hydropower generation increase if current projects were coordinated? What is the potential impact of coordination on other water users? · Development of the hydropower sector as envisioned in plans for the SAPP. What is the development potential of the hydropower sector? How would its expansion affect the environment (wet- 19 The Zambezi River Basin: A Multi-Sector Investment Opportunities Analysis lands), irrigation, tourism, and other sectors? · Flood management, particularly in the lower Zam- What gains could be expected from coordinated bezi and the Zambezi Delta. What options exist to operation of new hydropower facilities? permit partial restoration of natural floods and · Development of the irrigation sector through uni- to reduce flood risks downstream from Cahora lateral or cooperative implementation of projects Bassa Dam? How would those options affect the identified by the riparian countries. How might use of existing and potential hydropower and the development of irrigation affect the envi- irrigation infrastructure on the Zambezi River? ronment (wetlands), hydropower, tourism, · Effects of other projects using the waters of the and other sectors? What incremental gain Zambezi River (e.g., transfers out of the Basin could be expected from cooperative as op- for industrial uses). How might these projects posed to unilateral development of irrigation affect the environment (wetlands), hydropower, schemes? irrigation, and tourism? 20 Scenario Analysis and Findings Table 3.1. Development scenarios evaluated Flood protection Water supply needs Other projects in Tete Restoration of natural flooding Hydropower Irrigation in the lower Delta E-flows Scenario CSNC CSCO SAPP CS IP IPC HLI HLIC NAF AF1 AF2 AF3 AF4 AF5 AF6 FP CC 0 Base case: current situation 1 Coordinated operation of key existing HPP facilities 2 Development SAPP A hydropower (up to 2025) 2A 2 + e-flows A 2B 2A with hydropower B coordination (4 clusters) 2C 2A with hydropower C coordination (2 clusters) 2D 2A with full hydropower D coordination 3 Base case for hydropower + identified projects + e-flows 4 Base case for hydropower + high-level irrigation + e-flows 5 2A + Identified irrigation A projects 5A 2A + Identified irrigation A projects (with cooperation) 6 2A + high-level irrigation A 6A 2A + high-level irrigation A (with cooperation) 7 5 + Other projects A 8 7 + Flood protection A 9 8 + impacts of climate change A 10-A Assess effects of restoring A natural floodings with 4,500 m3/s in the Delta in February 10-B Assess effects of restoring A natural floodings with 7,000 m3/s in the Delta in February 10-C Assess effects of restoring A natural floodings with 10,000 m3/s in the Delta in February 10-D Assess effects of restoring A natural floodings with 4,500 m3/s in the Delta in December 10-E Assess effects of restoring A natural floodings with 7,000 m3/s in the Delta in December 10-F Assess effects of restoring A natural floodings with 10,000 m3/s in the Delta in December Continued on next page 21 The Zambezi River Basin: A Multi-Sector Investment Opportunities Analysis Table 3.1. Development scenarios evaluated (continued) Flood protection Water supply needs Other projects in Tete Restoration of natural flooding Hydropower Irrigation in the lower Delta E-flows Scenario CSNC CSCO SAPP CS IP IPC HLI HLIC NAF AF1 AF2 AF3 AF4 AF5 AF6 FP CC 11-A Assess effects of flood A protection (maximum of 10,000 m3/s) 11-B 10-A + Flood protection A 11-C 10-B + Flood protection A 11-D 10-C + Flood protection A 11-E 10-D + Flood protection A 11-F 10-E + Flood protection A 11-G 10-F + Flood protection A LEGEND Hydropower: OP: Other water withdrawal projects CSNC: Current situation without coordinated operation CSCO: Current situation with coordinated operation (Kafue, Kariba, Cahora Bassa) E-Flows: Environmental flows in all basin SAPP: Development SAPP hydropower CC: Climate change A : All hydro independently operated B : 4 clusters: Kariba/Kafue/Mozambique/Malawi Restoration of natural floodings: C : 2 clusters: Kariba + Kafue/Mozambique + Malawi NAF: No Artificial Flooding D : All clusters coordinated AF1: 4,500 m3/s in lower Delta in February (4 weeks) AF2: 7,000 m3/s in lower Delta in February (4 weeks) Irrigation: AF3: 10,000 m3/s in lower Delta in February (4 weeks) CS: Current situation AF4: 4,500 m3/s in lower Delta in December (4 weeks) IP: Identified projects AF5: 7,000 m3/s in lower Delta in December (4 weeks) IPC: Identified projects (with cooperation) AF6: 10,000 m3/s in lower Delta in December (4 weeks) HLI High-level irrigation HLIC High-level irrigation (with cooperation) Flood protection: FP: Maximum of 10,000 m3/s D/S Lupata 3.2 overallFindings in terms of additional generation with minimal investment, is estimated at $585 million over a The results of the scenario analysis, with incremen- 30-year period. tal changes in the level of development for hydro- The next increment in development of the hy- power and irrigated agriculture, are summarized dropower sector is the realization of SAPP hydro- in figure 3.1. The vertical axis indicates levels of power investments (Scenario 2), with the inclusion hydropower production, while the horizontal axis of e-flows (Scenario 2A) and the gradual addition of denotes incremental levels of irrigated area. coordinated operation (scenarios 2A to 2D). Taking environmental flows into account would cause a 3.2.1 generalobservations nine