Water supply and sanitation in Israel

History

The history of the development of water supply and sanitation in modern Israel can be divided into distinct phases, beginning with the unilateral development of conventional water resources. This was followed by a period that emphasized the use of reclaimed water, the signing of an agreement to share water resources with Jordan and the Palestinian Authority, and the development of seawater desalination.

Development of conventional water resources (1937–70)

Because the coastal plain of Judea and Samaria had few water resources, Theodor Herzl already envisioned the transfer of water from the Jordan River to the coast for irrigation and drinking water supply. In 1937 the national water company Mekorot was created, more than a decade before the creation of the state of Israel. Among its achievements was the Shiloach Pipeline along the Burma Road to Jerusalem built during the 1948 Arab–Israeli War and a first pipeline to the Negev in 1955. Between 1953 and 1955 the United States Special Representative for Water in the Middle East, Eric Johnston, had negotiated the Jordan Valley Unified Water Plan to jointly develop the water resources of the Jordan River Basin between Israel, Lebanon, Syria and Jordan. The Johnston Plan was rejected by the Arab League, but Israel nevertheless abided by its water allocation under the plan. Mekorot began a Rain Enhancement program in 1961, increasing rainfall by 13–18%. A Brackish Water Pipeline to divert brackish ground water from the Sea of Galilee to the Lower Jordan was completed in 1965. The main water resources project at the time, however, was the transfer of water from the Sea of Galilee to the coast through the National Water Carrier in 1965. As a reaction to the construction of the pipeline, Lebanon, Syria and Jordan tried to divert the headwaters of the Jordan River. This was one of the events that increased tensions leading to the Six-Day War of 1967 during which Israel captured the West Bank and the Golan Heights.

Water reclamation (1970s and 80s)

In 1969 the Shafdan wastewater treatment plant south of Tel Aviv was completed to treat approximately 130 million cubic meters of wastewater per year for reuse in agriculture. However, wastewater from other cities and towns remained largely untreated. In 1970 there was a cholera outbreak because of illegal irrigation of salad with untreated wastewater. This gave rise to major investments in wastewater treatment under the National Sewerage Plan, which emphasized the reuse of treated wastewater. In 1984 the Kishon wastewater treatment plant was completed in Northern Israel. It provides 20 million cubic meters of treated wastewater per year for agricultural use in the fertile Jezreel Valley, maximizing distribution potential during high-demand periods.

Signing of water sharing agreements (1990s)

The 1995 Interim Agreement as part of the Oslo Peace Process provided certain quantities of water to the Palestinians, but prevents them from drilling any new wells in the Mountain Aquifer. The surface water of the Jordan River remains disputed with Syria, Lebanon and the Palestinians. Only with Jordan Israel was able to reach an agreement on the sharing of water resources in 1995 as part of the Israel-Jordan Peace Treaty.

Seawater desalination (2000s)

In 1997, the first reverse osmosis desalination plant in Israel opened in Eilat. In 2002, under the impact of drought, the Government approved the construction of large seawater desalination plants along the Mediterranean coast. These installations would supply 305 million m³/yr of desalinated water by the year 2010 and 500 million m³/yr by 2015. By mid-2008 two of the new plants with a capacity of 130 million m³/yr were in operation. In parallel to the desalination program the cabinet also decided to promote water savings activities that could reduce household water use by at least 10 percent. In 2012, the Ashkelon Desalination Plant was converting 15,000 to 16,000 cubic meters of seawater to fresh water every hour, supplying 15 percent of Israel's annual water supply.

In July 2007 Water Commissioner Uri Shani warned about a decline in rainfall, exacerbating Israel's water crisis. "The drop in water supply derives from atmospheric contamination, which affects cloud composition and causes a drop in rainfall levels. Every year we record less water entering Lake Kinneret in the winter. Another factor in the drop in water supply is contamination of the coastal aquifer, which reduces the amount of water that can be pumped out."

In 2007 Mekorot inaugurated its advanced Central Filtration Plant at the company's Eshkol facility. Built at a cost of more than $100 million, the sophisticated plant has annual filtering capacity in excess of 500 million cubic meters per year. It is the largest plant of its type in Israel and one of the largest in the world. In 2008 Mekorot lay a fifth pipeline to Jerusalem to double the quantity of water and provide 150 million cubic meters annually, including desalinated water. In March 2008 National Infrastructures Minister Benjamin Ben-Eliezer and Water Authority head Uri Shani began to explore options for new wastewater treatment plants and reservoirs. Another alternative considered was more expensive but less land-intensive membrane bioreactors. In 2006 the Dan Regional Wastewater Board was criticized for plans to incinerate sludge to replace the practice of dumping it into the sea. Critics said the sludge should be used as fertilizer in agriculture.

