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1

Nilometer in the ancient Egypt Disaster Abundance Security Happiness Suffering Hunger Water Level = Social Prosperity Level 2

Water A basic commodity for humans and environment! If so, Every person should have a right for water. Is the water a FREE commodity? YES, in its natural shape BUT 3

Water Supply Do we want water in its natural shape? - NO Today the right for water is to open the tap, to splash the water in the toilet, to operate an irrigation system, to connect water to the production line, to live in proper sanitary, unpolluted and healthy environment. 4

In the Middle East it is a well known reality!

MCM Recharge from Rainfall along years: 1975-2013 MEDIAN: 1209, STD: 456 MCM Min. : 659 MCM Max. : 2,929 MCM MEDIAN 1,209 MCM

Standard precipitation index Simulated and Expected Droughts Drought magnitude, intensity and duration are expected to increase in the future 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 LAST droughts period NEXT droughts period 2013-2014 62% of Average 8

Israel Water Sector - Visit Card Annual Water Supply 2 billion m 3 8 million residents 200,000 Ha irrigated fields To 14,000 farms Over 1,000 Industrial plants Annual financial volume 9 billion NIS 9

Industry תעשייה 138.3 MCM (91.5 MCM Potable; 46.8 MCM 113.8 מלמ"ק Marginal) )6%( 6.7% Water Consumption in Israel According to sectors Data for 2013 Domestic שוליים 588.5 מלמ"ק בית 737.4 מלמ"קMCM 733.2 (717.8 MCM Potable; 15.4 MCM )38%( Marginal) 35.3% Agriculture 1204.6 MCM 58% Potable שפירים 519.3 MCM מלמ"ק 460.6 Recycled and Brackish 744 MCM Total: 2,187.1 MCM (including 23.4 MCM for Nature) חקלאות 1,126.6 מלמ"ק )58%( Supply to PA 53.8 MCM (West Bank) + 4MCM (Gaza Strip); Supply to Jordan 53.2 MCM 10

WATER RESOURCES WATER DEMAND Average total natural enrichment 1.170 billion m 3 /annum Water demand more than 2 billion m 3 /annum Current potable water demand ~ 1.2 billion m 3 /annum Forecast for potable water demand: 2020 ~ 1.7 billion m 3 /annum 2030 ~ 1.95 billion m 3 /annum 2040 ~ 2.2 billion m 3 /annum 2050 ~ 2.45 billion m 3 /annum 11

Management Scarcity 12

overnance & Regulation ntegrated Water Resources Management euse of treated effluents rackish water for agriculture and industry eawater and brackish water desalination evelopment of the national and regional infrastructure 13

Water Resources Pillar Manufactured: Wastewater Reuse Seawater and brackish Desalination Natural: Precipitations Enrichment Integration: National water grid Total sewage collection and reuse Semiannual operational plan Preservation and Recovery constraints

WATER SUPPLY CHAIN Recycling Planning Sewage Collection Recharge Supply Quality Conveyance Desalination Agriculture Households Nature Future Generations Industry Diplomatic Agreements 15

Main Water Supply System Eshkol reservoir Tel Aviv Haifa Saphir station Sea of Galilee (Kinneret) National carrier 108 Jerusalem Eshkol reservoir National carrier - length section 108 Sea of Galilee 16

Sea Water Desalination In accordance with the Government decisions since 2001 large scale seawater desalination facilities are being built: Production since 12/09 (127) Hadera Mekorot Develop. Expected Production 2015 (120) Ashkelon Production since 6/07 Production since 12/05 Production since 8/13 (90) Palmachim (100) Ashdod (150) Sorek Completed facilities Ashkelon -BOT 120 MCM/Y (VID) Palmachim -BOO 90MCM/Y (Via Maris) Hadera- BOT 127 MCM/Y (H 2 ID) Sorek BOT 150 MCM/Y (SDL) Under Construction Ashdod 100 MCM/Y (TK Mekorot) Another 50 MCM facility in planning Water Management Tool: Enlarge or reduce the quantities of desalinated water production in accordance with the annual water balance requirements! 17

SWRO facilities connection - Revolution in the National System operation Western Line Hadera Barkai Cule Ashdod Sorek Hafetz Haim Western Line Ashkelon Neora The 5 th Line to Jerusalem Horashim

Brackish Water Desalination Private sector Mekorot Co. Atlit Neve Yam Maagan Michael Mate Asher Naaman Kordani Emek Harod Brackish water desalination facilities 50 MCM/Y גרנות Granot Lahat Gat Halatz Negba Rotem plane Neve Zohar Ketziot Shizafon 19

