An analytical study of investment in the use of treated wastewater project in the Egyptian agricultural sector

Yehia Abd El-Rahman Yehia and M. M. Soliman Doaa Mamdouh
Department of Finance and Agricultural Cooperation Research, Agricultural Economics Research Institute (AERI), Agricultural Research Center (ARC), Giza, 12618, Egypt

Abstract

Yehia, Y. Abd El-Rahman., Mamdouh Doaa, M. M. S. (2022). An analytical study of investment in the use of treated wastewater project in the Egyptian agricultural sector. Bulg. J Agric. Sci., 28 (2), 250–264

Egypt is suffering from water scarcity and tried to pursue a package of policies to decrease the water deficit, by using unconventional resources like treated wastewater. Wastewater is 6.9 billion m3/year, the total of treated sewage is 5.1 billion m3 in 2019/20. The wastewater reuse potential in agriculture is 1 billion m3/year which leads us to question: What is the economic return on the use of treated sewage to reduce the water deficit and achieve targeted development? This paper aims to identify the value of investment projects in the sewage treatment sector and determine the cost and returns of treated wastewater in Agriculture by using (CBA) approach and indicators of financial analysis. The results prove that the binary stage is a commitment to the state and its responsibility to preserve the environment, the ratio of reuse of sewage to the total cost of wastewater treatment is 12%, while the ratio of the cost of compulsory treatment to the state to the total cost of wastewater treatment is 88%. It is expected that value add will increase and the benefits will be 22.5 billion L.E. The paper recommends encouraging investors to the wastewater treatment sector by setting up treatment units on their farms. NPV for the project is 388.71 Million L.E which means the project is greater than its cost, profitable, and, if the firm accepts the project, then the value of the firm would increase. PI for the project equals 1.2 Million L.E which means the investment in this project would be profitable and should be imple­mented and IRR is 16.4%, It is greater than the rate of cost of capital 14%, then investment in the concerned project would be profitable

Keywords: Treated Wastewater; Investment; EC 501; CBA; NPV
Abbreviations: L.E.: Egyptian Pound, NPV: Net Present Value, IRR: Internal rate of Return, PI: Profitability index, CBA: Cost Benefit Analysis

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