Closed Compact Report: Jordan Compact | September 2018

Country Context

Jordan is a highly urbanized, resource poor country of over nine million people. 1 The country has no oil or natural gas and relies heavily on imports to meet its energy needs. Barely three percent of the land is arable, and only one percent is under permanent cultivation. With limited access to surface water or naturally recharged aquifers, Jordan ranks among the world’s five most water scarce countries, with renewable freshwater resources that total only 150 cubic meters per person per year—a situation further exacerbated by rapid population growth, urbanization and other factors. 2 On a per capita basis, available fresh water supplies are expected to decline significantly over the next 15 years, driving up costs and impacting household expenditures and industrial productivity. The influx of Syrian refugees into Jordan since 2011 has further stressed the resource infrastructure, which was already suffering from structural issues prior to the refugee crisis. 3

MCC’s Board of Directors first selected Jordan as eligible for MCC compact assistance in November 2006. As part of its compact development process, MCC conducted analyses to determine the binding constraints to economic growth in the country, and the Prime Minister of Jordan established the Millennium Challenge Unit to manage the development of a detailed Constraints Analysis and Sector Analysis in the first half of 2008. The Unit then conducted a broad consultative process that garnered feedback from donors, private sector representatives, civil society organizations, and ordinary citizens in each of Jordan’s twelve governorates. Throughout this process, the challenge of addressing Jordan’s severe water shortages emerged as a key priority.

During further consultations, key stakeholders in the water, sewer, and sanitation sector emphasized the need to (i) improve water delivery systems to reduce water losses and (ii) expand capacities for collecting and treating wastewater and reusing it in agriculture, wherever appropriate. This led the Government to propose a compact comprised of four major projects related to the rehabilitation of the water distribution system and expansion of the capacity for collecting and treating wastewater in Zarqa Governorate, among the poorest and most urban areas in the country. A history of neglect coupled with rapid population growth had strained critical water and wastewater infrastructure throughout Zarqa. Residents continuously complained of sewer main overflows and water pipes made of cheap, flexible tubing that ran above ground through city streets, where they were subject to considerable wear and tear.

MCC agreed to jointly develop three of the four projects, which included rehabilitating and extending water distribution and wastewater collection networks and expanding the capacity of an existing wastewater treatment plant that treats the majority of wastewater from the Zarqa Governorate and the capital city of Amman. Through separate investments outside of the compact, the Government of Jordan agreed to fund the fourth project, a conveyor pipeline to carry high-quality treated wastewater to agricultural areas in the Jordan Valley; andcontributed $20 million to expand wastewater pumping stations to complement MCC’s investments in the sector.

MCC and the Government of Jordan signed a five-year, $275.1million compact in October 2010, to address the constraints outlined above. At that time, the Government of Jordan and MCC estimated that the compact would benefit more than 3 million people over 20 years, laying the groundwork for sustained economic growth by expanding access to clean water and improving wastewater treatment. 4 This modern, more efficient water and sanitation system would create new opportunities for households, communities and businesses, as well as support stability in the region. MCA-Jordan was created soon after signing the compact to implement its programs. 5

At the end of the compact in December 2016, the Government of Jordan and MCC had spent 99 percent of the allocated compact funds to increase the supply of water available to households and businesses and help improve the efficiency of water delivery, wastewater collections and wastewater treatment. Given the nature of the investments, the entire kingdom’s population is expected to benefit from them. Further details of the compact results and impacts will be shared in forthcoming impact and performance evaluations, expected by 2019, with a final report to be submitted in 2021.

  • Original Amount at Compact Signing:
    $275,100,000
  • Amount spent:
    $272,934,551
  • Signed:
    October 25, 2010
  • Entry Into Force:
    December 13, 2011
  • Closed:
    December 13, 2016

Estimated benefits correspond to $270 million of compact funds, where cost-benefit analysis was conducted.

  • 9,000,000Estimated beneficiaries over 20 years
  • $596,000,000Estimated net benefits over 20 years

    (2012 USD) The total compact revised at time of signing


Footnotes
  • 1. Population estimates vary between 9.4 million (World Bank, World Development Indicators, 2016) and 8.2 million (CIA, World Fact Book, 2016), depending in part on the count of recent migrants.
  • 2. Water scarcity, stress and security are related concepts, of which the last, from a development perspective, arguably is the most relevant. Jordan is among the most water scarce, stressed and insecure countries in the world (see https://maplecroft.com/about/news/water_security.html, accessed February 2018). For information on the water sector in Jordan see http://www.mwi.gov.jo/sites/en-us/Hot%20Issues/Jordan%20Water%20Sector%20Facts%20and%20%20Figures%202015.pdf.
  • 3. Regarding the impact of refugees on Jordan’s resources see https://www.mercycorps.org/research/tapped-out-water-scarcity-and-refugee-pressures-jordan.
  • 4. The beneficiary estimate was later changed to reflect the expectation that the primary benefit stream will be from lower production costs of water over time. This reduces fiscal demands on the public purse and implies macroeconomic benefits to Jordan (lower national debt, a lower tax burden on the public, or changing government expenditures). Such macro benefits imply beneficiaries beyond Zarqa households. This change in method for counting beneficiaries takes account of income impacts that are derived rather than intermediated.
  • 5. Under MCC’s country ownership model, governments receiving MCC assistance are responsible for implementing the MCC-funded programs. Partner governments establish units known as accountable entities referred to as MCAs to manage implementation for compact projects.