In July 2008, in the middle of another drought, the Knesset established a state commission of inquiry into the slow progress of desalination. Desalination capacity was less than a third of the amount set by the cabinet, mostly due to a slowdown in tenders after a few years of relatively high rainfall. The planned water-saving activities were stopped completely and were resumed only in 2006, but at a slow pace. However, a vigorous water savings campaign was then started featuring videos by famous Israelis such as singer Ninet Tayeb, model Bar Refaeli and actor Moshe Ivgy. The campaign resulted in reducing water use by more than 10 percent, saving the construction of a desalination plant. In its final report in March 2010 the commission of inquiry, headed by former judge Dan Bein, concluded that changes were needed in the Water Law of 1959. The Finance Ministry was accused of having delayed desalination plans arguing that conservation and wastewater reuse should have been implemented first. Only years later, the ministry endorsed large-scale desalination. The Water Authority was said to have been slow, non-transparent and that it failed to coordinate with various ministries. Infrastructure Minister Uzi Landau endorsed the report and announced that his Ministry would submit a bill to curtail the Water Authority's powers and to put it more firmly under the control of his Ministry.

New National Water System (2009 onwards)

In January 2009 Mekorot said it would invest more than NIS 2 billion (US$500 million) in a new National Water System with several east-west arteries relying on pumping, complementing and partly substituting for the National Water Carrier running from north to south that relied on gravity. The new pipelines would connect the five new desalination plants along the coast with water users. The project would include the construction of 100-kilometer water channels, advanced quality control and command systems, and water reservoirs. When completed, most drinking water supplied to Israel’s residents from Hadera southwards – in other words, most of the country’s population – would come from desalinated seawater.

By 2014, Israel's desalination programs provided roughly 35% of Israel's drinking water and it is expected to supply 40% by 2015 and 70% by 2050.

Water use

Water use in 2009 was 1.91 billion cubic meters of which fresh water use was 1.26 billion cubic meters. Water use was 100 million cubic meters (5.2%) to Jordan and the Palestinian Authority, 1016 million cubic meters for agriculture(53.2%), 684 million cubic meters (35.8%) for domestic and public uses and 110 million cubic meters (5.7%) for industrial use. According to one estimate, average domestic water consumption in Israel is 137 litres per person per day on average, about half of indoor water use in the United States. However, according to another estimate water use per person per year is 90 cubic meter, corresponding to 247 litres per day. The latter estimate includes losses and probably also water use by offices that may not have been included in the former figures.

Service quality

According to the Ministry of Environment, 97.9% of the tests complied with drinking water quality standards. An analysis of results since 1989, when disinfection of groundwater was first introduced, has shown a constant improvement in the quality of drinking water, with the percentage of violations decreasing from 8.4% in 1989 to 2.1% in 1999. In 2000, the Minister of Health signed an amended version of public health regulations which raise chemical standards for water quality to very stringent standards. Maximum levels for 38 new chemical substances—including pesticides, organic solvents and petroleum products—were set for the first time while existing standards for nitrates, lead, cadmium and zinc were tightened.

The salinity of supplied water in Israel varies from very low salinity water (10 mg/l of chlorides) from the Upper Jordan River, 200 mg/l from the Sea of Galilee, and more than 1500 mg/l from groundwater sources in the south.

Responsibility for water supply and sanitation

Responsibilities for the water and sanitation sector in Israel are defined in two key laws: The Water Law of 1959, amended most recently in 2006, and the Water and Sewerage Corporations Law of 2001.

Policy and regulation

The Minister of Energy and Water Resources (until 2012 the Minister of Infrastructures) is the Cabinet member responsible to the Parliament (the Knesset) for the management of water resources, proposing the national water policy for Cabinet approval and subsequently implementing it, as well as for Israel's external water relations. Since some aspects of the management, protection and allocation of water resources fall into the spheres of other Ministries, the exercise of certain powers requires their consent. The principal Ministries in that category are the Ministries of Agriculture (agricultural allocations and pricing), Environmental Protection (water quality standards), Health (drinking water quality), Finance (tariffs and investments) and the Interior (urban water supply). The Administration for the Development of Sewage Infrastructures, a unit in the Ministry of Energy and Water Resources, implements government policy in the field of development of sanitation. Long-term planning for the supply and sanitation is included in the National Outline Plan.

