Report No. 25175 - EGT Arab Republic of Egypt Cost Assessment of Environmental Degradation Sector Note june 29, 2002 Rural Development, Water and Environment Department Middle Erast andU NoI. /AfIILd Rxegion Document of the World Bank Cu rrency Equivalents (Exchange rate effective June 13, 2002) Currency Unit = Egyptian pound (LE) US$ 1.00 = 4.61 LE Fiscal Year July I - June 30 Acronyms DALY Disability Adjusted Life Year DC Damage Cost EEAA Egyptian Environmental Affairs Agency LE Egyptian Pound GDP Gross Domestic Product METAP Mediterranean Environmental Technical Assistance Program NEAP National Environmental Action Plan PM10 Particulate Matters RC Remediation Cost UNDP United Nations Development Program USAID United States Agency for International Development US$ US dollar WHO World Health Organization WTP Willingness-to-Pay Vice-President: Jean-Louis Sarbib Country Director: Mahmood Ayub Sector Director: Letitia A. Obeng Sector Manager: Salah Darghouth Task Team Leader: Maria Sarraf Cu rrency Equivalents (Exchange rate effective June 13, 2002) Currency Unit = Egyptian pound (LE) US$ 1.00 = 4.61 LE Fiscal Year July I - June 30 Acronyms DALY Disability Adjusted Life Year DC Damage Cost EEAA Egyptian Environmental Affairs Agency LE Egyptian Pound GDP Gross Domestic Product METAP Mediterranean Environmental Technical Assistance Program NEAP National Environmental Action Plan PM10 Particulate Matters RC Remediation Cost UNDP United Nations Development Program USAID United States Agency for International Development US$ US dollar WHO World Health Organization WTP Willingness-to-Pay Vice-President: Jean-Louis Sarbib Country Director: Mahmood Ayub Sector Director: Letitia A. Obeng Sector Manager: Salah Darghouth Task Team Leader: Maria Sarraf Contents Acknowledgements ........................................................... .........................................(i) Abstract ............. (ii) Executive Summary .............. (Iii)-(v) 1. Introduction .I A. Background. I B. Cost of environmental degradation ............................. ..................... .................. I C. Rationale and objectives ...................................................................... .. 1 D. The preparation process .............................. 2 2. Methodological Framework. .............................. 3 A. Definition .3 B Methodological processes ......................... .................................................3........ .3 C. Categories of analysis .................4..... . 4 D Consequences of degradation ...............4...... . ...4 E. Monetary valuation ...4...........................4 F. Damage costs and remediation costs ........................ ..5.................... ...... ................ 5 G Marginal analysis .............................. 5 3. Cost Assessment of Environmental Degradation. 7 A. Introduction .7 B. Total cost of degradation .7 C. Water .8 D. Air .9 E. Soil .9 F. Municipal waste .......................... ............................... ......................... 10 G. Coastal zones and the cultural heritage. ......................... 10 H. Global environment .......................... ............ ......................... 11 1. Future generations and poverty ......................... 11 4. Cost of Remediation ............... ... . .................... ....... ........... ... 13 A. Introduction ............................................................. ......................... 13 B. Policy context ........1.... ..................................................... .......... 13 C. Water .13 D. Air .14 E. Soil .14 F. Waste .15 G. Coastal zones and the cultural heritage .15 H. Global environment .15 5. A Comparison of Damage and Remediation Costs and Conclusion . .16 A. Introduction .16 B. Comparison by environmental categories .16 C Conclusion .18 Bibliograph y.19 Annexes Annex I Damage and remediation costs calculation Annex II DALYs for indoor and outdoor air pollution and water and sanitation Tables Table 3.1 Annual cost of environmental degradation - mean estimate Table 3.2 Water: annual damage cost - mean estimate Table 3.3 Air: annual damage cost - mean estimate Table 3.4 Soil: annual damage cost - mean estimate Table 3.5 Municipal waste: annual damage cost - mean estimate Table 3.6 Coastal zones, cultural heritage: annual damage cost - mean estimate Table 3.7 Impacts on future generations and the poor Table 4.1 Water: cost of remediation Table 4.2 Air: cost of remediation Table 4.3 Soil: cost of remediation Table 4.4 Waste: cost of remediation Figures Figure A Annual cost of environmental degradation by environmental categories (mean estimate as % of GDP) Figure B Annual cost of environmental degradation by economic categories (mean estimate as % of GDP) Figure C Index of per capita cost of environmental degradation - poor vs. non-poor Acknowledgements This sector note was prepared by Maria Sarraf (Task Team Leader) and Bjom Larsen (Senior Consultant). Sherif Arif is the Regional Environmental Coordinator, Salah Darghouth is the Sector Manager, and Letitia Obeng is the Sector Director. The team would like to acknowledge the cooperation and support received from H.E. Dr. Mamdouh Riad Tadros (Minister of State for Environmental Affairs), Dr. Ayman Abu Hadid (Chief Executive Officer, EEAA), Eng. Dahlia Lotayef (Director of International Cooperation, EEAA), Dr. Heba Nassar (Professor of Economics, Cairo University) as well as Mmes. E. Elleithy, 0. El-Khawaga and H. Zayed. They would also like to thank Dr. Gonzague Pillet (Consultant, Ecosys) for providing significant contribution during the early stage of the study. Substantial contributions were provided by Mustapha Nabli (Chief Economist and Sector Director, MNSED) and Aziz Bouzaher (Lead Natural Resource Economist, SASEN). Magda Lovei (Lead Environmental Economist, ENV) and Jan Bojo (Lead Environmental Economist, ENV) were the peer reviewers and provided extensive comments and feedback. They finally gratefully acknowledge the financial support provided by the Swiss Agency for Develop- ment and Cooperation through a grant to the Mediterranean Environmental Technical Assistance Program (METAP). Abstract This report is a first step in a process towards the use of environmental damage cost assessments for priority setting and as an instrument for integrating environment into economic and social development. The report provides estimates of damage and remediation cost for several areas of the environment. The estimates should be considered as orders of magnitude, and a range is provided to indicate the level of uncertainty. As areas of priority are identified, further analysis would be required for more accurate estimates. The damage cost of environmental degradation in Egypt in 1999 is estimated at LE 10-19 billion per year, or 3.2-6.4 % of GDP, with a mean estimate of LE 14.5 billion or 4.8% of GDP. In addition, the damage cost to the global environment is estimated at 0.6% of GDP. The cost of air pollution is assessed at LE 3.3 - 9.6 billion or 1.1-3.2% of GDP (urban outdoor and rural indoor), followed by soil degradation at LE 3-4.2 billion or 1.0-1.4% (erosion and salinity). In the area of water, the damage cost is estimated at LE 2.1-3.6 billion or 0.7-1.2% of GDP (mostly from the lack of safe water, sanitation, and hygiene). Cost of coastal zone degradation is estimated at LE 0.6-1.2 billion or 0.2-0.4% of GDP, arnd inadequate waste management at around LE 0.6 billion or 0.2% of GDP. Of total damage cost about 2/3 is from damages to health and 1/3 from natural resource degradation. It should be noted that no cost estimate is provided for degradation associated with industrial, hazardous and hospital waste, as sufficient data were unavailable. Similarly, cost assessment of degradation associated with inadequately treated wastewater is limited due to data constraints. Cost is also presented for a limited number of remedial actions in each of the environmental areas for which damage cost is estimated. More detailed analysis is required in future work in order to compare benefits of remediation to reduction in damage cost at the margin. (ii) Executive Summary INTRODUCTION The 1990's were a groundbreaking decade for in Egypt to assess the cost of the environmental degradation over time; environmental management and protection in and Egypt, a decade with environmental programs and activities that encompassed, at least to (c) provide a basis for a training program some extent, all areas of the environment. for ministries, agencies, institutes and However, challenges remain. There has until other interested parties to incorporate now been no systematic quantification of the assessments of the cost of environmental health and natural resource cost of these degradation in olic makin and challenges. The number of areas such as the egradaonmna managemengt ones found in Egypt, with a continuing environmental degradation has been The next step in the process is to develop a increasing. training manual that builds on the analytical Most recently on May 28, 2002, H.Ee framework, environmental categories, and President Hcnlosni Mbarak met with, m em s results and conclusions of this report. This President Hosni Mubarak met with members manual will be used in a training program that of the cabinet and three governors regarding will concentrate on in-depth analysis of the strategy for environmental action up to environmental damage assessments, and 2017. In addition to emphasis on improvement benefits and costs, of environmental actions in in key environmental areas (such as air priority areas. pollution, water quality, and water re-use), it was also stressed that integration of The report also provides cost estimates of environmental management and economic select remedial actions that may be necessary development should be strengthened. to protect the environment and restore its quality. It also presents a discussion on the This report is a first step in a process coprio of daaecs.neeito supported y the Medterranean comparison of damage cost and remediation supported by the Mediterranean cost and the potential benefits of remedial Environmental Technical Assistance Program actions for some environmental issues. (METAP) towards the use of environmental damage cost assessments as an instrument for The estimates of environental damage cost integrating environment into economic and remediation cost should be considered as development. This initiative is supported by orders of magnitude. As areas of priority are the Swiss Agency for Development and identified, further analysis would be required Cooperation. for more accurate estimates. Nevertheless, the estimates presented in this study indicate the The specific objectives of this report are three- severity and magnitude of environmental degradation, provide a rationale for continued environmental management, and allow priority (a) provide a first order estimate of the cost setting for environmental actions. of environmental degradation in Egypt with the most recent data available (1999); (b) provide an analytical framework that can be applied periodically by professionals COST OF ENVIRONMENTAL DEGRADATION The damage cost of environmental degradation children, caused by lack of access to safe in Egypt in 1999 is estimated at LE 10-19 water and sanitation, and inadequate domestic, billion per year, or 3.2-6.4 % of GDP, with a personal and food hygiene. This is followed mean estimate of LE 14.5 billion, or 4.8% of by health impacts of indoor air pollution in GDP. In addition, the damage cost to the rural areas from biomass fuel use (0.15-0.5% global environment is estimated at 0.6 % of of GDP). The last category is waste GDP. management with potential impacts on health Estimated damage costs have been organized from uncollected municipal waste. Moreover, by environmental categories, and are presented the health cost of air pollution from buming in the Table and the first Figure (not including practices of waste in Cairo is estimated at 0.2- the global environment). The second Figure 0.5% of GDP (included in urban air pollution). presents the same mean estimates by economic It should be noted that no cost estimate is categories, indicating that the cost to health provided for degradation associated with and quality of life is about 3.2% of GDP, industrial, hazardous and hospital waste, as followed by 1.6% for natural resources. sufficient data were unavailable. Annual cost of environmental degradation by The report also suggests that urban air environmental categories (mean estimate as % pollution may cause a reduction in of GDP) Annual cost of environmental degradation (mean 2 50% _ Estimate) 2 __% _ _ Million LE Percent of GDP per year 150% Air 6,400 21% 1 0% _ _- _ __ Soil 3,600 12% Water 2,900 1 0% o so% _ _ - Coastal zones and 1,000 03% cultural hentage o00% Waste 600 02% Air So l Water Coastal waste Sub-Total 14,500 4.8% Global environment 1,900 0 6% Total 16,400 5.4% Annual cost of environmental degradation by international tourist visits. Based on limited economic categories (mean estimate as % of evidence from Asia, it is estimated that GDP) tourism losses in Cairo are on the order of 0.2- 35 _ _ 0.3% of GDP. 300% =. 