percent reduction in total firm energy genera- tion annually, an amount easily offset by coordinated The first increment in the development of the operation, for a gain of 23 percent in firm generation. hydropower sector is the coordinated basin-wide The investment cost associated with realization of operation of existing hydropower facilities. Sce- the SAPP plans is estimated at $10.7 billion. nario 1 would make it possible to increase firm Along the irrigation axis, the first increment in energy production by seven percent over the cur- development is associated with the realization of the rent situation--from 22,776 to 24,397 GWh/year. identified irrigation projects (IP), superimposed on The economic value of basinwide cooperation, the current situation. Scenario 3 assumes investment 22 Scenario Analysis and Findings Figure 3.1. Potential for energy generation and irrigation by development scenario 45,000 SAPP with full HPP coordination Desirable (Scenario 2D) development zone 40,000 Firm energy generation (GWh/year) 35,000 SAPP + coordinated IP SAPP (Scenario 2A) (Scenario 5A) SAPP + IP (Scenario 5) 30,000 tory SAPP + IP + Flood protection + Coordinated existing HPPs ced trajec Other projects (Scenario 1) Balan (Scenario 8) 25,000 Base Case Current situation (Scenario 0) 20,000 IP (Scenario 3) 15,000 0 200,000 400,000 600,000 800,000 1,000,000 Irrigated area (ha/year) SAPP = Southern Africa Power Pool ; IP = Identified Irrigation Projects. to equip an additional 336,000 hectares for irriga- High-level irrigation development without any tion. In this development scenario, water for con- hydropower sector development (Scenario 4) yields sumption would reduce firm annual hydropower 2,795,000 hectares of potentially irrigated area, but generation from the current situation (22,776 GWh/ with a 50 percent reduction in the production of firm year) to 18,052 GWh/year, a 21 percent reduction. energy, compared with the current situation. Sce- This scenario, however, has the potential to create nario 4 represents an imbalanced approach designed some 250,000 job opportunities in the irrigation sec- to set the upper limit for irrigation development. tor. The estimated cost of investment associated with A balanced development approach would com- the scenario is $2.3 billion. With the assumptions bine hydropower and irrigation investment and is used (see volume 2), the additional NPV created by reflected in Scenario 8: this irrigation investment cannot compensate fully for the losses in hydropower production. · Full development of hydropower, with firm In Scenario 5, the combined development of energy of around 30,000 GWh/year and average the irrigation sector (corresponding to the IP level) energy of around 55,800 GWh/year; and hydropower sector (realization of SAPP plans) · Implementation of identified irrigation proj- would yield a total of 774,000 irrigated hectares ects, with an average irrigated area of 774,000 (514,000 more than at present) and a production of hectares; 33,107 GWh/year of firm energy and 56,993 GWh/ · Restoration of natural flooding (subscenario year of average energy. level AF2, with 7,000 m3/s in February) in the 23 The Zambezi River Basin: A Multi-Sector Investment Opportunities Analysis Zambezi Delta and flood protection in the Tete NPV terms. For the scenarios that involve irrigation Region (not more than 10,000 m3/s) of the Lower development, the additional employment opportu- Zambezi; nities created by the investment are also depicted. · Implementation of other water transfers (e.g., As shown in figure 3.2, the investment scenarios Botswana off-take and important industrial proj- involving hydropower development only (scenarios ects in Zambia, Zimbabwe, Mozambique); and 1 and 2) show a positive NPV. The gain in NPV · Preservation of e-flows all around the Basin. for Scenario 1 is based solely on increased coop- eration. As irrigation development and investment This investment option would cost approxi- options are introduced, the total NPV begins to fall mately $16,100 million to implement, with a poten- (Scenarios 3 and 4), but combinations of hydropow- tial NPV of $110 million and a return on investment er and irrigation development (Scenario 5) reveal of about 10 percent. opportunities for improving it. Again, the impact The impact of climate change on investment of cooperation is evident through the increase in in hydropower and irrigation in the ZRB can be NPV in Scenario 5A. significant because of the region's highly variable The high-level irrigation development scenarios hydrology. A preliminary assessment of the impact would greatly curtail hydropower generation and, of climate change considers reduced runoff yield for that reason, are not considered viable. Including and increased irrigation deficits, as well as a tem- other water-using projects (e.g., out-of-basin trans- perature increase of 1.5ºC for evapotranspiration fers), as presently defined, does not seem to have a calculations, indicates a reduction of 32 percent in major impact on the economics of the development firm energy generation compared with Scenario scenarios considered (Scenario 7). Scenario 8 offers 8. The range of indicators of the impact of climate the most balanced approach to hydropower and change in the 2030 time frame was obtained from irrigation development. a 2010 World Bank study on water and climate The analysis shows that the trade-off