With the 2006 amendment to the Water Law the Governmental Authority of Water and Sewerage (the "Water Authority") was created. The Water Authority is an inter-agency body overseen by a council composed of senior representatives of the Ministries of Finance, Energy and Water, Environmental Protection and Interior. The Director of the Authority (formerly the "Water Commissioner") is a cabinet-appointed civil servant reporting to the Minister of Energy and Water and to the Knesset. He is nominated by the Cabinet for a period of five years. There also is a Water Board, which is composed of representatives of the Government and the public (producers, suppliers and consumers), whose consent/advice must be obtained for certain measures. Past and present water commissioners or Directors of the Water Authority include Meir Ben Meir (1996–2000), Shimon Tal (2001–2006), Uri Shani (2006-2011) and Alexander Kushnir (since 2011).

Bulk water supply through Mekorot

The state-owned National Water Company (Mekorot) is responsible for bulk water supply through the National Water Carrier, transferring water from the Sea of Galilee and other sources mainly to the coastal plain. Mekorot supplies 1.5 billion cubic meters of water in an average year, 70% of Israel's entire water supply and 80% of its drinking water. It supplies water to about 4,800 intermediary water providers, including municipalities, regional associations, agricultural settlements and industrial consumers. It also operates 31 desalination plants treating nearly a million cubic meters of seawater and brackish water every day. The company's eight wastewater treatment plants, including the Dan Regional Wastewater Treatment Plant, treat 40% of all Israel's wastewater. Its nine reclamation plants enable 70% of the treated effluent to be reused for agriculture. In 2007 the structure of Mekorot has been changed. The parent company, "Mekorot Water", continues to produce, transport and supply water. One of its subsidiaries, "Mekorot Ventures and Development", concentrates, among other things, on the desalination of seawater, wastewater treatment, projects for the municipal sector and projects abroad. Another subsidiary focuses on building and maintaining water infrastructures, primarily for the parent company. Mekorot also serves in some cases also as a Regional Water Authority. A Regional Water Authority does not have to be owned or controlled by the Government and may be owned either privately or by municipalities.

Water distribution and sanitation

Water distribution and sanitation is the responsibility of 52 regional water and sewer corporations that serve 132 local authorities with 5.5 million inhabitants. Outside their service area local authorities provide services directly to customers.

Local authorities consist of 76 cities (with a population ranging from 2,500 to 750,000 inhabitants), 144 local councils in small towns and 53 regional councils in rural areas. The Water and Sewerage Corporations Law of 2001 provides for the creation of regional companies to which local authorities would gradually transfer their water and sewerage services. The 2001 Law aims at, inter alia, full cost recovery and the promotion of private sector investments for infrastructure. The transfer of service provision from municipalities to public service entities (called "Water and Sewerage Corporations") is initially voluntary, but at a later stage it will become compulsory. It had been initially envisaged that by 2010 all municipal water and sewerage services would have been transferred to Water and Sewerage Corporations. The Corporations may serve the area of one or more municipality, although in the latter case all municipalities in the service coverage area have to agree. The Corporations have quality of service obligations and are required to obtain a permit from the Ministry of the Interior. The Corporations may be owned either by the municipality (ies) in whose service area they operate or by private investors. The Government may intervene in the operation of the Corporation, including transferring the provision of the services to another entity in case of failure in service provision, including in case of bankruptcy. The aim was to have only about 15 large regional water and sanitation companies. However, 52 companies had been established as of 2010 because mayors resisted the establishment of larger regional companies.

An example of a multi-municipal utility that precedes the 2001 law is the Dan Regional Sewerage Board (Shafdan), which includes seven municipalities in and around Tel Aviv. It owns the Dan wastewater treatment plant, the largest wastewater treatment plant in the country which treats about 130 million cubic meters of wastewater annually for reuse in agriculture (see under reclaimed water). Mekorot operates the plant on behalf of Shafdan.

Financial aspects and efficiency

In Israel water tariffs are levied for all uses and at all stages of production, from groundwater abstraction, to bulk water sales to final users. Investments are financed both through self-financing from water sales revenues, through commercial debt and through various subsidies paid to municipalities and to Mekorot. From 2010-12 regional water companies distributed the equivalent of $55 million in profits to their municipal shareholders. As of mid-2014, the Ministry of Energy and Water planned to present a law to Parliament that would allow utilities to return profits to their customers in the form of refunds.