250% - The cost of natural resource degradation is 2 00% predominantly from agricultural soil 150% degradation (1.1-1.4% of GDP) caused by 10OD% -.salinity and erosion, followed by coastal zone 000% degradation (0.25-0.4% of GDP) associated HealthQualtyof ide NaturJ tesources with losses in coastal zone tourism due to degradation of coral reefs and coastal water pollution. The most significant impacts on health and quality of life are caused by urban air pollution especially in Cairo (0.7-2.3% of GDP, with a COST OF REMEDIATION mean of 1.5% of GDP), followed by diarrheal diseases and mortality (0.5-1.1% of GDP, with Cost of remediation has been estimated for a a mean of 0.8% of GDP) primarily affecting limited number of actions for each environmental category and presented in (iv) Chapter 4. While the focus of this chapter is stringent and comprehensive are the on the cost of remediation, and mainly of remedial actions; investments and programs, a discussion of (b) The remedial actions discussed in Chapter policy context is warranted. Reducing 4 are in most cases insufficient to degradation and protecting the environment adequately address the damages; should be viewed in the context of economic and sector policies, socio-economic (c) Quantification of environmental damages development, and in the broader framework of and their monetary valuation can never be environmental management. completely accurate (Chapter 2), and the costs of remedial actions are often rough Much can be gained from prevention of estimates; and degradation through evaluating environmental (d) The principle of marginal analysis needs impacts of policies and development plans. to be applied in order to obtain remedial Eliminating price, tax and economic actions that are likely to provide the regulatory distortions can also benefit the environment if such distortions favor largest benefits per unt of cost. inefficient use of "dirty" resources or "dirty" industries. CONCLUSION This study indicates that the cost of Reducing degradation and protecting the environmental degradation in Egypt is in the environment also require proper enforcement range of 3.2-6.4% of GDP, with a mean of environmental legislation, public/private estimate of 4.8%. This is substantial and on partnerships, environmental awareness raising, the order of two times higher than in and local participation. Sound environmental industrialized countries. The main reasons for management also requires that the role of the this is: (i) a significant disease burden public and the private sector be clarified. It (mortality and morbidity) associated with lack should be said that the remedial actions of safe water and sanitation and inadequate discussed in this report should not necessarily hygiene behavior; (ii) substantial health be undertaken by the public sector. The impacts of severe air pollution; and (iii) private sector should bear the cost of productivity losses associated with soil remedying the pollution and degradation it degradation that amount to a significant causes, and the private sector can provide a percentage of GDP, given that agricultural significant contribution to the delivery of share of GDP is many times higher in Egypt environmental services. than in high-income countries. This report also indicates that Egypt would benefit significantly from remedial actions to COMPARISON OF DAMAGE AND protect and restore environmental quality, REMEDIATION COSTS ~~~~~~~although estimates are tentative. Further A comparison of benefits (reductions in analysis of benefits and costs of select damages) and costs (remedial actions) of environmental issues that are considered environmental protection and improvement priority areas by the Government of Egypt can be useful in order to point to would facilitate the process of priority setting environmental issues for which benefits of and improved environmental management, as remediation are likely to exceed the cost of well as promote inter-sectoral support for remedial actions. action. As the damage cost of urban air pollution has been relatively well assessed in Chapter 5 in the report points to some areas for several studies, future damage cost analysis which a comparison of benefits and costs are should include more in-depth assessment of made. However, in making such comparisons, impacts of environmental quality on tourism a note of caution is warranted: (and impacts of tourism on the environment), on soil and water resources management, as (a) Environmental damages are unlikely to be well as the health impacts of indoor air completely eliminated no matter how pollution. (v) 1. Introduction A. BACKGROUND 1.01 Egypt, as all countries in the region and environmental management and economic the world, has long faced environmental development should be strengthened. degradation and threats that impinge on the health of the population and the economic development process. B. COST OF ENVIRONMENTAL DEGRADATION 1.02 In 1992, Egypt prepared its first National Environmental Action Plan (NEAP 1.06 In 1995, the World Bank published the 1992) that provided a comprehensive "Middle East and North Africa Environmental assessment of the environmental situation in Strategy". The Strategy provided an order of the country and identified key areas of priority magnitude of the regional cost of actions. In 1994, it adopted a comprehensive environmental degradation as a percentage of law for the protection of the environment - regional GDP. The main areas for which the Environmental Law No 4. Since then, Strategy provided an estimate of the cost of industrial and urban pollution mitigation, degradation were the detrimental impacts on especially, has taken place on a significant health from lack of safe water and sanitation scale, although challenges remain. and urban air pollution, and the cost of natural resources degradation (soil erosion and 1.03 A new ministry of environment was salinisation as well as rangeland and forest created in 1997 as well, and significant degradation). progress was made to strengthen local capacity for environmental management. A 1.07 The Strategy was based on 1990 data, comprehensive NEAP update and an and was a first attempt to quantify the impacts environmental profile were completed in 2002. on health and economic activity of environmental degradation in the region. In 1.04 As a whole, the 1990's and the addition, the strategy also identified some beginning of this new decade have been a areas of resource inefficiencies (such as groundbreaking period for environmental energy and water) with high economic costs management and protection in Egypt with and that contributed to environmental environmental programs and activities that degradation. encompassed at least to some extent all areas of the environment. In accordance with a 1.08 During the 1990's, several country report prepared for EEAA by the Organization specific studies were also undertaken in the Support Program (OSP) in August 2001, region, which provided estimates of the cost of international donors and international financial environmental degradation for specific institutions provided an amount of LE 2.4 environmental issues or a subset of issues. billion from 1991 to 2001 to improve These include studies commissioned by environmental management METAP, UNDP, USAID, the World Bank and others in Algeria, Egypt, Iran, Lebanon, 1.05 Most recently on May 28, 2002, H.E. Morocco, and Syria. President Hosni Mubarak met with 11 Members of the Cabinet and three Governors regarding the strategy for environmental action C. RATIONALE AND OBJECTIVES to 2017. In addition to emphasis on improvement in key environmental areas, it 1.09 In Egypt, there has not been until now was also stressed that integration of any quantification of the health and natural (1) resource cost of remaining environmental report was also developed. This manual will challenges. Furthermore, the local capacity to be used in a series of training programs in undertake such quantifications is limited, as in Egypt and other MNA countries that will so many other countries. An increase in such a concentrate on in-depth analysis of capacity could provide an added instrument environmental damage assessments, and towards a better understanding of the benefits and costs of environmental actions in magnitude of the cost to society of priority areas. environmental degradation in various sectors. This in turn could help improving the continuing process of environmental priority D. THE PREPARATION PROCESS setting, and to achieve reductions in the overall cost of environmental degradation with less 1.12 The study commenced in December public and private sector resources. 2000 in Egypt with discussions and initial data collection. A senior Egyptian expert was 1.10 This report is a first step in a process included in the process of the study to supported by METAP towards the use of contribute to completing the data collection environmental damage cost assessments as an and provide professional expertise. A draft of instrument in environmental management. the study was presented and discussed with participants at a seminar at EEAA in The specific objectives of the report are three- December 2001. fold: (a)providean estimate of the cost of 1.13 In the process of study preparation, a (a)vprovientaldegradationinEgyptw. review of relevant published literature and the most recent data available (o 999); documents was carried out, and data from various Government of Egypt documents and (b) provide an analytical framework that can statistical data, economic and sector work by be applied periodically by professionals in the World Bank, and reports and data from Egypt to assess the cost of the various international agencies were utilized. environmental degradation over time; and (c) provide a basis for a training program for 1.14 Constructive discussions were also held ministries, agencies, institutes and other in Cairo for exchanging ideas, opinions, and interested parties to incorporate specific information under the auspices of assessments of the cost of environmental METAP and the EEAA. Two teams were es- degradation in policy making and tablished - a local team for accompanying the environmental management. preparation of the study, and an external team for revising the draft of the study. In addition, 1.11 A training manual that builds on the a connection was established with researchers analytical framework, environmental at Cairo University (Center for Economic and categories, and results and conclusions of this Financial Research and Studies). 2. Methodological Framework A. DEFINITION 2.01 This report provides first order estimates 2.06 If the cost of degradation as a percentage of the cost of environmental degradation in of GDP is growing over time, it suggests that Egypt, as well as the cost of remediation of the welfare loss from environmental environmental degradation for select actions. degradation is growing faster than GDP, i.e., that economic and human activity is having 2.02 An attempt has been made to capture increasingly negative (environmental) what may be expected to be the most consequences on the nation relative to its significant costs of degradation. However, economic affluence. If the contrary is the case, data limitations have been a constraint, which it suggests that environmental consequences implies that estimates in some environmental are being reduced relative to the nation's areas are not included. economic affluence. 2.03 As the main objective of the report is to quantify degradation, the assessment of B. METHODOLOGICAL PROCESSES remediation is limited and is in most cases insufficient to provide a comparison of 2.07 The process of estimating the cost of benefits and costs of remediation. environmental degradation involves placing a monetary value on the consequences of such 2.04 Cost of environmental degradation can degradation. This often implies a three-step be understood as a measure of lost welfare of a process: nation due to environmental degradation. a uantification of environmental Such a loss in welfare from environmental (a) q.g.: moninof of ament degraationinclues (bt notnecesarilydegradation (e.g.: monitoring of ambient degradation includes (but not necessarily air quality, river/lake/sea water quality, limited to): soil pollution); (a) loss of healthy life and well-being of the (b) quantification of the consequences of the population (e.g.: premature death, pain and degradation (e.g.: health impacts of air suffering from illness, absence of a clean pollution, changes in soil productivity, environment, discomfort); changes in forest density/growth, reduced natural resource based recreational (b) economic losses (e.g.: reduced soil activities, reduced tourism demand); and productivity and reduced value of other (c) a monetary valuation of the consequences natural resources, lower international (e.g.: estimating the cost of ill health, soil tourism); and productivity losses, reduced recreational (c) loss of environmental opportunities (e.g.: values). reduced recreational values of lakes, 2.08 Environmental science, natural resource rivers, beaches, forests for the population). science, health science and epidemiology, economics (and frequently other sciences) are 2.05 In this report the cost of environmental on ap d toequently envirnmental degradation is expressed as a percentage of often applied to quantdfy environmental GDP in order to provide a sense of magnitude. For valuation of the consequences, and It is also often useful to compare the cost of sometimes to quantify the consequences of degradation to GDP in order to assess their degradation, environmental economics and relative magnitude over time. natural resource economics are applied. (3) 2.09 The