between change. The uncertainty in analyzing climate change hydropower generation and irrigation can be signifi- impacts calls for caution in interpreting any climate cant. In strictly economic terms, the trade-off does change induced results. not seem to favor intensive irrigation development, The economic benefits of increased hydropower despite the employment opportunities and the food production are substantial, and the associated invest- security that such development might provide. ments are viable, as demonstrated in this analysis. It Even if irrigation schemes may be profitable in is clear that cooperation can play a significant role in themselves, their development benefits in economic maximizing the benefits that can be expected from terms are offset by the value lost in hydropower the investments. Even without further substantial generation. This is due to the premium assigned to investment, cooperation among the riparian countries firm energy. In fact, the outcome of the analysis is has the potential to offer substantial benefits while extremely sensitive to the value of firm energy. The allowing the region to postpone some investments break-even point, in terms of NPV, seems to be at in new infrastructure while maintaining the Basin's $0.05/KWh. long-term sustainability. That conclusion is supported The development of irrigation in this analysis by a comparison of Scenarios 1 and 2A, Scenarios 5 has another important aspect: direct employment. and 5A, and Scenarios 6 and 6A, among others. Building and operating irrigation systems demands a lot of labor and thus creates job opportunities. In 3.2.2 economicanalysis this analysis, about 270,000 jobs would be gener- ated in Scenario 8 and more than 1 million with Key parametric assumptions made in the economic high-level irrigation. Hydropower generation also analysis are reported in table 3.2. The results of produces direct jobs, of course, but except in the the economic analysis performed using the tool relatively short construction period, employment described in volume 4 are illustrated in figure 3.2. opportunities are limited to those with necessary The analysis is carried out for each investment in skills. The strongest employment effects from 24 Scenario Analysis and Findings Table 3.2. Main assumptions used for the economic analysis Parameter Assumption General Discount rate 10% Base year of prices 2010 Price development Constant prices Time horizon for sectors 50 years Time horizon for projects 30 years Hydropower Value of firm energy $0.058/KWh Value of secondary energy $0.021/KWh Depreciation period 50 years Employment factor investment, staff/MW installed 2.3 Employment factor operation, staff/MW installed 0.23 Agriculture Cost US$ (thousands) per hectare investment: range 3.7­7.8 Cost US$ (thousands) per hectare investment: average 5.6 Depreciation period 30 years Employment factor per crop (jobs/ha) Winter wheat 0.5 Summer maize 0.5 Winter maize 0.5 Summer rice 1 Winter rice 1 Sugar cane 0.3 Vegetables 2 Soya summer 0.5 Cotton 1 Citrus 2 Pasture 0.1 Other winter 1 Summer sorghum 0.5 Beans 1 Gross margin US$ per hectare range (economic, excluding financing costs, taxes, and indirect costs Low: 240; sorghum such as income forgone) High: 3,212; vegetables Gross margin US$ per hectare average (IP) (economic) 1,312 Note: Refer to detailed descriptions in volume 4. hydropower development arise as the increased and restoration of natural flooding, estimates indi- quantity and reliability of power production turn cate minimal influence on the expected viability of the wheels of the economy and creates new jobs. investments in hydropower and irrigation projects. This indirect effect has not been examined in the Decisions made on development investments, how- analysis but warrants further study. ever, are seldom based strictly on economics. Many Regarding other topics and sectors (wetlands, other factors, most outside the water sector, play a tourism, fisheries), other water-transfer projects, role in the decision process. 25 The Zambezi River Basin: A Multi-Sector Investment Opportunities Analysis Figure 3.2. Summary of economic analysis: Net present value and employment results by scenario (compared to current situation) 2,000 300,000 Scenario 2A with coordinated operation Net Present Value (million US$) ­ compared to current situation 1,500 250,000 1,000 Number of direct full-time jobs 200,000 500 0 150,000 SAPP + E- ows ­500 SAPP Plan 100,000 Other ­1,000 projects Coordinated Balanced HPP operation development 50,000 ­1,500 Hydro development Irrigation development ­2,000 0 1 2 2A 2B 2C 2D 3 5 5A 7 8 Scenario NPV Other sectors NPV Other projects NPV Flood protection NPV Agriculture NPV Hydropower Employment Note: NPV near zero reflects a return of aprox.10% on investment. 