Reuse of All Sewage Effluents With governmental support, sewage infrastructures have been developed and upgraded nationwide, what enabled to turn the environmental hazard to valuable resource. Reuse of 450 MCM/Y Sewage effluents for Agriculture 50% of allocations in 2014. Tertiary treatment unrestricted irrigation. New stringent standards for effluents quality (37 parameters). Nutrients and Salt Removal. Methods of agricultural cultivation in Israel are constantly modernized and innovated. Israel became an international leader in developing water saving technology in agriculture. 20

רמת הגולן Reuse of all sewage effluents in Dan Region (Greater Tel Aviv) Wastewater Treatment plant (Shafdan) and the pipeline to Negev Sewage from the Greater Tel Aviv area 125 MCM/Y (2010) Large-scale WWTP secondary treatment quality Six infiltration fields Over 150 production and monitoring wells (quality permitted for occasional drinking ( 90km pipeline to Negev 32 pumping stations, operational storages (0.51MCM) and seasonal storages (17.2 MCM) 7 מליון קוב ברכת רם מאגר יוסיפון בניאס קרית שמונה כפר גלעדי מאגר עינן תחנת מאגר עינן תחנת כורסי תחנת האון בר' מיצר בית זרע מים לירדן מפעל זמר ראש פינה מאגר דלתון 2.5 מיליון קוב מקרא צפת ה ג ל י תחנת ספיר תחנת צלמון ל טבריה תחנת דגניה סכר דגניה גולני בר' המוביל הארצי מאגר דמון +140 נצרת עפולה כרמיאל נהריה ברכות שפרעם מאגר אשכול תח' שמשית ידעיה כפר ברור מאגר תשלובת הקישון 12 מלמ"ק האחזיות שומרון קריות אורן חדרה חיפה תחנת חוף הכרמל קולחי נתני תחנ ה מחנה חורון ת תחנת ראש נוה תחנת העין צומת תפוח ירק פ"ת תל אביב בק אריאל ויסות חולון עת יפו T.T.A מעלה תחנת בת הי רדן אפרי טל יםראשל"צ תח' דניאל תח' ם שילה תח' אחיס לטרון מך תח' מפעל מאגר השפד"ן בר' תח' מאגר נשר תח' פדיה תח' הלר חולדה שואבה איילון תח' ירושלים בר' ותח' חול תח' קליה גרנות תח' תח' דוד כ.אוריה כסלון דה בית תח' עגור 7 לחם אשקלון גוש תח' עציון גבעו גל און צומת זוהר ת קרית גת מאגר בר' נגה תח' אלמוג בר' נהורה קרית תח' שמחה מחצבה מצפה ארבע אמציה שלם בר' חברון אחוזים מאגר מפסח בר' תקומה בר א' ב' לוציפר ספיח בר' בר' ותח' בר' תפוח באר שוקת חמי שבע זוהר בר' ערד תח' סדום נאות הכיכר קו מים מים לשתיה להשקייה - מים קולחין מליחים ישובים מאגר מים שפירים בריכות מים שפירים תחנת שאיבה מים תחנת שפיריםמים מושבים מאגר מים מושבים בריכות מים מושבים מתקן התפלה קדוחי מים מליחים ערד באר שבע מאגר לב מי שתיה למלונות ים בר' ותח' הנגב מאגר המלח בר תח' צאלים יעלים ערעור נבטים קד' אפעה בר' ותח' רביבים דימונה קד' מכתש קטן למים מליחים עידן בר' עין יהב צופר פארן אורון בר ' תח' פארן יהל סבחה מתקן התפלת מים מליחים לאילת גרופית ירוחם קטורה שדה משאב י שדה בוקר ה נ ג ב מצפה רמון פארן קד' בר' ציחור בר' ותח' בר' שיטה שיזפון בר' צוקי עובדה בר' סיירים יטבתה תח' נחושתן באר אורה מפעל נחלי מנשה לתפיסת מי שטפונות והחדרתם למי תהום אילת נתניה מערכת National המים Water הארצית מפת מפעלי המים Grid של חברת מקורות בישראל בר ' צאלים תח' חלוצה קד' למים מליחים בר' שדה בוקר הר חריף בר' שבטה קד' ניצנה )מליחים( תח' אברהם בר' מבטחים 21

Reuse of All Sewage Effluents Wastewater Treatment Plants Acre Zephat waste water utilization Carmiel waste water utilization Infiltration site Sorek 2 Infiltration site Yavne 4 Kishon concern Western extension Kefar Baruch reservoir Kefar Tabor area Afula Hadera Ashdod Azrikam Training areas, Givati and Beit Ezra Taanach orchards Gat east plant Ashkelon Hadera waste water Mifal Halatz Nir Hen area and Zohar Main conduit for waste water Geulat Hayarkon plant Tel Aviv Safria orchards area Ashdod Nesher reservoir waste water utilization Ayalon-Latrun waste water utilization Dan Wastewater Treatment Facility (SAT) Lachish plant Kibbutz Ruhama Dvir Lahav Tekuma plant Hefetz Haim plant Ashkelon Adulam area Ashdod waste water south extension Pithat Shalom plant Beer Sheba Zohar lake 22

Effluent Quantity for Irrigation: 86 Percent of National Effluent Used % Next Steps (Improvements Within 5-7 Years): Israel will increase use of the total national effluent produced 23 each year from 86% to 90%

National Consumption: Agricultural Sector 2010 500 (48%) 400 (38%) 2050 350 (26%) 900 (67%) 144 (14%) 100 (7%) If effluent were not used in agriculture, desalinated water production would be required )a more costly alternative( to supply the agricultural sector s needs.