report has utilized available A year lost to premature mortality represents information on the quantification of one DALY, and future years lost are environmental degradation in Egypt, and discounted at a fixed rate. information that has been available on the consequences of degradation. In limited cases 2.14 For waterborne illnesses - associated for which no information was available on the with inadequate water and sanitation services consequences of degradation, expert opinions and hygiene - the loss of DALYs presented in have been utilized as to the likely this report are predominantly due to child consequences and their magnitudes. mortality caused by diarrheal illnesses. Each child death represents about 35 DALYs. C. CATEGORIES OF ANALYSIS 2.15 For air pollution, health impacts are primarily estimated based on ambient air 2.10 In order to estimate the cost of quality data in Cairo and international studies environmental degradation for the various of health impacts of air pollution. In this areas of the environment, the analysis and report, each premature death due to air estimates have been organized by the pollution represents 10 DALYs. following categories: (b) air E. MONETARY VALUATION (b) soir (C) soil 2.16 To arrive at a monetary valuation of the (d) waste ~~~~~~~consequences of environmental degradation (e) coastal zones and cultural heritage, and (i.e the cost of environmental degradation), (f) the global environment (. h oto niomna erdto) various methodologies of environmental and 2.11 For each of these categories there are natural resource economics have been applied. separate analysis and cost estimates for: 2.17 The notes in the Annexes at the end of (a) health/quality of life, and the report provide brief explanations of the (b) natural resources. estimated cost of degradation. A range has been used for most of the estimates to reflect uncertainties. An elaboration of some of the D. CONSEQUENCES OF issues follows here. DEGRADATION 2.18 The cost of health impacts, i.e. the cost 2.12 Several methodologies or approaches of a DALY lost have been valued by two have been applied to provide a quantitative approaches. GDP per capita has been used as estimate of the consequences of environmental benchmark, in some cases as the lower bound degradation (for details, see Annex I). ofthe range estimate and in other cases as the However, an elaboration of some issues is upper bound. The rationale for this valuation warranted here. technique is that the economic value of a year lost to illness or early death is the productive 2.13 Health impacts of environmental value of that year, which is approximated by degradation are expressed as Disability GDP per capita. It should be noted that this Adjusted Life Years (DALYs). This is a valuation technique has nothing to do with the methodology that has been developed and non-economic value of life in general. An applied by WHO and the World Bank in alternative valuation method is willingness-to- collaboration with international experts to pay (WTP) by an individual to reduce the risk provide a common measure of disease burden of death. Valuations arrived at, in studies in for various illnesses and premature mortality. the United States and Europe that apply WTP, Illnesses are weighted by severity, so that a are substantially higher than the GDP per relatively mild illness or disability represents a capita approach (at least for adults). WTP has small fraction of a DALY, while a severe in some cases been used in this report as the illness represents a larger fraction of a DALY. upper bound for the valuation of a DALY. (4) 2.19 DALYs lost due to child mortality are in the cost of degradation) and cultural heritage this report valued at a different rate than preservation. DALYs lost due to adult mortality. International valuation studies of child 2.23 Finally, all estimates of costs of mortality in developing countries are limited. environmental degradation and remedial For consideration, if DALYs are assigned the actions are annual costs. Whenever necessary, same value (e.g.: GDP per capita) for the death costs have been annualized over its relevant of a child and an adult, the valuation of a child time period and discounted at an annual rate of death would be 2-3 times higher than an adult 10 percent. death. This may be an unreasonable valuation based on household welfare considerations and social choice, i.e. higher valuation for F. DAMAGE COSTS AND productive, income-earning adults. Thus GDP REMEDIATION COSTS per capita has been used as an upper bound for DALYs lost due to child mortality. As a lower 2.24 The following chapters present the bound, 50% of GDP per capita has been estimates of the cost of environmental applied to reflect the lower income among the degradation and cost of remediation for select household population that suffer from higher actions (DC for damage cost, and RC for rates of child mortality. This valuation range remediation cost. has been applied to child mortality (and morbidity) from inadequate water, sanitation 2.25 As stated previously, damage costs and hygiene, and indoor air pollution. express the national welfare loss associated with environmental degradation. Damage costs 2.20 As an upper bound for the range also provide a perspective on the extent of the estimates of the cost of DALYs lost due to potential benefits that would occur with good adult mortality, WTP to reduce the risk of environmental management. death has been applied in this report. WTP is from assessments in United States and Europe, 2.26 The assessment of remediation costs and has been adjusted by the GDP per capita provides an indication of the resources needed differential to Egypt. As a lower bound, to at least partially avoid the current DALYs have been valued at GDP per capita. environmental degradation. As the remedial This range has been applied for adult mortality actions for which costs have been estimated due to indoor and outdoor air pollution. are limited, it remains uncertain to what extent the remedial actions would restore 2.21 It should be noted that a DALY valued environmental quality. Thus any comparisons at WTP is about six times higher than a DALY of degradation costs and remediation costs (i.e. valued at GDP per capita. Thus the lower potential benefits compared to costs of bound estimate of the cost of a DALY lost due environmental improvements) should be to adult mortality would be a gross undertaken with great care and needs a more understatement of the cost of environmental detailed assessment before it can be degradation if WTP provides a better intelligently utilized as a policy tool. representation of welfare cost. 2.22 For some issues, the consequences of G. MARGINAL ANALYSIS environmental degradation have not been quantified. A cost of degradation can therefore 2.27 A marginal (incremental) analysis not be estimated. This is the case for should be applied to assess the benefits inadequate industrial waste management, most (reductions in the cost of environmental wastewater pollution and coastal degradation degradation) and costs of remedial actions. (tourism losses and a rough estimate of fishery Only in specific and limited cases can it be losses have been provided to partially reflect expected that the incremental benefit of an additional remedial action is about the same as (5) for a previous action. In most cases, however, incremental benefits are declining and it becomes increasingly costly to improve principle of marginal analysis. In such cases, environmental quality. Thus benefits and other principles should be applied that may be costs of each action should ideally be assessed based on precautionary concerns, to the extent possible, and actions with the irreversibility of environmental damages, highest benefits per unit of cost should be intergenerational concerns, and gender, implemented first. This process should be poverty alleviation and equity objectives. continued up to the point where benefits of an These principles may also be combined with action equal the cost. Implementing actions to marginal analysis for the cases that benefits improve the environment beyond this point and costs can be quantified. The issue of would result in a net welfare loss. marginal analysis will be addressed later in the report regarding remediation costs and 2.28 In practice, however, it may prove very comparison of damage costs and remediation difficult (if not impossible) to assess benefits costs. and costs sufficiently accurate to apply this 3. Cost Assessment of Environmental Degradation A. INTRODUCTION 3.01 This chapter presents the estimates of annual costs, in many areas of the environment the cost of environmental degradation (DC for damages may be irreversible and impact the damage cost) based on the methodologies opportunities, livelihood, and quality of life of outlined in Chapter 2. Damage cost is future generations. Moreover, the estimated presented for each of the following annual costs are likely to impact the people environmental categories: and natural resources of Egypt to varying (a) water extent in terms of geographical regions and (b) air impacts on poverty. Assessments of these (c) soil issues are beyond the scope of this report, and (d) waste should be considered in sector studies in the (e) coastal zones and the cultural heritage future. A brief qualitative discussion of these (f) the global environment. issues is provided at the end of this chapter. 3.02 For each of these categories cost estimates are presented for: B. TOTAL COST OF DEGRADATION (a) health/quality of life, and 3.05 The damage cost of environmental (b) natural resources, degradation in Egypt in 1999 is estimated at 3.03 It should be noted that these estimates LE 10-19 billion per year, or 3.2-6.4 percent of are orders of magnitude and therefore only an GDP, with a mean estimate of LE 14.5 billion, indication of actual costs. The main reasons or 4.8% of GDP. The damage cost to the for not being able to provide precise estimates global environment is estimated at 0.6 percent are that available data are often aggregates that of GDP. Mean estimates of these costs are do not reflect important geographic variations presented in Table 3.1 and Figure A. across Egypt, that precise data or estimates on (exclusive of global environment) for each the consequences of environmental environmental category. degradation are unavailable or incomplete, and that the valuation of these consequences are 3.06 By economfc category, the cost to health very rough estimates. Furthermore, estimates and quality of life is about 3.2% of GDP and of the cost of environmental degradation do 1.6% for natural resources as seen in Figure B. not include all environmental areas because of lack of data and difficulties in quantifying Table 3.1 Annual cost of environmental degradation impacts. This is particularly, but not limited to -mean estimate incomplete or absent assessment of solid waste Million LE Percent of GDP (industrial, hospital waste), water resources per year pollution, and coastal zone degradation. Air 6,400 21% Soil 3,600 1 2% 3.04 Calculations of each of the estimates of Coastal zones, cultural 1,000 03% environmental damage costs can be found in Heritage the Annexes as percentages of GDP in 1999 Municipal Waste 600 02% and as total LE figures. Summaries of these Global environment 1,900 4.8% estimates are presented here in terms of annual Total 16,400 5.4% cost of degradation. Although presented as (7) Figure A. Annual cost of environmental diarheal episodes among children are degradation by environmental categories (mean estimated at more than 60,000 DALYs per estimate as % of GDP) year. Thus, more than 675,000 DALYs are lost each year. A DALY valued at a range of 50-100% of GDP per capita , implies a 2 00% damage cost of 0.5-1.1 % of GDP per year. 150% _ _ 3.08 In addition, pollution of coastal waters, 1 Do% - _river areas and lakes by industry, sewerage, and agriculture is reducing the recreational 050% value and quality of life of the citizens of 0 oo00%- _ _ - -Egypt. The damage cost to quality of life is Ar Soil Water Coastal Munc estimated at 0.07% of GDP per year. This zones Waste estimate is based on international evidence of the willingness-to-pay (WTP) of individuals for quality of recreational areas, which implies LE 3.5 per month per urban household in Figure B. Annual cost of environmental Egypt. Total damage cost to health and degradation by economic categories (mean estimate quality of life is therefore estimated at about 0.9% of GDP (mean estimate) per year (see 3 50% - __ __ Table 3.2. and Annexes I and 11). 300% - 3.09 Natural resources. The assimilative 2 50%. .__ ____ _____ capacity of ecosystems in Egypt is reduced 2 00% due to billions of cubic meters of un- 1 50% - treated/partially treated wastewater discharges. 