3.3 FindingsbydevelopMenT Findings: Coordinated operation of the exist- ing system of hydropower plants increases firm scenario energy from 22,776 to 24,397 GWh/year, a gain of 7.1 A short narrative on the objectives and anticipated percent (table 3.3). Average energy remains nearly effects of each development scenario is provided constant (30,323 GWh/year for Scenario 1 versus in this section, which provide a pictorial summary 30,287 GWh/year for Scenario 0). of hydropower generation (firm and average), ir- Coordinated operation of hydropower gen- rigation development (equipped and average total eration in Malawi, Mozambique, Zambia, and area), and associated water abstractions for all of Zimbabwe has the potential to eliminate current the scenarios considered in this analysis. The figures deficits in the base load demand without changes are intended as a visual comparison of the scenarios in system capacity. The gain from coordinated and their impacts and serve as points of reference operation would make it possible to postpone ad- for the narrative that follows. ditional capital investment to meet these deficits. The coordinated system could operate at an even Scenario 0: Base Case ­ Current Situation higher level of output if more interconnections were Firm energy production is 22,776 GWh/year and available. One such interconnection is under con- 260,000 irrigated hectares/year. struction between Malawi and Cahora Bassa, but to operate efficiently and share benefits equitably, the Scenario 1: Coordinated operation of existing whole system should be interconnected. This viable hydropower facilities investment option is a medium-term objective of Objective: To determine the amount of firm the SAPP. The estimated benefit from coordinated energy produced through cooperation among ripar- operation of the existing hydropower system could ian countries. be as high as $585 million over a 30-year period. 26 Scenario Analysis and Findings Figure 3.3. Synthesis of firm energy generation for all scenarios 70,000 60,000 50,000 Energy (GWh/year) 40,000 30,000 20,000 10,000 0 0 1 2 2A 2B 2C 2D 3 4 5 5A 6 6A 7 8 Scenario Average Firm Scenario 2: Development of SAPP's hydropower · Scenario 2C: Scenario 2A with hydropower co- plans ordination in two clusters (Kariba/Kafue and · Scenario 2A: Scenario 2 with e-flows Mozambique/Malawi) · Scenario 2B: Scenario 2A with hydropower · Scenario 2D: Scenario 2A with hydropower coordination in four clusters (Kariba, Kafue, coordination in all clusters. Mozambique, and Malawi) Figure 3.4. Average annual irrigated area by scenario 3,000,000 2,500,000 2,000,000 Irrigated area (ha/year) 1,500,000 1,000,000 500,000 0 0 1 2 2A 2B 2C 2D 3 4 5 5A 6 6A 7 8 Scenario 27 The Zambezi River Basin: A Multi-Sector Investment Opportunities Analysis Figure 3.5. Mean annual water abstractions by scenario 40,000 35,000 30,000 25,000 million m3 / year 20,000 15,000 10,000 5,000 ­ 0 3 4 5 5A 6 6A 7 8 Scenario Evaporation Abstractions for irrigation use Other abstractions Objective: To assess the increase in power Scenario 4: Current hydropower + high-level ir- production from future additions to the power rigation projects + e-flows system (Scenario 2A). To assess the effects of greater Objective: To determine the impact of carrying regional integration (cooperation) on hydropower out a set of ambitious irrigation projects (projects not production (Scenarios 2B to 2D). yet identified or planned) on the energy production Findings: In Scenario 2A, a total of 35,302 GWh/ of the existing hydropower developments. year is generated from unilateral (uncoordinated) Findings: An ambitious irrigation-development operation (table 3.3). The potential for hydropower scenario that would open some 2,800,000 hectares development associated with coordination in Sce- to irrigation would reduce firm energy production nario 2D is almost 43,500 GWh/year of firm energy. from the existing HPP system to 11,600 GWh/year. That amounts to a gain of 8,200 GWh/year in com- Though more than 1 million jobs would be created, parison with Scenario 2A--a significant increase of the impact on hydropower production would be 23 percent. The practical aspects of achieving this significant: a 49 percent reduction in firm energy gain should be further studied. and a 28 percent reduction in average energy. Scenario 3: Current hydropower + identified ir- Scenario 5: Scenario 2A + identified irrigation rigation projects + e-flows projects Objective: To determine the impact of identi- Objective: To assess the effects of a gradual fied irrigation projects on the energy production of increase in irrigation-equipped area based strictly existing hydropower facilities. on existing national plans and programs, together Findings: An irrigation-development scenario with development of new hydropower plants in in which identified projects involving some total accordance with the SAPP plan. Irrigation develop- 774,000 hectares of irrigated area were implemented ment is unilateral: each country develops its own would reduce firm energy production from the ex- projects without taking into account their impact isting power system to 18,050 GWh/year. Through downstream. No specific strategy for cooperation irrigation development projects, this scenario among riparian countries is assumed. would create an estimated 250,000 employment Findings: Under this medium-scope irrigation- opportunities. development scenario, involving some 774,000 hect- 28 Scenario Analysis and Findings Table 3.3. Effect of coordinated hydropower operation on firm and average energy production Existing facilities With new investments in hydropower sector Stand-alone Stand-alone operation operation Four Two Stand-alone Coordinated (without (with coord. coord. Full Item operation operation e-flows) e-flows) clusters clusters coordination Scenario 0 1 2 2A 2B 2C 2D Scenario for comparison 0 2 2A 2A 2A Firm energy (GWh/year) 22,776 24,397 39,000 35,302 39,928 37,712 43,476 Loss/gain (GWh) 1 621 ­3,697 4,626 2,410 8,173 Loss/gain (%) 7 ­9 13 