MCM Water Storage Recovery Plan Effective Storage Vs. Scenarios of Replenishment Green Line Measured in the end of the YEAR Assumptions: Agricultural Consumption in all scenarios: 550 MCM/Y Seawater Desalination Production: ~600 MCM/Y 25

Water Sector Development Development programs based on long term Master plan taking into consideration the population growth rate and its distribution and the rate of growth in consumption: Increased living standards Water for nature utilization Agricultural distribution and water consumption Political arrangements 26

Regulation: One decision making regulatory body Professional (not political) level Integrative approach Finance: Cost recovery for suppliers Fairness and uniformity for consumers Service Standards: Investments in infrastructure High quality standards for end users Governance Pillar

The country's water resources are public property, controlled by the state and are designated for the needs of its residents and the development of the country.. Water resources, for the purpose of this law, include: springs, streams, rivers, lakes, reservoirs, either surface or ground water, natural or artificial, standing or flowing, including drainage water and sewage.

Water Authority Board ONE table for decision making Member Public Representative Chairman Water Authority Member Public Representative Member Ministry of Finance Member Ministry of Agriculture Member Ministry of Environment Member Ministry of Infrastructures, Energy & Water Member Ministry of Interior

Water Playground Nature Agriculture Industry Future Generations Households Diplomatic Agreements 55 Municipal Water Companies 1000 local suppliers in the rural sector 30

Agriculture Water for agriculture 1,150 MCM/Y 450-530 MCM/Y constant quota (potable water) Water Authority development plans: Irrigation with recycled effluents in exchange of potable water quota release; Reform in water tariffs for agriculture and graduate replacement of subsidy through water tariff towards direct subsidy to farmers; Brackish water suitable for irrigation at low tariff. Triennial water quotas increased stability in planning. 31

Water Saving in Agriculture Water use efficiency (production output / water use) 1950-2008 Source: CBS and Planning Authority, MARD

Domestic Water Consumption 1996-2014* Per capita / annum *2014 estimated data

Economic Policy: Methodology for recognized costs of water suppliers 1. The Goal creating a transparent methodology for analyzing recognized costs that enable an efficient supply of water. 2. Providing resources for infrastructures needed for water supply and defining normative expenses components (& profit) essential for providing services whilst enhancing efficiency. 3. Creating regulatory environment that enables non-discriminatory consumers competition. 4. Creating regulatory environment that encourages the use of efficient water technologies.

The Reform in Water Tariffs The water tariffs were raised by approximately 40%. The principle of covering all costs providing resources for infrastructures needed for water supply and encourages water conservation. The principle of fairness or uniformity As a rule, all users of water in a given sector pay the same price, regardless of their location. 35

Water tariffs for the domestic sector: Two-block tariff system: Below 3.5 m3/person/month - the rate is USD 2.3/m3 Above 3.5 m3/person/month - the rate is USD 3.7/m3 Progressive pricing Encouraging conservation Cost recovery 36

Water tariffs for the domestic sector Since the reform in 2010: During the last two years (2014-2015) the water tariffs for the domestic use were reduced by 15%! The tariffs are in US$ per M 3 including VAT (1US$=3.5NIS) 37

Average tariff in NIS per 15 cubic meters in 2014 Tariffs for water and sewage services International comparison The water tariff in Israel covers 1.3 billion NIS for purchase of desalinated water Country 1$= 3.5 NIS 38

Water Tariff Components 2015 (in US$ without VAT): Average tariff 2.63 44% Municipal Companies Costs 1.15 18% Wastewater Treatment 0.47 4.5% Subsidies 0.12 22% Mekorot Costs 0.58 16% Desalination Water Purchase 0.43 Capital Costs 0.35 Operation Costs 0.50 Water and Collection Losses 0.30 1$ = 3.5 NIS -4.5% Differences from previous years - 0.12 Energy 0.15 Fixed Operation Costs 0.13 Capital Costs 0.25 Miscellaneous 0.05

Principals and Goals of the Israel Water Sector Reforms Water supply is a valuable commodity. The water tariffs enable the sustainability of reliable water supply, preserving the natural water resources and keeping clean environment. Reliable water and wastewater services; infrastructure development, efficiency and high service standards. Simple and transparent regulatory system that enables development and operation of the water sector.

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