100% - - Most water bodies like the Northern lakes and - . _ the Nile River have economic and ecological 0 00% value. Once polluted or contaminated, either Health/Quality o Ida Naturalmrasurmes the use of such water bodies is restricted or I__ _ __ more sophisticated wastewater treatments are required. Only damages in terms of fishery losses have been estimated here (close to 0.1% C. WATER of GDP), although damages likely extend to the agricultural sector (see Table 3.2. and 3.07 Health and quality of life. It is Annex I). Implications for the coastal areas estimated that more than 17,000 children die are included in the coastal zone section. (20% of all child deaths) every year in Egypt from diarrheal diseases. The main causes are sub-standard drinking water quality, Table 3.2 Water: Anual damage cost - mean inadequate quantity and quality of water for water Percent_ _ personal and domestic hygiene, inadequate GDP sanitation facilities and sanitary practices, and Health/Quality of life (mortality, 09% inadequate personal, food and domestic morbidity, quality of life) hygiene behavior. This represents an annual loss of about 615,000 disability adjusted life Natural resources (damages to 0.1% The ~~~~~~~~ecosystems from municipal and years (DALYs).' The same factors are also industrial wastewater) responsible for a burden of infectious disease Total 1.0% morbidity among children and adults, such as intestinal worm infections, schistosomiasis, and non-fatal diarrheal episodes. Non-fatal 2 See Chapter 2 for a discussion of the valuation of a See Chapter 2 for an explanation of DALY. DALY. (8) D. AIR 3.10 Health and quality of life. There is pollution is 85,000 - 180,000 DALYs per year, substantial research evidence from around the or 0.15-0.5% of GDP per year (see Chapter 2 world that both indoor air pollution and for valuation methodology, and Annexes I and outdoor/urban air pollution have significant II for details). impacts on public health in terms of premature death, bronchitis, respiratory disorders, and 3.13 In addition to detectable health effects of even cancer. Indoor air pollution, especially in air pollution, the affected population is also rural areas, can be even higher than suffering from general discomfort. Based on a outdoor/urban air pollution do to indoor use of study from Rabat, Morocco, the cost of such biomass fuels for cooking and heating. The discomfort may be estimated at 0.04% of GDP most significant air pollutant in terms of health per year in Egypt (Annex 1). impacts is most commonly found to be particulate matter, especially fine particulates 3.14 Another source of damage cost of air (PM 10 or smaller). pollution is impacts on international tourism in Cairo. Based on limited research evidence 3.1 1 No study that statistically links urban air from other countries, tourism losses in Cairo pollution and health, based on local health are estimated at 0.2-0.35% of GDP (Annex I). data, has been carried out in Egypt. However, applying the findings from international 3.15 In total the damage cost of air pollution studies to the local air pollution situation in on health and quality of life (including tourism Egypt can produce an estimate. Based on losses) is estimated at 1.1-3.2% of GDP per annual average concentration levels of PMIO year with a mean estimate of 2.1% (see Table monitored in Greater Cairo and a rough 3.3). estimate for Alexandria (no accurate monitoring data are available), it is estimated Table 3.3 Air: Annual damage cost - mean that on the order of 20,000 people are dying estimate prematurely every year due to urban air Air Percent of pollution in the two metropolitan areas GDP Health/Quality of life (mortality and 2 1% (mainly because of very high PM10 morbidity from urban and indoor air concentrations in Cairo). Combined with pollution, quality of life) illnesses (morbidity) from air pollution, an estimated 450,000 DALYs are lost each year. Natural resources (impacts on n a This corresponds to 0.7-2.3% of GDP per agricultural productivity) year, based on valuation of a DALY equal to Total 2.1% GDP per capita as a lower bound and WTP as 3.16 Natural resources. It is well known that an upper bound (based on WTP studies from some atutal such as sull diown at the United States and Europe adjusted by GDP some air pollutants, such as sulfur dioxide and prcapita differentials to Egypt). Further sulfur compounds, can cause damage to pertaita didentin Chapt). Further natural resources (agricultural production, details are provided in Chapter 2 and Annexes forests and lakes). The cost of such damages has not been estimated for Egypt, but may be 3.12 For indoor air pollution in rural Egypt, expected to be substantially less than the there is no air quality monitoring data damage cost to health. available. However, a household survey from 1993 indicates that 30-40% of rural households rely partially on biomass for E. SOIL cooking and heating (biomass fuel use in Egypt is estimated at 3% of total energy 3.17 Natural Resources. Soil degradation in consumptis ) esmated onat3 f methotaloegy athe form of erosion/desertification and consumption). Based on a methodology aond salinisation is in many areas of Egypt affecting presented in Smith (2000), it is estimated in agricultural productivity. It is estimated that this report that health damage of indoor air about 20% of cultivated land suffers from soil (9) erosion/desertification, or about 1.5 million cost of waste burning is estimated at 0.2- feddans. An estimated 25-35% of potential 0.5%3. crop value is lost. Based on an average crop value per feddan of LE 4.45 thousand per year, 3.21 Untreated industrial, hazardous, and the damage cost of erosion/desertification is health sector waste also pose a risk to health estimated at 0.6-0.8% of GDP per year (see through water resources and land. No study in Annex 1). Egypt has quantified these risks and damages. No damage cost estimate is therefore provided 3.18 In addition to erosion/desertification, it is in this report. estimated that about 35% of agricultural land is suffering from salinisation. An estimated 3.22 Natural resources. Improperly disposed 10-15% of potential crop value is lost. At the or stored waste may contaminate soil and same average crop value per feddan as above, water resources, reducing the value of these the damage cost of salinisation is estimated at resources to society. While it may in some 0.4-0.6% of GDP per year (see Annex 1). In cases be significant, no study exists for Egypt total, the damage cost of soil degradation is and given the complexity of the issue no estimated at 1.0-1.4% of GDP per year, with a estimate is provided in this study. mean estimate of 1.2% (see Table 3.4.). It should be noted that both of these estimates Table 3.5 Waste: Annual damage cost -mean are highly tentative and do not reflect estimate geographical differences. Municipal Waste Percent of GDP Table 3.4 Soil: Annual damage cost - mean Health/Quality of life estimate Uncollected municipal waste 0.2% Soil Percent of GDP Air pollution from buming of waste in Natural resources (soil erosion/ 1 2% Cairo (0.2-0.5% of GDP, already n a desertification, and salinisationl estimated as part of health impacts of Total 1.2% urban air pollution) Risks associated with industrial, hazardous and health sector waste n a F. MUNICIPAL WASTE Total 0.2% 3.19 Health and Quality of Life. Uncollected municipaUhousehold waste that G. COASTAL ZONES AND THE may accumulate for shorter or longer periods CULTURAL HERITAGE in urban and rural areas poses a risk to health and impinges on the quality of life. Waste 3.23 Natural resources. The coastal zones attracts rodents, flies and insects that may be and the cultural heritage of Egypt represent vectors of infectious diseases and can cause unique cultural, economic and recreational various allergies. Children may in particular assets. They attract both domestic and be a vulnerable group. In the absence of any international tourists, thus their quality is studies in Egypt on health effects, estimated important to sustain tourism and provide a damage cost is WTP for improved waste basis for tourism growth. Coral reefs around management, based on studies in other Hurghada at the Red Sea have become countries. Damage cost is estimated at around degraded. A review of tourism statistics 0.2% of GDP per year (see Table 3.5 and indicate that recent growth in tourism at the Annex 1). Red Sea has shifted towards tourists from origins that are likely to spend less per day 3.20 Waste burning is substantial in Cairo than Western European tourists that constitute and contributes significantly to the urban air the largest share of tourism days. Based on a pollution. Based on estimated overall contribution of waste burning to air pollution 3 This figure is not included in Table 3 5 as it is already (Lowenthal et al., 2001) and the health impacts reflected m the estimated health damages in the Air presented in the section on Air, the damage section. (10) study by Huybers and Bennett (2000) on WTP companies is only about US$20 per hectare4. for environmental quality, it is estimated in Because of the difficulty of estimation, no this report that tourism losses due to assessment of the cost of biodiversity environmental degradation at the Red Sea are degradation in Egypt has been included in this on the order of 0.2-0.3% of GDP (see Annex study. 1). 3.28 Climate change. The international 3.24 Coastal degradation around Alexandria community of nations has become increasingly from wastewater pollution is also likely to concerned that certain gases released into the cause tourism losses. Based on the same atmosphere - of which carbon dioxide is the methodology as in the preceding paragraph, most important in many countries - are losses are estimated at around 0.05% of GDP. causing an increase in global temperatures with adverse effects on local climates and 3.25 In addition, coastal water pollution and polar ice meltdowns. In Egypt, carbon dioxide degradation is also likely to affect fisheries. A emissions are about 100 million tons per year. tentative estimate of 0.03-0.04% of GDP is At an international damage cost of US$20 per presented in this report. In total, the damage ton of carbon, this represents 0.6% of GDP per cost of coastal zone degradation is estimated at year (see Annex I). This figure is highly almost 0.3-0.4% of GDP per year (see Table tentative, and impacts of climate change will 3.6 and Annex 1). vary greatly from country to country. In the case of Egypt, impacts may include coastal 3.26 An additional cost of degradation is the zone damages due to sea level rise, adverse cost inflicted on domestic tourism and effects on coral reefs and agriculture, and recreation of reduced quality of coastal zones possibly implications on Nile water and cultural heritage. This has not been availability. estimated, but some of it may be reflected in the estimated WTP for recreational quality in I. FUTURE GENERATIONS AND the water section. POVERTY Table 3.6 Coastal zones and the cultural heritage: 3.29 Environmental degradation in each of the Annual damage cost - mean estimate. six environmental categories studied in this Coastal zones, cultural heritage Percent of report can be expected to have different Natural______resources ______ GDP impacts on future generations as well as on the Tourism losses due to degradation of 03% poor. Table 3.7 presents a very generalized coastal zones and cultural heritage view of these issues. While the cost of environmental degradation that impacts health Fishery losses due to pollution 0 04% may be expected to primarily affect the current Total 0.34% generation (if pollution is curbed), the impacts on natural resources can often be irreversible, or have much longer effects, and therefore H. GLOBAL ENVIRONMENT negatively impact future generations. 3.27 Biodiversity. Biodiversity losses are difficult to value. Therefore, estimates differ greatly. For example, two of the drugs, developed by a company from the rosy periwinkle from Madagascar's rain forest, have sales of US$100 million a year. Other estimates have put the value of an untested species at anywhere from US$44 to US$23.7 million a year. On a per-hectare basis, one estimate suggests that the value to drug 4 Ibid; Balvanera et al, 2001 Table 3.7 Impacts on Future Generations and the data at the govemorate level, a very Poor. preliminary and tentative estimated index of Future Poverty the per capita cost of environmental Generations degradation is presented in Figure C. As water L H suggested in Figure C, the poor are -Ecosystems H L to H ( disproportionately burden by environmental Air degradation regarding indoor air pollution, -Health (indoor air) L H water (mortality and morbidity related to -Health (urban air) L L water, sanitation and hygiene), soil -Salonzationlerosion degradation, and municipal waste collection. desertification H L to H (9) In terms of urban air pollution, the non-poor Waste are most affected because so few of the poor -Municipal collection L H live in Cairo and Alexandria. The cost of -Munic waste disposal L to H (9) L to H coastal degradation is also disproportionately -Industrial/hospital H 7 Coastal/cultural affecting the non-poor because most of the -Marine environment H L (9) poor live in inland areas (more than 65 percent -Ecosystems H L (?) live in Upper Egypt). It should be emphasized Global environment H H() that Figure C is only indicative, and further -Cmaterchange H LtoH(9) studies are needed in order to provide more L= expected low impact, H= expected high impact "7" accurate estimates. In particular, the estimated indicates that further assessment is needed to draw any cost for the poor and non-poor regarding soil conclusions degradation is at this point very uncertain. 3.30 In terms of the impact of environmental Figure C: Index of Per Capita Cost of degradation on the poor, a detailed assessment Environmental Degradation - Poor vs Non-Poor. would be required to estimate how much of the environmental damage cost is burdening 120 the poor relative to the non-poor. Table 3.7 1Poor provides a general indication of environmental 100 _ ___ ___ ONon- issues that are likely to disproportionately Poor affect the poor, given the current so environmental situation in Egypt. A question I mark indicates that further investigation is needed to ascertain the situation. 