7 23 Average energy (GWh/year) 30,287 30,323 60,760 59,304 59,138 59,251 59,178 Loss/gain (GWh) 37 ­1,456 ­166 ­53 ­126 Loss/gain (%) 0 ­2 0 0 0 ares of total irrigated area, firm energy production ditional benefits could be generated by reducing of the future power system would be approximately water withdrawals from upstream reaches of the 32,400 GWh/year. This scenario provides for the Zambezi River. creation of 250,000 employment opportunities. Scenario 6: Scenario 2A + high-level irrigation Scenario 5A: Scenario 2A + coordinated identified Objective: To assess the impact of intense devel- irrigation projects opment of irrigation on Scenario 2A (development Objective: This is Scenario 5, plus cooperation of hydropower under the SAPP and e-flows), but among riparian countries in the development of without any specific strategy for joint operation or identified irrigation projects. The variant is based cooperation among riparian countries. on the observation that irrigation projects are gener- Findings: Although intensive development ally located toward the lower part of the river basin of high-level irrigation would bring the estimated so as to reduce abstraction for consumption in the total irrigated area in the Basin to 2,800,000 hectares, upper part that would penalize other sectors of the such increase in water abstraction for irrigation economy--for example, high abstraction in the up- would directly affect energy production levels of per reaches would reduce flows for tourism and for hydropower projects developed under SAPP (incor- hydropower at Victoria Falls, Kariba, Cahora Bassa, porating sufficient releases for e-flows). Compared and other sites. to Scenario 2A (development of SAPP + e-flows), Findings: Relocating some new irrigation areas firm energy production decreases with 37 percent downstream (e.g., 28,000 hectares of sugarcane) from 35,302 to 22,282 GWh/year, and average would shift the points of consumption in the system energy production by 18 percent from 59,304 to and allow for additional energy generation. Firm 48,504 GWh/year. energy production would increase by two percent to 33,107 GWh/year with cooperation, compared Scenario 6A: Scenario 2A + coordinated high-level to without it. Average energy would increase by irrigation one percent. Objective: To assess the impact of intensive ir- The benefit of cooperative development (in rigation development combined with development terms of additional NPV) for this level of irrigation of new hydropower plants, including cooperation development is estimated at $140 million. Ad- among riparian countries in irrigation development. 29 The Zambezi River Basin: A Multi-Sector Investment Opportunities Analysis Findings: In the presence of intensive develop- Scenario 9: Scenario 8 + impact of climate change ment of irrigation (based on Scenario 4) that would Objective: To assess the potential impact of cli- yield some 2,800,000 hectares of irrigated area, firm mate change on the balanced approach represented energy production would be 22,917 GWh/year with in Scenario 8, as it includes all the water-using cooperation in irrigation, compared with 22,282 sectors. GWh/year without it. Firm energy production Findings: The impact of climate change in this would increase by three percent, average energy analysis was evaluated in terms of change in air tem- by one percent. Compared to Scenario 6, the benefit perature, basin yield (for natural flows), and irriga- of cooperation (in terms of additional NPV) for this tion water deficit (World Bank 2009). The preliminary level of irrigation development is estimated at $265 indications are that some parts of the Basin would be million. affected more than others with potential reduction of This scenario assumes transboundary coopera- up to 30 percent in hydropower generation. As noted, tion in large-scale irrigated agriculture. It provides this will need further detailed analysis. Given the an opportunity for discussion of regional issues such uncertainties associated with climate change projec- as food self-sufficiency and food security, mecha- tions, this finding should be viewed with caution. nisms for sharing benefits created from cooperative uses of water, and employment opportunities. Scenario 10: Flood restoration in the Lower Delta Objective: To assess the effects of restoring Scenario 7: Scenario 5 + other projects natural flooding in the Lower Delta by modifying Objective: To assess the effect on irrigation the operation of the Cahora Bassa reservoir in order development and hydropower energy production to enhance environmental and economic benefits for of water withdrawals for other projects--transfers fisheries, aquaculture and livestock production, and outside the basin, industrial withdrawals, and ad- other uses, as well as to better protect downstream ditional water supply. zones against flood damage. The following subsce- Findings: Realization of industrial, domestic narios are considered: water, and interbasin water-transfer projects would Scenario set 10-A, 10-B, and 10-C: To assess the reduce the annual production of firm energy to effects of restoring natural flooding on the Lower 32,024 GWh/year, compared with 32,358 GWh/year Delta at three flooding levels; 4,500, 7,500, and in Scenario 5. This one percent reduction appears to 10,000 m3/s in February of each year. be a reasonable trade-off. Scenario set 10-D, 10-E and 10-F: To