Fees and tariffs

Domestic water tariffs charged by local authorities are set by the Ministers of Interior and Finance. They are progressive (increasing-block) tariffs. The first block is for the initial 3.5 cubic meters per month for each housing unit and was set at NIS 9.09 ($2.43) in 2013, with higher consumption charged at NIS 14.60 per cubic meter. In condominiums apartments usually have their own meters. In 2005 the average household expenditures on water stood at 0.9% of total household consumption expenditures. In June 2013 the Finance Ministry and the Council of Local Authorities reached agreement that the base water tariff will be reduced by 5% by the end of 2015. Water tariffs had gone up by over 30% in previous years.

Abstraction Fees In 1999, during a severe drought, it was decided that all those extracting water from water sources would be charged with an extraction levy. The obligation for payment of the extraction levy falls on the extractor who can pass the costs on to the consumers.

Mekorot bulk water tariffs The prices Mekorot is entitled to charge are the rates set by the Ministers of Energy and Water and Finance, approved by the Knesset's Finance Committee, and updated from time to time according to the changes in the Consumer Price Index, electricity rates and the average wage index. The rates are categorized by the different uses: domestic, consumption and services, industry and agriculture. The rates for industrial and agriculture uses are lower than those for domestic consumption and services. Water for agriculture is supplied on a less reliable basis and is of poorer quality. Subsidies are provided for agriculture and for remote and elevated localities. The bulk water tariff for a specific use is the same throughout the country, irrespective of the difference in costs of supplying water to a specific locality. Mekorot bulk water tariffs were increased by 25% in January 2010, to a large extent to absorb increases in electricity prices. Energy accounts for an ever larger share of water supply costs because of the increasing share of seawater desalination.

Investment

The total investment in the sector consists of investments by Mekorot in bulk water supply (including water supply for domestic uses, industry and agriculture), as well as investments by municipalities in drinking water distribution, sewerage and wastewater treatment. If half of the Mekorot investments of US$240 million in 2006 can be attributed to domestic water supply (US$120 million), and US$125 million were invested by municipalities in sanitation (see below), total investments in drinking water supply and sanitation stood at least US$245 million per year, excluding investments in desalination plants under BOO schemes and excluding investments in drinking water distribution by municipalities.

Financing

Municipalities receive grants and soft loans in order to finance investments, particularly in wastewater treatment. These subsidies are channeled through various funds, such as the Water Networks Rehabilitation Fund, the National Sewage Program and the Wastewater Renovation and Reuse Program. The State invests about NIS 450 million per year (about US$125 million) in sanitation through these funds, mostly in the form of long term subsidized loans (20 years, 5% interest), and some in the form of grants.

Mekorot receives a subsidy from the Ministry of Finance to cover the difference between its supply costs and the tariffs it is allowed to charge to its customers. Between 1993 and 1999 government support to Mekorot declined from 40% to 23% of its turnover, to a large extent because of an increase in the efficiency of Mekorot. This has been induced by a change introduced in 1994, whereby Mekorot's tariffs were not set any more under a cost-plus formula, but a 2.5% annual factor for efficiency increases was built into the tariff formula.

Most large-scale seawater desalination plants are being privately financed as BOT projects. The Hadera plant, for example, is led, for the first time, by a consortium of foreign banks, and amounts to NIS 1.5 billion according to the following breakdown: 50% The European Investment Bank (EIB); 25% the French Calyon Corporate and Investment Bank, which specializes in long term projects; 25% Banco Espirito Santo (BES), a Portuguese investment bank.

Mekorot finances

Throughout its history, the Mekorot has been financially stable according to information published on its website. In 2006, Mekorot's turnover was over $700 million, shareholders' equity was $500 million and total assets were in excess of $2.8 billion. In 2006, Mekorot invested over $240 million in developing water facilities, including a new central filtration plant, compared with $180 million in investments in 2005. For a number of years Mekorot's fundraising instruments (primarily, bond offerings) have been awarded the highest AAA rating by the Ma'alot credit rating agency based on the following factors: Because tariffs established by the government are low and do not cover Mekorot's operating costs, the company receives compensation for the difference between what it costs to produce a unit of water and what it is allowed to charge. The level of subsidies is fixed in multi-annual agreements, the first one having covered the period 1993–98, the second one 1998–2006 and the third one for a much shorter period, 2007–08.