3.31 The recently completed report "Poverty 20 _ _ * o Reduction in Egypt-Diagnosis and Strategy" (GOE/World Bank 2002) indicates that about 17 percent of the Egyptian population was CoAI Mt. Sol Munwoe Cftlo poor in year 2000. By region, only 5 percent of the population of Cairo was poor, while poverty rates in several governorates in Upper Egypt exceeded 30 percent. Based on the data in the poverty reduction report and additional (12) 4. Cost of Remediation A. INTRODUCTION 4.01 This chapter presents cost estimates for partnerships, environmental awareness raising, a limited number of remedial actions for each and local participation. Sound environmental environmental category discussed in Chapter management also requires that the role of the 3. It remains uncertain, however, the extent to public and the private sector be clarified. The which the remedial actions would restore remedial actions discussed in this report environmental quality. The following should not necessarily be undertaken by the clarifications are warranted regarding the public sector. The private sector should not remedial actions and cost estimates presented only bear the cost of remedying the pollution in this chapter: (a) the cost estimates are not and degradation it causes but also provide a necessarily based on the most cost-effective or significant contribution to the delivery of least-cost remedial actions or technologies, but environmental services. represent overall cost estimates of actions that are likely to be necessary to reduce environmental degradation; (b) the remedial C. WATER actions and cost estimates, do only partially correspond to environmental damage 4.05 Health and quality of life. The damage categories and further analysis are needed for a cost to health (DALYs lost) estimated in more accurate assessment of optimal remedial Chapter 3 is associated with inadequate water, actions (see chapter 5 for further discussion); sanitation, and hygiene. Estimated and (c) the cost estimates of remedial actions remediation cost has three components: (a) the are annualized - at a 10% discount rate over cost of providing improved water source and the useful lifetime of investments. safer sanitation to the portion of the population without such services. This cost is annualized on the basis of per capita investment cost, B. POLICY CONTEXT discounted at 10% over 25 years; (b) the cost of improving/rehabilitating/upgrading the 4.02 While the focus of this chapter is on cost water supply and sewage system wherever of remediation and mainly on investments and considered necessary to avoid cross- programs, a discussion of policy context is contamination of the water network from warranted. Reducing degradation and leakages in the systems or contamination of protecting the environment should be viewed water wells. This cost is calculated as 10% of in the context of economic and sector policies, the total construction/investment cost of the socio-economic development, and in the water and sewage networks for year 1-10, plus broader framework of environmental 5% of total networks cost for year 11-20, management. annualized at a discount rate of 10% and (c) the cost of household and community hygiene 4.03 Much can be gained from prevention of education programs at LE 15 per household degradation through evaluating environmental per year (see Annex I for more details). impacts of policies and development plans. Eliminating price, tax and economic 4.06 The total annualized cost of these regulatory distortions can also benefit the remediation components is estimated at around environment if such distortions favor 0.5% of GDP per year. The largest portion the inefficient use of "dirty" resources or "dirty" cost is associated with the industries. rehabilitation/upgrading component. However, this component will save substantial 4.04 Reducing degradation and protecting the water network losses. Savings are estimated at environment also require proper enforcement almost 0.2% of GDP, which substantially of environmental legislation, public/private (13) reduces the net cost of rehabilitation/upgrading 4.10 Additional actions that are likely (see Table 4.1 and Annex l). necessary to reduce mobile source pollution, but have not been assessed in this study, are Table 4.1 Water: Cost of remediation pollution reductions from gasoline vehicles by Water Percent of installation of catalytic converters, at least on GDP all new cars, and vehicle inspection and Health/Quality of life maintenance programs in particular for high Water, sanitation investment and 048% hygiene programs usage vehicles. Water network savings -0 18% 4.11 Burning of waste is estimated to Natural resources (municipal and 0.44% contribute as much as 20% to the total industrial wastewater treatment) pollution load of PM 10 in Cairo (Lowenthal et al., 2001). In this case, improved waste management and control will be important in 4.07 Natural resources. As discussed in order to reduce the urban air pollution. Chapter 3, partially treated and untreated municipal and industrial wastewater is 4.12 Energy efficiency improvements, at impacting the ecosystems in Egypt. About 0.9 least for users of mazut and diesel, can also billion cubic meters of polluted/contan inated contribute to air quality improvements. Based municipal wastewater per year and 0. 1 7 billion on energy audits, 5% of energy consumption cubic meters of industrial wastewater per year could be saved at a net saving of around 0.2% to the Northern lakes, the Nile Delta and Fay- of GDP (Annex 1). oum are accounted for. The remediation cost is estimated at more than 0.4% of GDP, based on Table 4.2 Air: Cost of remediation the cost of treatment of municipal and Air Percent of industrial wastewater (Table 4.1 and Annex 1). GDP Cost of treating wastewater discharges into the Health/Quality of life Mediterranean Sea and coastal areas are dealt -substitution of biomass to 0 17% with in the section Coastal zones and the commercial energy cultural heritage. -industrial depollution 0 11% -low sulfur diesel (for vehicles) 0 03% -control of waste buming n a -catalytic converters n a D. AIR -vehicle inspection/maintenance n a 4.08 Health and quality of life. Remediation cost of indoor air pollution in rural areas is based on substitution of 50% of E. SOIL biomass energy to cleaner commercial energy at a cost of 0.17% of GDP (Annex 1). Lower 4.13 Natural resources. While the damage cost options might be available (such as cost of soil erosion/desertification and improved ventilation, stoves and cooking salinisation is estimated to be significant, the arrangements) that may reduce the need to cost of remedial actions is very difficult to switch to commercial energy. assess because it is likely to vary substantially across geographic areas. For soil salinisation, 4.09 Remedial actions to reduce urban air the cost will also depend on upstream pollution from mobile sources and industry irrigation and drainage etc. However, there include cleaner diesel (0.05% sulfur) to reduce are some cost estimates available per hectare PMIO from diesel vehicles and facilitate of agricultural land and these have been effectiveness of emission control technology applied to estimate the total remediation cost, available on newer vehicles in the market; and despite the difficulties of assessing geographic industrial de-pollution for compliance with cost variations, and should therefore be environmental legislation. The cost of these considered very tentative and only an order of options is estimated at about 0.15% of GDP magnitude. Cost of remediation is presented per year (see Table 4.2 and Annex 1). in Table 4.3, based on LE 10,000 per hectare for soil erosion/desertification control and LE (14) 15,000 per hectare for salinisation control, 0.03% and 0.01% of GDP respectively (see annualized over 30 years at 10% discount rate Annex 1). (see Annex 1). G. COASTAL ZONES AND THE Table 4.3 Soil: Cost of remediation CULTURAL HERITAGE Soil Percent of GDP 4.15 Natural resources. The protection and -soNl erosion control 0c5% preservation of coastal zones and the cultural -soil salinisation control 0 5% heritage involve multidimensional actions. In this study, only the cost of wastewater treatment has been assessed, not accounting wastewater that is included under natural F. WASTE resources in the water section. The cost of municipal and industrial waste-water treatment 4.14 Health and quality of life. Remediation - an estimated portion that may not be already cost of waste management includes treated - is estimated at about 0.2% of GDP uncollected municipal waste, and treatment per year based on estimated treatment cost per and safe disposal of industrial waste, cubic meter of industrial and municipal waste- hazardous waste, and health sector waste. The water (see Annex 1). Cost of cultural heritage cost of collection of uncollected municipal protection has not been assessed in this study. waste is based on an estimated 8 million tons per year of uncollected waste (based on rural and urban collection rates) at LE 30 per ton, H. GLOBAL ENVIRONMENT corresponding to 0.08% of GDP per year (see Annex 1). The highest cost of waste 4.16 The cost of protecting the global management regards untreated industrial environment, in terms of climate change and waste. Waste treatment is estimated at almost biodiversity, has not been estimated. The cost 0.3% of GDP. Cost of hazardous waste and of such actions depends largely on the health sector waste treatment is estimated at willingness and cooperative agreements of the international community. Table 4.4 Waste: Cost of remediation. Waste Percentage of GDP Health/Quality of life - uncollected municipal waste 0 08% - industrial waste 0 30% - hazardous waste 0 03% - health sector waste 0 01% - control of waste burnmg n a 5. A Comparison between Damage & Remediation Costs and Conclusion A. INTRODUCTION 5.01 This chapter provides a discussion and hygiene are likely to reduce the health impacts comparison of the benefits of reducing by 50-60% (Esrey et al., 1991). This suggests environmental damages and the cost of that the health benefits of these actions are on achieving such reductions (remediation cost). the order of 0.3-0.6% of GDP based on estimated damage cost in Chapter 3 (see also 5.02 In making such comparisons, a note of Annex 1). The overall cost of remedial actions caution is warranted: is estimated at 0.3% of GDP. However, from a point of view of marginal analysis (see (a) environmental damages are unlikely to be Chapter 2), health benefits per LE of completely eliminated no matter how remediation cost is likely to be highest for a stringent and comprehensive the remedial well designed and targeted hygiene actions are; improvement program, as well as safe water (b) remedial actions discussed in Chapter 4 and sanitation provision to the population are in most casesinsufficient to adequately groups without such services, indicating that address the damages; benefits of these actions will well exceed the cost. (c) quantification of environmental damages and their monetary valuation can never be 5.05 Health benefits per LE of cost of water completely accurate (Chapter 2), and the and sewage rehabilitation/upgrading of costs of remedial actions are most often existing networks is generally likely to be only estimates; and lower than the two former actions, suggesting (d) principle of marginal analysis needs to be that the health benefits of rehabilitation/ applied in order to arrive at remedial upgrading may not outweigh the cost, except actions that are likely to provide the in locations with serious problems. However, largest benefits per unit of cost. a more careful analysis of this action may find that other benefits, such as increased reliability 5.03 Nevertheless, a comparison of benefits and quantity of water delivery, can in many (reductions in damages) and costs (remedial instances justify the cost. actions) can be useful in order to point out the environmental categories in which benefits of 5.06 In the natural resource category (impacts remediation are likely to substantially exceed onecsys ,estimated cost of remediation the cost of remedial actions. However, for a (mncpl ad iusrl wst-te more accustofratedialassessent fuwher, a treatment) by far exceeds estimated benefits ane partcular arsesmea rthegor wulds b (reductions in damage cost). However, several any particular area/category would be considerations should be made on this issue. necessary. For one, the damage cost estimates are very tentative and incomplete. And second, B. COMPARISON BY potential negative impacts of water pollution ENVIRONMENTAL CATEGORIES on agriculture are not assessed. 