assess the effects of restoring natural flooding on the Lower Scenario 8: Scenario 5 + flood protection Delta at the same three flooding levels in December Objective: To assess the economic and envi- of each year. ronmental impact of balancing development of Findings: The results of this series of scenario hydropower, irrigation, other water projects, flood analysis show that: protection, and restoration of natural flooding in the Lower Delta. · It is technically feasible to restore natural flood- Findings: Under this scenario, 30,013 GWh/ ing with a high degree of success (from 100 year of firm energy and 55,857 GWh/year of aver- percent for 4,500 m3/s in February to 90 percent age energy would be generated. Identified irrigation for 7,000 m3/s in December). The probability projects would increase the total average irrigated of success in restoring a 10,000 m3/s flood in area to some 774,000 hectares. Restoring natural December would only be 50 percent. flooding at the rate of 7,000 m3/s could be achieved · Flood restoration would reduce energy genera- in February in the Zambezi Delta, and flood protec- tion from three to 33 percent at Cahora Bassa tion could be provided downstream from Lupata and from four to 34 percent at the planned Gorge for up to 10,000 m3/s peak flow. This scenario Mphanda Nkuwa Dam, compared with energy meets the e-flow requirements at all defined control production under the base case (Scenario 2A). points in the ZRB. This reduction in generation is significant. 30 Scenario Analysis and Findings · The economic trade-offs between power produc- It should be noted that although it is theo- tion and restored flooding benefits are not favor- retically possible to modify the operation of Ca- able to flood restoration. The price of energy is hora Bassa to mitigate most of the flooding at the critical in this regard. The break-even point is at monthly scale specified in this scenario, in practice, an electricity price of $0.02/KWh, with the value a sizeable portion of floods originate from flash of hydropower increasing at higher unit prices. streams, making their management difficult. In the absence of a comprehensive early warning system, Scenario 11: Flood protection downstream of Lu- the capability of Cahora Bassa Dam to mitigate pata Gorge (to a maximum of 10,000 m3/s) floods downstream is limited, and the level of flood Objective: This scenario combines two different protection will be lower in practice than in theory. objectives: restoring natural flooding (as in Scenario Nonetheless, this analysis provides some insight 10) and flood protection to a maximum of 10,000 into the trade-off among storage, power generation, m3/s downstream from Lupata Gorge. and flood mitigation. Findings: The results of this set of scenarios The economic value of flood protection is show that: based on the costs from loss and damage caused by hazardous floods. The NPV of the projected · It is technically feasible to combine part restora- avoided costs is $72 million over the period tion of natural flooding of 4,500 or 7,000 m3/s in (2010­60). At an assumed firm energy price of February and December with flood protection $.056/KWh, this averted damage is equivalent downstream from Lupata Gorge. to about 130 GWh of generation. The production · Depending on the scenario set considered, loss of averting damages, therefore, is between energy production could be curtailed from 10 750 and 2,200 GWh in the Cahora Bassa Dam and percent to 40 percent for firm energy and from the planned Mphanda Nkuwa Dam. In economic one percent to 37 percent for average energy, terms, protection is justifiable if the economic price compared with Scenario 2A. of energy is much lower. 31 4 Conclusions and Next Steps 4.1 conclusions This report has analyzed a set of development scenarios for growth- oriented investments in water and power in the Zambezi River Basin. The scenarios represent a range of options that may be considered by the eight riparian countries in the course of deliberations over coop- erative development and management of the water resources of the Basin. The analysis focused on hydropower and irrigation as key in- vestment areas. The water needs of closely related sectors and topics-- water and sanitation, flood management, environment, tourism, wetlands--were also taken into account. Water users in these sec- tors were considered to be legitimate stakeholders with first-priority claims on water allocation. The main findings of the analysis are: · The ZRB and its rich resources present ample opportunities for sustainable, cooperative investment in hydropower and irrigated agriculture. · With cooperation and coordinated operation of the existing hy- dropower facilities found in the Basin, firm energy generation can potentially increase by seven percent, adding a value of $585 million over 30 years with essentially no major infrastructure investment. · Development of the hydropower sector according to the genera- tion plan of the SAPP (NEXANT 2007) will require an invest- ment of $10.7 billion over an estimated 15 years. That degree of development will result in estimated firm energy production of approximately 35,300 GWh/year and average energy production of approximately 60,000 GWh/year, thereby meeting all or most of the estimated 48,000 GWh/year demand of the riparian countries. · With the SAPP plan in place, coordinated operation of the system of