5.04 Water. Evidence from the intemational 5.07 Air. This is the environmental category 5.04 ~~~~~~~~~~~with the highest estimated damage cost in this literature indicates that the remedial actions discussed in Chapter 4 to address health report. To address the health impacts of impactsofinadequatewater, sanitation and indoor air pollution in rural areas, the only remediation action for which a cost estimate is (16) provided in this report is replacement of 50% geographic areas with limited air pollution or of biomass fuel use with commercial energies. in certain sectors). Lvovsky et al. (2000) If such fuel substitution reduces indoor air provides estimates of the health damage cost pollution by 50%, it is not clear from the of diesel fuels whereas the Morocco estimates in Annex I that health benefits will Environment Review by the World Bank generally outweigh the cost. However, the provides a benefit-cost analysis of clean diesel damage cost estimate is very tentative and for Casablanca. An Energy-Environment deserves an in-depth analysis with more Review study for Egypt (draft final report) has detailed household data on biomass use, confirmed that diesel and heavy fuel oil are indoor air quality, and health conditions. responsible for high damage costs in Egypt. Moreover, remediation actions such as improved ventilation and stoves should be 5.11 Waste burning in and around Cairo has evaluated. been identified as an important source of air pollution (see Lowenthal et al., 2001). If 5.08 An assessment of the benefits and costs improved waste collection can significantly of urban air pollution remediation is as contribute to solving this problem, health complex as for indoor pollution. It involves a benefits are by far likely to outweigh the careful assessment of pollution loads across incremental cost. Based on Lowenthal et al various sectors and activities, and assessment (2001), it is estimated in this report that the of a whole menu of actions for each sector and damage cost of waste burning in Cairo could activity. While the health impacts of air be on the order of 0.2-0.5% of GDP. In pollution concentrations are often found to be addition, estimated household WTP for relatively linear (i.e., marginal benefits of improved waste collection nationwide is on reductions are relatively constant), cost per the order of 0.2% of GDP, while cost of unit of pollution reduction vary substantially improved collection is estimated at close to across potential remedial actions (rising 0. 1% of GDP. marginal costs). 5.12 The main benefits of select energy 5.09 The first step of an assessment is a efficiency improvements are likely to be pollution load inventory (emission inventory) economic (see Chapter 4 and Annex I), as well followed by an estimate of contributions to air as global from reductions in carbon emissions. pollution concentrations of loads from The benefits to urban air pollution reductions different sources. This has been carried out are likely to be limited in comparison to other for Cairo. The next step would be the cost available remedial actions. assessment of a menu of potential emission reduction actions, to derive marginal costs that 5.13 Soil. If the available data on erosion, could be compared to estimated marginal salinisation and cost of remediation are benefits of emission reductions. In practice, reasonably correct, benefits of erosion control this is far from an exact science. However, a outweigh the cost of control measures, while careful assessment is likely to reveal those this is not the case for salinisation control. actions for which benefits most likely However, the available data reflect averages outweigh the costs. for Egypt and it is likely to find geographic areas for which benefits of both erosion and 5.10 In this report, costs have been estimated salinisation control outweigh control cost. only for a few air pollution remedial actions Further analysis is required for a more (see Chapter 4). For instance, the health complete assessment of these complex issues. benefits of clean diesel (low sulfur) for road This is particularly important because diesel vehicles can outweigh the cost, in agricultural employment is about one-third of particular if combined with standards for total employment in Egypt, and agriculture is emission control technology for new diesel an important economic sector, and with vehicles. The health benefits per unit of cost important poverty alleviation implications. would also be higher if the markets for diesel fuel use can be effectively separated (which 5.14 Waste. As discussed in the section on may allow for higher sulfur diesel in Air above, estimated WTP for improved (17) municipal waste collection (which reflects the C. CONCLUSION value that households place on such improvements) exceeds estimated cost by a 5.17 This study indicates that the cost of factor of two. By including the health benefits environmental degradation in Egypt is in the of reducing waste burning, benefits compared range of 3.2-6.4% of GDP, with a mean to cost of collection improvements estimated estimate of 4.8%. This is substantial and on in this report are even higher. However, the the order of two times higher than in high- estimate of WTP and cost of collection income countries. The main reasons for this improvements is a national average. Thus the is: (i) a significant disease burden (mortality analysis should be undertaken in more specific and morbidity) associated with lack of safe urban-rural contexts. water and sanitation and inadequate hygiene behavior; (ii) substantial health impacts of 5.15 Analysis of benefits of industrial waste severe air pollution; and (iii) productivity management has not been undertaken in this losses associated with soil degradation that report because of data limitations. amount to a significant percentage of GDP, given that agricultural share of GDP is many 5.16 Coastal zone and the cultural times higher in Egypt than in high income heritage. The analysis undertaken in this countries. report on damage costs and remediation cost of coastal zones and cultural heritage is 5.18 This report also indicates that Egypt insufficient for a comparison of benefits and would benefit significantly from remedial costs of remediation and protection. It should actions to protect and restore environmental be noted, however, that the coastal zones and quality, although estimates are tentative. cultural heritage in Egypt are unique assets Further analysis of benefits and costs of select that provide a significant source of income environmental issues that are considered from international tourism. These assets are priority areas by the Government of Egypt also important for recreation and domestic would facilitate the process of priority setting tourism. However, the analysis does suggest and improved environmental management, as that damage cost of coastal zone degradation is well as promote intersectoral support for significant, and that coastal zone protection is action. Future cost analysis of importance perhaps especially important for the Red Sea. should include a more in-depth assessment of With continuing to allow growth in the field of the impacts of environmental quality on tourism, it is important that measures are taken tourism, soil and water resources management to protect the very resource base that tourism and indoor air pollution in the context of rural depends on. An analysis of the value of poverty and health as well as in the context of coastal zone protection to domestic recreation waste buming and urban air pollution. and tourism should also be undertaken to improve the understanding of necessary remedial and protective actions. (18) Bibliography AeHuybers, T. and J. Bennett. Impact of the Altaf, M. and J. Deshazo. Household demand for Environment on holiday destination choices improved sold waste management A case of prospective UK tourists implications for study of Gujranwala, Pakistan. World Tropical North Queensland. Tourism Development, Vol. 24, No. 5, pp 857-868. Economics, 6(1) 21-46 2000. 1996.' Lowenthal et al. Cairo Air Improvement Balvanera, P G.C. Daily, P.R. Ehrlich, T.H. Project 1999 Source Attribution Study Ricketts, S.-A. Balley, S. Kark, C. Kremen, Desert Research Institute. Nevada, USA and H. Pereira, Conserving Biodiversity and Final report May 2001 Prepared for Ecosystem Services. Science, 291, 16 March Chemonics International, Washington DC 2001. Barber, C. and J. Schweithelm. Trial by fire Lvovsky, K. 2001. Health and the Environment. Forest fires andforestry policy in Indonesia's Environment Strategy Background Paper No era of crisis and reform. World Resources 1. World Bank. Washington, D C. Institute, Washington, D.C. 2000. Lvovsky, K., G. Hughes, D. Maddison, B Ostro Belhaj, M., The WTP to reduce air pollution in and D. Pearce, Environmental Costs offossil Rabat-Sale A contingent valuation experi- Fuels Environment Department Working ment. Department of Economics, University Paper No. 78 The World Bank, Oct. 2000 of G6teborg, no date. Organization Support Program (OSP) financed by Blore I and Nunan F. Living With Waste Public DANIDA: Review of Donors Projects Valuation of Solid Waste Impacts in Bangkok Implemented in Cooperation with EEAA (1991- University of Birmingham, January 1996, 2001), August 2001. 58p. Papers in the Administration of Development No. 57. Ostro B., Estimating the Health Effects of Air Pollution A Method with an Application to Bruner, A.G., R.E. Gullison, R.E. Rice, G.A.B. da Jakarta. Policy research working paper, The Fonseca, Effectiveness of Parks in Protecting World Bank, Washington, D.C., 1994. Tropical Biodiversity. Science, 291, 125-8, 5 Jan. 2001. Seyam, Gamal. An Economic Feasibility Studyfor Investment Projects in Sharq Elinat, Toschka, EEAA/UNDP. The Environmental Profile of Egypt. Egypt 1999-2000. Cairo University. Egypt Smith, Kirk R. National burden of disease in India EEAA/UNDP. The National Environmental Action fomindoorairpollution Proceedingsofthe Plan of Egypt Cairo, Egypt, 2002. National Academy of Sciences of the United Esrey, J.,B. Potash, L. Roberts and C. Schiff, States. June 6, 2000. Effects of Improved Water Supply and Sa- Varley, Tarvid, and Chao A reassessment of the nitation on Ascariasi, Diarrhea, Dracun- cost-effectiveness of water and sanitation culaisis, Hookworm Infection, Schistoso- interventions in programmesfor controlling miasis, and Trachoma, Bulletin of the World childhooddiarrhea Bulletin of the World Health Organization, 1991 Health Organization, 1998, 76(6): 617-63 1. Georgiu, S., D. Whittington, D. Pearce and D. World Bank. Middle East and North Africa Moran, Economic Values and the Envi- ronment in the Developing World, Edward Elgar for UNEP, 1997. World Bank, Entering the 21st Century - World Glover, D. and T. Jessup (eds). Indonesia's Fires Development Report 1999/2000 Oxford and Haze Institute of Southeast Asian Studies University Press (for the World Bank), 2000. and International Development Research World Bank, World Development Indicators, 2001. Centre. Singapore, 1999. World Bank/WHO. Global Burden of Disease, GOE (MOP)/World Bank. Poverty Reduction in 2001. Egypt-Diagnosis and Strategy 2002. World Energy Council. The challenge of rural Hanley, N. and C.L. Spash, Cost-Benefit Analysis energy poverty in developing countries and the Environment, Edward Elgar, Egypt case study London, UK. Reprinted 1994. World Tourism Organization. Compendium of Tourism Statistics. Madrid, Spain, 2001. (19) Annex I Economic Date 1999 (rho World SanA) ABREVtATIONS Populaton 63,000,000 LE = Egyptian Pound hsd = household inhab = tnhabrtant ca = per capra GDP LE (current) 300,000.000,000 qa = untal t = metic ton ha = hectare nD = rnon available I feddan 4 201 run GDP S (current) 89,000o,00,000 DALY = Disabiliy Adjusted Life Year GDP/CAPITA S 1,413 WTP = Wiingness-to-pay LEAUSD Exchage Rate Dec 99 3 39 Damage Costs ...... ..... ........ ............ , .......... ...... ...... ..... F .. .. ............................................ . .... WATER b$WEd 'O(tarntrtw 4Un Pited. u4it Ultoen tLf % ao EP ˘tef Sl9idf Health/Quality of life Low High Low High Low High Low High DALYs ae lost each year in Egypt due to poor water quality, insuaftlent water quantity, and nadequate sanitation and hygiene (see Eseyoet at 199g fora review of worldwide sudies DALYs are esthuated based on a (under 5 year) child mortalirty rate of 54 per 1000 lIve bittis In 1999 (vvDI, World Bank 2001) - Inadequate Water, and an estmated diarrheal child mortality equlvalent to 20% f chIa mortaaty (bawdd on regrona0 data b hn Sanfadqona HYgtene DALYs 675.000 DALYs 2,400 4,800 LEt DALY 1,620 3,240 0 50 11% WHOtWorld Bank 2001), and danateal episodesrillnesses oft per month among children 0-14 years ou age (expeit eshinate, EEAA) Valuation (pnce) per DALY Is GDP per capIta (high), andO 5GDP per capta (low) to relect tncome dferenthas of the bottom 50% ofthe populah on Darrheal child motality dispmportlonatety amongthelatterhaltolthepopulatlion (dat on Income distrbutlon isfromWDI, Woaid Bank 1995) It is assumed that households ame wIling to pay for Improving the qualty of wator for recreabonal use Thb - QualIty Losses - WTP 4600000 Urban 42uLEI is based on various studies showing a wilIngness-to-pay tor recreational use of water Georgnu et al. Rerreabnalty Lsses - TP 4,800,000 Househ s 42 househol 202 202 0 07% 0 07% Economic Values and the Environment In the Developing World, 1997 Data on nunber af urban yr households ane from the 1996 Census ITP o LE 35 per month per household in Egypt is based on Egyptian expert opinion 1,822 3,442 0 6% 1 1i/ Natural Resources Partialy and untreated municpal and industial wastewater, and agriiutural drainage water is signiiscant Percent pollbting fresh and biackish waterbodres The NEAP 2002 and Envumnmental Pmfile 2002 discuss this 4mpadcs on Ecosystems Fishery losses 10 15% bsses per 2.000.000.000 LE per 200 300 0 07% 0 10% stuatbon and mnpacts on Ish resources but no quantitatOe estirate of Impacts is presented A fishery year year reduction of 10-15% is stpulated heme to provide a perspective on the polentla value of Iosses due to pollution Value of annual fresh and bracush water fsh catch (pnce) is from the NEAP and Environmen I Profile 200 300 0 07% 0 10% rsmogo Costs 2,022 3,742 O 1 2% _Damage Costs (mean estimate) 2,882 1 0% Annex I AIR Matrod Q0milfty ni Ptih Unit 4W0* Li; 5$ r GOP NOdPP*Sourcsw HealthQualt,ty of life Low High Low High Low High Low High Indoorairpollutlon,especralyitrmbiomasstuel isknowntocausesigndicantheaRhdamages A DALYs children 65,000 120,000 DALYs 2,400 4,800 LEI DALY 222 444 methodology presented In Smrth (2000) u appfiod to Egypt (see Annex IV) A household survey in Egyp in 1993 (see World Energy Council) shows that 30% ot rural households one biomuss energy tar heating a if -Heafh - Indoor Pollution 0 14% 0 5% 40uS GDPomessforc Zowtokner4 Forchildren,valuation(parce) per DALY isGDP eraprta (high) and 0 5"GDP percaptia(low) to reflect incomedriftereahuatsof the bottom 50%oatthe populahion, whichtisthe DALYs aduh ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~part of the poputabun that usesmrostaofthe biomuss energy For women, valuaticn(price) per DALY is DALYw s adu 20,000 60.000 DALYs 4,800 28,000 LE/ DALY 192 1,120 GDP per capita (loW), and VVtP (high) to reduce the nsk of death af adults (US/Europe estimates adlust by GDP per capda dIfferentials to Egypt) DALYsare based on air pollution of PMIOin Greater Cairo and Alexandna using available dose respon DALYs mortalty 200.000 DALYs 4.800 28,000 LE/DALY 980 5,600 functions tram woaifdwde otodies P the health ampacts of air pollution (see Or 1904 fora y applcation Jakarta) Annual average PM1O in Greater Cairo is 270 ugAi3 (baSed onavailazble monitoring data) -Heatth-Urban Air Pollutin 07% 23% PM10mondonngdataforAlexandriaisnotavailable,andhasbeenassumedtobe100ug/m3 About9 % of total DALYs are In Gmater Cairo becauseoatthe higher2air pollahion and larger population Valuation DALYs morbidity 250.000 DALYs 4,800 4,800 LE/ DALY 1.200 1,200 (pace) per DALY is GDP per caupc Par moitalfty, MhP to reduce the nsk of death oa aduos is used as 'high' (US/Europe estimates adjusted by GOP per capita differentials to Egypt) According to a conhngent valuation method appUed to urban households in Rabat-Salt, Morocco by Belt a) - Qualify of lite - Discamfart 960,000 20% Urban 120 ~~~~LE/ (sifteborg Uviveratly, the WTP by householdslmonth tar increased comfort from lower ambient air Quaity of life - Discomfort vTP 960,000 20' Lirban 120 househo 115 115 0 04% 5t0l0u04% patit m assessed at$6hmonth The classeticaton at economies (Egypt0 Momcco) by Income is the troen Urban Air Pollution Households yrsame W40, Wtodd Bank, 2001 Gwven that SOMe at this WTP is atrady included In heath canto. 50% (3 rShousehold/monthi) Is retained to avoid double counhng 20% ot urban households were used (data on e number oftotatl households stfrum the 1858 Ceases) Health threatening urban arr po0uUo)n such as in Cairo can be eaPected to rlduce intematronal tourism demand Glover and Jessup (1999)esntimated that the haze-relateda00fpollution frmmforest tires In Intemaltonal Tourist day Indonesia In 1997-98 caused a reduction in Internahonal tourist anrivals of 30% in MalaysIa, 15-22 5% in Urban Air Polluon Tourisn Loases- 700,000 1,050,000 reductions 425 475 LE/day 298 499 010% 017% indonesia, and 10% In Singapore (adjusted borlte financial crises) Eased an Cairos share ottotal Urban ir Polution Calm petryear intemational tourist days in Egypt for 1599 (Waifdd Tourism Orgamuzatron and Egypt Central Agency tar General Mobrilsaton and Statistics), a range of 10-15% reduction in tourist days (quantity) In Caim has been appied and valued at average touna expendifure per day for 1997-1999 as an estreate of losses tourist visits doe to air pollution Huybers and Bennet (2000) finds that tourLsts are wiling to pay a srgnitiant premium tor envimnmental Intemational ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~quality at overseas tourist destinations DOnaverage,.tourists (the study assessed Brltsh tourists) are - HeaRh/Econombc losses- Tounso Losses- 7,000,000 Tptirst days 50 70 LE/day 350 490 012% 016% wlilIng to pay a prenim of arund US $70 per day for an "unspoih"vs "somewhat spoui. and almewh Urbn Air PolluthDn Cairo peryear spoilt 'vs "Very spoilt" deshnatron A conservatwve US 615-20 per day has been applied to Cairo tar ann, al visitor days (quantify) In 1999 as an esthoate ot tourlism revenue lasses doe to air pollution (average torsar expendidure re Egypt is amund US L125-140 per day, 1997-1999) -Quality of Ide-Real Estate Depreciation n a n a Estimates oa degradaUon of buildings and structures due to air pollution Is not available for Egypt Depreciation costs 3,337 9,468 1 1% 3 2% Natural Resources . Productivity Losses Value lost na n a Losses assodated wvth degradaton of lend quauty end vegetoton are not available Damage Costs _ 3,337 9,468 1 1% 3 2% Damage Costs ( n estimate) 6,402 21% SOiL k4mpt t durE ti rirt Prkie tUrit Wttilslo 1L , % fSO r P Nitoettaturcss Natural Resources Low High Low High Low High Low High Soil Degradation it isestimated that about 20%oatcultivated area (76 millionfteifdans)issuffeang frmmsoilerosion It is -SollErosionoesertfcatlon Pnodurvisty Lost 1,520000 leddans 1,1 11 1,556 tdLE/ 1,659 2,365 06% 08% as umed that25-35% 0op valueisbemglost duet erosion Oneeddana lequlvatentto4,201 m2he ~SoilErsionlDeertifiction PmuctNityost 1.500M fedans 1.11 1,556 feddantyr value used Is the average craop value of LB 4445 per cafivated teddan (calcualatins by aulthors are bar on agacutural data tram NEAP 2002, Environmenbl Profle of Egypt 2002) It is estimated that about 35% oa agrlcutiural lond (8 2 million feddans) is suffedng from sahiosation It Is - Sanisation Pmaduatldy Lost 2,870.000 feddans 445 667 LE/ 1.276 1,914 0 4% 0 6% assumed that 10-15% of crop value Is lest The value used Is the averge crap value of LE 4445 per feddantyr 1cugwialed feddan (calculatlens by authors are based an agricultural data from NEAP 2002, Envimoment Profile at Egypt 2002) Damage Costs 2,8965 4,278 1 0% 1 4% Damage Costs mean estimat) 3,622 1 2% Anmex I WASTE d , fTl Urt& f* %f tl(t Wl iLW P R e es HealtthQuality of life Low High Low High Low High Low High Municipal Waste Municipal waste colledion rate Is about 65% In Cairo, 50% In other urban areas, and 20% m rural areas LEI (NEAP 2002) Altbat and Deshazo (1996) estonate householdsV WTP for wnproved waste collection in -Waste Coliectlon WTP for lrnIpred 106500 000 households 4 25 5 00 hnusehokd 56 630 0 18% 0 21% Pakistan, and Blore and Nunan (1996) estonate Tousehods Ws t for t es uinating the drawhacks of bin -Waste Cllection Waste Collectionmot near asowidwaste iandtiliin Bangkok, Thailand The resuftsof these studies areappfiedto Egypt by adjusting for GDP per capda dfferenhials (see price), and Indicate the social cost of inadequate waste cotection Uncollected municpal waste Is often disposed and bumed In cties and towns In Cairo d Is estimated th Air pollution and buming of waste contributes as much 20% to PM 10 (Ine particulates) air pollution (Lowenthal et al 200 -Waste Disposal and Degradation of see notes t It so burning ot waste has a damage cost of 0 2-0 5% of GDP, based on the estwmated damage cost of Treatment Natural ubsee notes dan air pollutbn presented In the secton on air Municipal waste Is also being disposed at unsanitary Resources landfills, Illegal dumps and suarace waters which may pose rsk to water resources (ground and surface water) and public health Unteated Industnal Waste Hazadoustra Waste na na na n Inappropriate storage and disposal of untreated industetat, hazardous and hospuol waste pose risk to -HazardousWaste n a nn a nn a n human8health,n an heath a nd resoos land There is no estimate of the envronmental cost ou such untreat -Health Care Waste Generation n a n a n a n a waste in Egypt although d should be recognzed that h might be signoficani ______________ _ _ 536 630 0 2% 0.2% Damag Coe t 536 630 018% 0 21% Damage Cosl (m n_estirmcte) 563 0 2% COASTAL ZONES, CUTURAL HMTAGE rn rdt N8W %ofDP Csf Natural Resounres Low High Low High An important aspect o tousm atraction th the Red Sea (Hurghada) is the coral res The NEAP 2002 and Environmental Preolie 2002 state that manyreefs have become degraded and desrtyed (and ftsh stochs around the rents have dechlned or aknost vneshedI Egypt tourism statishcs show that theschore Intemational ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Red Sea tourtist with tower daily expenditure than Western European tourists (who used to dominate In Il -Red Sea nTeumaLnors 86500,000 Tounstdays 70 tOO LE/day 595 850 0 2% 0 3% Red Sea) has increased sobtantlalynrecentyeam indcating a lweraveragevluwe per touist day Tourisn Losses per year study by Huybers and Bennett (2000) of British tourists found that tourists are wtIDng to pay a premiumro around US $70 per day for ounspoir vs 'scmewhal spugr and 'srnewhat sporevs 'very spuRt destinatons Apconservative US $20-0 vper tourist day has been applied to the Red Sea for total tounst days (quantity) in 1999 as an esrbnate of tounsm revenue losses due to environmental degradation Per the NEAP 2002 and the Envirenmental Profile 2002. coastal waters around Alexandria are polluted. -Mediterranean Sea Intemoatonal 1650000 Tounsta 70 100 LE/day 126 180 004% 006% andthust es attractetotouns tshat alueenvronmentalqualiy BasedonthestudybyHuybersand Touriren Loosen ~~~~peryear Bennett (see anove). a conservatie US $20-30 pertoudut day has been applied to totattoaut days (quantify) in 1999 as an estinate of tournsm revenue losses due to environmental degradation -Med/Red Sea Domestic tourism ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Coastal zone degradation is also reducing the recreational and tourisrr value of these areas to the -Med/Red sea Domestic m ntion n a n a n a n a Egyptan populaton Noquanttatwe estmbate isavailable, butthslosscoufdbe estimated byforinstan and recreation contigent valualbon of WTP and/or Increased travel ost to destinations futher away Paitaily and untreated municipal and industrial wastewater, and agricutural drainage water is sJgnficant Percent polluting coastal waters. The NEAP 2002 and Environmental Peflle 2002 discuss this sduatbon and -Med/Red Sea Fishery losses 10% 15% losses per 850,000,000 LE per 85 128 0 03% 0 04% impacts on fish resources, but no quantitative estimate of bmpacts is presented A fishery reduction of 1 year year 15% is stipulated hereto provide a perspective on the potentil value of iosses due to poluton Valueo annual of manne water fish catch (prie) tor 1998 is from the NEAP and Environmental Profile Damage Costs I 806 1158 0 27% 0 39% Damage Costs śmean estimate) 2 1% 6L8LENVt)AENT.: tint ttBniIp %thf Ngyptoqri_ Some damage to biodiversity are known, as for example a $5 to $122 impact per square meter of last o Ial - BadwversEy _ _ reef in terms of tourism NEAP 2002 Annual damage are however not know (15 miluon LE were obtaine in the court as repaeatton In 2000) Damage due to climate change addresses potental adverse effects of climate change lke sea level ose, - (fl _ 97,900,000 Tons 70 LE/ ton 1,869 0 6% 06% changes in weather pattems, impacts on agncullure C02 emssions In Egypt are about 100 mrrbon tos per Carbon year One tonof carbon Is equivalent to 12/44 of a ton of C02 Damage cost used is US $20 per ton of _____=___4J______ carbon (source Genuine Savings, WDI, Wortd Bank 2001) JANAGf COSTS, Ail60tosshVBt6f ElT ANE11tAt uA4 .AI. DAMAGOE CIDSs AND GLOaAt fiv6tofEft1 (?fMLAt#StWIATLI. _ _ _ _ _ 44 Annex I Economic Data 1999 ABREVIATIONS Population 63,000,000 LE = Egyptan Pound hsid = household inhab = inhabitant ca = per caprta GDP LE 300,000,000,000 q = quintal t = metric ton ha = hectare n a =non available 1 feddan = 4,201 m2 GDP $ 89,000,000,000 DALY = Disability Adjusted Life Year GDP/CAPITA $ 1,413 WTP = Willingness-to-pay LEIUSO Exchage Rate Dee 99 3 39 Pen R ediotion_Costs ......... , , ................. ......... . .. ....... ......... .......... ... . . . .. . .... .......... _ .,....... WATER Meaiors Qogtky Urt rric*r Urnt MfthOlLn Af % ofQDP otit/ t$pnirces Health/Quality of life Annualized INVESTMENT cost for water supply for urban and rural populaton wrthout access to - Inadequate Water and iproved water source (4% and 6% respectively) and/or without sanitation (2% and 9% I Inadequate Water and nvestment Cost persons 400 to 800 LE per person 425 014% respectively) A 25 year useful life of investment and 10% discount rate has been applied Investment costs per person (S120-240) are based on Word Bank data (see World Bank 1995) Annualized REHABILITATIONIUPGRADING cost for water and sewage systems for both urban and rural population It is assumed that an equivalent of 10% of the total construction cost of the Rehabilitatio/ natabonwde systems (S120-240 per person) is needed for rehabilitabonlupgrading for the first 10 Upgrading Cost persons 400 to 800 LE per person 950 0 32% years, and then 5% of total construction cost for the following 10 years These costs are needed (on top of current maintenance expenditure) to bring the services to adequate quality A 10 year - Inadequate Water and useful lIfe and 10% discount rate has been applied for rehabilitatron/upgradrng expenditures Santation Estimate for constructon costs is based on World Bank data (see World Bank 1995) Water toss Water lost in public networks It is assessed that an excessive 20% of 