hydropower facilities can provide an additional 23 percent generation over uncoordinated (unilateral) operation. The value of cooperative generation therefore appears to be quite significant. · Implementation of all presently identified national irrigation projects would expand the equipped area by some 184 percent 33 The Zambezi River Basin: A Multi-Sector Investment Opportunities Analysis (including double cropping in some areas) for a of flood protection and natural flooding in the total required investment of around $2.5 billion. Lower Zambezi. However, this degree of development of the irrigation sector, without further development of hydropower, would reduce hydropower 4.2 nexTsTeps generation of firm energy by 21 percent and average energy by nine percent. If identified Explore and exploit the benefits of cooperative invest- irrigation projects were developed alongside ments and coordinated operations. The analysis has current SAPP plans, the resulting reduction demonstrated that the riparian countries could in generation would be about eight percent achieve short- and long-term benefits through for firm energy and four percent for average coordinated operation of existing and planned energy. hydropower facilities, cooperative flood manage- · Cooperative irrigation development (such as ment, and cooperative irrigation development. moving 28,000 hectares of large infrastructure This is particularly true at the subbasin level and downstream) could increase firm energy genera- when cooperation takes place between two or more tion by two percent, with a net present value of countries, in `clusters'. Engagement in the basin $140 million. But complexities associated with will depend on opportunities to build confidence food security and self-sufficiency warrant closer in cooperation at these different levels, and will examination of this scenario. depend on political and socioeconomic conditions. · Other water-using projects (such as transfers A detailed study of the benefits of cooperation and out of the Basin and for other industrial uses joint investment, and of how those benefits might within the Basin) would not have a signifi- be shared, is recommended. cant effect on productive (economic) use of Strengthen the knowledge base and the regional the water in the system at this time. But they capacity for river basin modeling and planning. This might affect other sectors and topics, such as analysis consolidated data and information from tourism and the environment, especially dur- both the basin-wide and national perspectives. ing periods of low flow. A more detailed study The consolidated information will be provided to is warranted. Similarly additional detailed the riparian countries, the SADC, and international analysis is needed for assessing the impact of development partners, as well as other interested climate change. parties. It can also inform other basin-wide initia- · For the Lower Zambezi, restoration of natural tives taken by the countries and the donor commu- flooding (for beneficial uses in the Delta, includ- nity. Development of comprehensive planning, and ing fisheries, agriculture, and environmental eventually of an operational model for the Zambezi sustainability) and better flood protection could River Basin (with a more refined operational time be assured by modifying reservoir operating scale), is recommended. The region would also ben- guidelines at Cahora Bassa Dam. Depending efit from better flood forecasting and more sensitive on the natural flooding scenario selected, these and dependable early warning capabilities, both of changes could cause reduction in hydropower which would improve reservoir management and production (between three and 33 percent for thereby maximize power generation, irrigation sup- Cahora Bassa Dam and between four and 34 ply, and flood management (both to release floods percent for the planned Mphanda Nkuwa Dam). for beneficial uses and to mitigate high flows). The More detailed studies are warranted. modeling effort should benefit from ongoing ac- · Based on the findings for Scenario 8, a reason- tivities related to flood management, early warning able balance between hydropower and irriga- systems, synchronized operation of hydropower tion investment could result in firm hydropower facilities, and other activities. generation of 30,000 GWh/year and some Improve the hydrometric data system. In the course 774,000 hectares of irrigated land. Those goals of the analysis, it became evident that significant could be achieved while providing some level gaps exist in the geographic extent and density of 34 Conclusions and Next Steps the region's hydrometric network. Some stations deemed essential for project preparation and deci- have been discontinued and need to be rehabili- sion making. Such studies would provide a good tated or replaced altogether. Future detailed analy- starting point for ZAMCOM when it becomes fully ses will depend on the availability and accuracy of operational. data and information on water resources and other Build institutional capacity. During the national related sectors. consultations organized as part of the MSIOA, it be- Conduct specific studies on select topics. Future came apparent that riparian countries varied widely detailed planning of water resources develop- in their institutional approach to water resources ment and management would benefit from