6 billion m3 of water reduterlons frmsupplied through networks are lost, in additbon to 25-30% that may be considered uneconomic to Rehabrltation/ -1,200,000,000 m3/yr 0 45 LElm3 -540 -0 18% avoid Pumping and treatment cost per m3 has been used in the calculations here to estimate the value of water savings from rehabilitation and upgrading of water networks Water Balance Upgrading for Egyptf NEAP 2002 and Water General Authonrtes, Cairn LE per Programs for hygiene improvement (educabon, community programs, etc to improve personal, - Inadequate Hygiene Program Cost 5,625,000 households 15 household per 84 ° 03% food and domestic hygiene) for 50% of all households for the prevention of infectious diseases * Inadequate Hygiene Program Cost ,625,000 households 15 household pr 84 0 0396 trelatedwtoewater andisnitationnconditionshTheocostfof4$4household is based on internationa year expenencoe of hygiene progams (Var/ey, et al 1998) Natural Resources Untreated Wastewater It is assumed that two-fith of 2 25 billion m3 of muniopal wastewater discharges to the Northern Lakes, Nile Deata and Fayoum are untreatment and need treatment 900,000,000 m3/yr 0 8 LEI m3 212 0 24% Water Batance for Egypt, NEAP 2002 Treatment cost of LE 0 8 per m3 has been applied based - Impacts on Ecosystems Treatment Cost 0n consuftattons with experts in Egypt industrial Wastewater Calculattons are based on annual industnal wastewater discharge into 170,000,000 m3/yr 3 5 LE/m3 176 0 20% Nile River, 2 branches, and canals that need treatment Treatment cost of LE 3 S per m3 has been applied based on consuttabons vwth experts in Egypt Met.bqt trntlty Unit Pt1 UVit MitPflon)4w W F 1Wes$ rcet; Health/Quality of life Cost of commerial energy (at US $30 per barrel) to substitute/replace 50% of traditonal fuel (bromass fuel) consumpton This is one of possible actons to reduce unhealthy indoor air Fuel Substitution tons of oilpoltopmrlnrrlrafEytTaioafeDsupnngpt3% ttI -Indoor Air Pollution FueCSubstituon 640,000 equivalent 100 LElbarrel 499 017% pollutionpamariy nralareasofEypt Tradtronafel om ption n E 3 of t Cost ~~~~~~~~~~~~~~~~~~~~~~~energy consumption (data on energy consumption areftrom\AWOI, World Bank 2001) Costs of per year other measures to remedrate indoor air pollution, such as rmpmoved ventitabon and stoves and cookng equipment have not been estimated m this report incremental cost of cleaner diesel for light and heavy diesel trucks and buses other than those buses that are in the process of being converted to natural gas This cost is the incremental world price of low sulphur (O 05%) diesel to the level of sulphur that allows particulate control Cleaner Diesel Incremental cost 4000,000 tons per 25 LEton desel 100 003% technology on diesel vehicles Lower sulphur wil also reduce PM1 0 from diesel vehicles wthout - ~~~~~~~~of Cleaner Diesel 400 year control technology The quantity of diesel used in thts study is estimated based on number of diesel vehicles and vehicle diesel consumption in Egypt World Bank data) While several studies have found that the (monetized) health benefits of cleaner diesel outweigh the cost (see for instance Lvovsky et at, 2000), a benefd-cost assessment for Egypt is warranted Annex I Improved waste -Solid Waste Buming collection and n a n a Burning ofsolidwastecontributessubstantially to PM 10 air pollution in Cairo Improved waste control collection, management and control is needed to remedy the situation (see section on Waste) Energy efficiency tons of oil It is assessed that potenbal energy savings (wrth a posibve economic return) are at least 5% of - Energy Use Energy efficency -2,100,000 equivalent 35 LE/barrel -573 -0 19% total energy consumption based on various energy audits undertaken in Egypt Eased on the measures prersame audits it is estimated that the net economic value per barrel of energy saved is US $10 ($30 for the economic value of energy, less $20 in efficency improvement cost) Vhole Bringing pollutng industnes into compliance with environment legislation is estimated at 2 billion - Industrial Depollubon Investment Costs 2,000,000,000 Investment 325,490,790 Annurty (LE/yr) 325 0 11% LE for 2002 A useful life of depolluton investments of 10 years and a 10% discount rate have (LE) been appled (expert opmion at EEAA) SOIL Meftd an6ts UreSt frte Uptl MtflBh I.f4y %ofGE Nota$41I0$s Natural Resources Soil Deqradabon The investment cost was assessed based on LE 10,000 per feddan over 30 years in response - Soil Erosion/Desertficabon Investment Costs 1,520,000 feddans 10,000 LE/feddan 1,612 0 54% soil erosion and/or desertdricatbon A 10% discount rate has been applied (cost figures from a study by Prof Gamal Seyam, Cairo Universrty) The investment cost was assessed based on LE 15 000 per feddan over 30 years in response to - Salinisabon Investment Costs 2,870,000 feddans 15,000 LE/feddan 4,567 1 52% salinisabon A 10% discount rate was applied (cost figure is from a study by Prof Gamal Seyam, Cairo University) WASTE Mehod . t _ U)Jlt :PtM# - Utl Mf 8mto % CtIr I, t S rcea Health/Quality of life Municipal waste The tower bound of internabonal cost (US$8-1 6/ton) has been applied given that labor cost is - Uncollected Waste Waste Colledon 8,000,000 I/yr 30 LE/t 240 0 08% substanally lowerin Egyptthaninhigh-income countnes Volume of uncolleted waste is Cost ~~~~~~~~~~~~~~~~~~~~~~~~based on 65% collection ratein Cairo, 50% inother urban areas, and 20%in rural areas Total annual waste generaton is about 15 miUion tons per year (NEAP 2002) Burning of waste contribute substantially to urban air polluton, especially in Cairo (see Damage - Uncontrolled Waste Disposal Control of Waste Costs section) Improved waste collecton and changes in waste management practioes are Buming i na mportant to mibgate this situabon Part of this remediation cost is included above in Uncollected Waste Untreated Industrial Waste - Untreated Waste Treatment Costs 4,500,000 IUyr 200 /It 900 0 30% Treatment costs NEAP 2002, and intemrabonal treatment costs - Hazardous Waste Treatment Costs 150,000 tUyr 500 S/t 75 0 03% Treatment costs NtEAP2002Z and intemational treatfnen costs - Health Care Waste Generation Treatment Costs 16,381 t/yr 500 - 1200 /It 20 0 01% Treatnent costs NEAP 20o0 and intemastonal treatment costs COATl ZONE-' . C:TVRAL HERITAOE pJi Ml %?f I S Natural Resources Annual discharges to the Mediterranean Sea are on the order of 700 million cum of municipal - Coastal Zone Protection Wastewater waighted ~~~~~~~~~~~wastewater and 500 million cum of industnal wastewater (Water Balance for Egypt, NEAP 2002) -Coastal Zone Protection WaTrewatment 300,000,000 m3tyr 1 9 average LEt 578 0 19% ftewtrd0m oc °f ualebbbetdTebn co sL 8n Treatment 30,0,0m3/r 19 aeae E 7 9 It was assumed that 25% of these discarges need tobe treated Treatment cost isLE 0 8and 3 5 for municipal and industnal wastewater, respectvely (Egyptian expert opinion) - Coastal Zone Protection Coral reef n a n a In additon to their ecological value, coral reefs serve as an important asset for tourism Cost of protection reef protecton is not estmated here - Cultural Heritage Investments Costs n a n a Resouce requirement for cultural heritage protecton is not available GLOtBAL EN IMONMENT 0 itl uIsrlt 4t1m Ut $MBon tB % GO ftdil ) sercees - Brodiversity Conservation Cost C02 Reduction Program C o2 -eq Reduction Costs Annex II DALYs - URBAN AIR POLLUTION (1999) Greater Key parameters Egypt Cairo' Alexandria Population (mill) 63 14 9 3 3 Adult population -= 15 yrs (mill) 41 9 7 2 1 Children population <=14 yrs (mill) 22 5 2 1 2 Crude death rate (per 1000) 7 7 7 Annual average PM1O (ugtm3)- 270 100 Exposed population (mill) 80% of tot 11 92 2 64 Exposed adult pop (mill) 7 8 1 7 Exposed children pop (mill) 4 2 0 9 DALYs Impacts DALYs per DALYs Greater per 1 10000 Cases Greater Greater Cases DALYs Cairo and Health categories Units uglm3 cases Cairo Cairo Alexandria Alexandria Alex Premature mortality % change in crude mortality rate 0084 100,000 18,924 189,242 1,552 15.523 204,765 Chronic bronchitis per 100 000 adults 3 06 12,037 64,092 77,148 5,257 6,328 83,476 Hospital admissions per 100 000 population 12 264 38,621 1,020 3,168 84 1,103 Emergency room visits per 100 000 population 2354 3 757,611 227 62,146 19 246 Restricted acivity days per 100 000 adults 5750 3 120,434,571 36,130 9,879,048 2,964 39,094 Lower respiratory illness in children per 100000 children 169 3 1,899,367 570 155,802 47 617 Respiratory symptoms per 100 000 adults 18300 3 383,296.114 114,989 31,441,143 9,432 124,421 TOTAL DALYS LOST PER YR 419,326 34,397 453,722 including Giza -The PM1O figure for Greater Cairo is based on available monronng data No data are available for Alexandna, and has been assumed to be PM10=100 ug/m3 Data source of Key parameters WDI, World Bank 2001 Source of DALY estimation Dose response coefficients (heath impacts per ugtm3) are from intemational studies DALYs - WATER, SANITATION AND HYGIENE (1999) Mortality Quantity Unite Children populatlon (0-4 yrs of age) 8 15 million Child mortaity rate 54 per 1000 Annual child deaths (all causes) 88020 per year Child diarrheal disease deaths 20 0% of child mortality rate Child diarrheal disease mortality rate 108 per 1000 Annual child diarrheal disease deaths 17604 DALYs per child death 35 discounted years of Ide lost DALYs from child diarrheal disease deaths 616140 per year Morbidity Children population (0-14 yrs of age) 22 million Diarrheal episodes (per child per month) 1 Total episodes per year 264 million Average duration per episode 10 hours Total duration per year (hrs) 2,640 million hrs Total duration per year (in years) 301,370 years DALY per year of diarrheal episode (seventy weight) 0 2 DALYs from child diarrheal disease morbidity 60,274 per year TOTAL DALYs LOST PER YR (mortality and morbidity) 676,414 per year Data source Base data are from WDI, World Bank 2001 Estimation Child diarrheal disease deaths as a percentage of child mortality rate is based on regional averages Estimation Morbidity estimates are based on children only, because of their substantially higher incidence rates Annex II DALYs - INDOOR AIR POLLUTION EGYPT (1999) Key parameters Egypt Total population (millions) 1999 63 Child mortality rate (per 1000 live births) 1999 54 Rural population share 1999 54 8% Rural Biomass use (share of rural population) 1993 35 0% Biomass intensity per household (relative to other developing countries) 0 5 Exposed population share (population equivalents as a % of total population) 96% Commercial energy use per capita (koe) 1999 679 Biomass fuel use (% of total energy) 1999 3 0% Biomasa fuel use per capita (koe) 1999 21 'Low' estimate Exposed NBD populabon Odds ratio Deaths deaths PP OR PAR Indoor air DALYs Acute respiratory infections children 5 yrs old 20900 96% 2 0087508 1829 64012 Chronic obstructive pulmonary dise, adult females)( 15 yrs old) 5200 96% 2 0 087508 455 9101 Tuberculosis adult females) 15 yrs old) 3100 96% 150 045756 142 2837 Heartdisease adultfemales(>15yrsold) 85300 96% 11 0009499 810 8103 TOTAL DALYS LOST PER YR A 4052 Exposed 'High' estmate NBD population Odds ratio Deaths deaths PP OR PAR Indoor air DALYs Acute respiratory infections children 5 yrs old 20900 96% 3 0160933 3364 117723 Chronic obstructive pulmonary dise, adult females I- 15 yrs old) 5200 96% 4 0 223422 1162 23236 Tuberculosis adult females> 15 yrs old) 3100 96% 3 0 160933 499 9978 Heartdisease adultfemales( 15yrsold) 85300 96% 14 0036943 3151 31512 TOTAL DALYS LOST PER YR 182448 PAR=PP-(OR-1 )(PP'(OR-i)+1) DATA The National Burden of Disease (NBD) for Egypt is estimated based on extrapolation of Burden of Disease data by WHO and World Bank for the Middle Eastem Crescent (MEC) region Child mortality from acute respiratory infections has been adiusted by the child mortality rate differential between MEC and Egypt The disease categories for adult women has only been adjusted by the population share of Egypt in the region The odds ratios (OR) are from Smith (2000) and reflect a review of intemational studies The exposed population (share of total population) to indoor air pollution from biomass fuel is based on a household survey from 1993 (see World Energy Council). indicating that 30% of the rural population use biomass fuel for heating and 40% for cooking Based on total biomass fuel use (1 3 Mtoe according to World Energy Council and WDI, World Bank) in Egypt and biomass fuel use in other countries the exposed population has been adjusted downwards to reflect a lower intensity of biomass use by rural households in Egypt (relative to many other developing countries) Altematively, the Odd Ratios could be adjusted downwards to reflect the lower intensity of biomass use METHODOLOGY: The methodology presented in Smih (2000) has been applied here The methodology is based on National Burden of Disease (NBD) statistirs for illnessessdseases that are associated with indoor air pollution, and odds ratios (OR) from international studies that reflect the increased risk of illness/disease associated with the indoor use of biomass fuel DALYs are based on discounted years of life lost for each disease Only mortality is included as Smith estimates that DALYs from morbidity is insignificant relative to mortality DALYs are only estimated for children less than five years of age and adult women because these groups are likely to spend disproportionately more time indoors than school children and adult men . -l l -f P, - , : , . I 7 - - Ropot, No.: 25175 EGT Type: SR