stud- management. Effective engagement in cooperative ies such as: benefit- and cost-sharing approaches water resources development and management on applied to specific cases; determination of e-flows, a regional scale would require greater institutional particularly for tributaries; acceleration of power capability at both the regional and country levels. transmission interconnections; and other studies 35 The Zambezi River Basin: A Multi-Sector Investment Opportunities Analysis Box 4.1. The Zambezi River Watercourse Commission (ZAMCOM) Establishment of a Watercourse Commission for the Zambezi River has been under discussion for more than two decades. In 1987 the SADC developed the "Action Plan for the Environmentally Sound Management of the Common Zambezi River System" and launched the Zambezi River Action Plan (ZACPLAN) to promote joint management of the water resources of the Zambezi River. This addressed both technical and political initiatives, including support to preparation of a Zambezi River Watercourse Commission (ZAMCOM). A draft ZAMCOM agreement was subsequently produced and the first detailed negotiations among the riparian countries took place in 1998. The negotiations were terminated later in the same year. It was agreed that the process should meet the needs of all SADC Member States and this resulted in development of the SADC Protocol on Shared Water Courses. A revised version of the protocol was agreed in 2000 which was signed and ratified by all of the then 14 SADC Member States and is now in force. The ZACPLAN process, including negotiations on establishment of the ZAMCOM, was initiated again in October 2001 through the launch of the ZACPRO 6, Phase II Project with the assistance of the governments of Sweden, Norway and Denmark. The immediate objectives of ZACPRO 6.2 were (i) to setup the regional and national enabling environment necessary for strategic water resources management through ZAMCOM; (ii) to establish water resources management systems including models, tools and guidelines; and (iii) to develop an integrated water resources management strategy. The Zambezi Water Information System (ZAMWIS) has been established and the Integrated Water Resources Management Strategy and Imple- mentation Plan for the Zambezi River Basin was finalized in April, 2008. This acknowledges gaps and weaknesses in the approach to ZAMCOM and makes recommendations on how to address these, as detailed at the end of volume 3 of this study. These are identified in the following broad areas: · Integrated and coordinated water resources development · Environmental management and sustainable development · Adaptation to climate variability and climate change · Basin-wide cooperation and integration An updated version of the draft ZAMCOM Agreement facilitated under ZACPRO 6.2 was signed by seven of the eight riparian countries on July 13, 2004. The agreement will come into force with ratification by six of the riparian countries, with five having ratified to date. Zambia still has not signed and is awaiting conclusion of the policy reform process and institutional alignments. ZAMCOM was designed to assume the functions of the ZACPRO and continue to provide an enabling environment for the development of integrated water resources management of the Zambezi River Basin. ZACPRO 6.2 came to an end on April 30, 2009 and was supposed to cede its functions to ZAMCOM. In July 2009, in the absence of a ratified agreement, the riparian Ministers responsible for water adopted an Interim ZAMCOM Governance Structure. A Council of Ministers is responsible for overall guidance, strategic planning supervision, financial overview and decisions, connecting with institutions outside the Zambezi River Basin, and evaluation of programs. Its Technical Committee implements policies and decisions of the Council, develops the strategic plan, develops hydrometric data and early warning systems, and monitors water abstraction. The Committee also makes legal, political, and technical recommendations to the Council and is intended to supervise the ZAMCOM secretariat (ZAMSEC). In the absence of the ratified agreement all riparian countries have agreed on the establishment of an interim secretariat to be established in Gaborone, Botswana. 36 References Euroconsult Mott MacDonald. December 2007. Integrated Water Re- sources Management Strategy and Implementation Plan for the Zambezi River Basin. Final Report, Rapid Assessment, Southern African De- velopment Community Water Division/Zambezi River Authority (SADC-WD/ZRA). NEXANT. October 2007. SAPP Regional Generation and Transmission Expansion Plan Study. Draft final report, Main Report, Volume 2, sub- mitted to SAPP Coordination Center. ------. May 2008. SAPP Regional Generation and Transmission Expan- sion Plan Study. Draft final report (Interim), Volume 2A, analysis us- ing updated data submitted to Southern African Power Pool (SAPP) Coordination Center. SEDAC (Socioeconomic Data and Applications Center). 2008. "Grid- ded Population of the World, version 3 (GPWv3) and Global Rural- Urban Mapping Project (GRUMP), alpha version." Socioeconomic Data and Application Center. http://sedac.ciesin.org/gpw/docu- mentation.jsp (accessed 2008). World Bank. November 2009. Water and Climate Change: Understanding the Risks and Making Climate-Smart Investment Decisions. Final Report. 37 THE WORLD BANK GROUP 1818 H Street, N.W. Washington, D.C. 20433 USA