The Economic Impact of Digital Transformation on Enhancing Water Resources Management Efficiency and Reducing Water Losses: An Applied Analytical Study of Libya’s Water Sector.

Abstract

This study aims to analyse the economic impact of digital transformation on improving water resources management efficiency and reducing water losses in Libya’s water sector. A quantitative analytical approach was employed through the development of an economic model integrating cost-benefit analysis and scenario analysis to assess the economic feasibility of investing in digital technologies used in water network management, including smart meters, sensors, and digital monitoring and control systems. The study developed three analytical scenarios based on reducing water losses by 10%, 20%, and 30%, using realistic assumptions regarding water production, water loss rates, and production costs in Libya. Several quantitative economic indicators were applied, including annual financial savings, cumulative economic benefits, return on investment, and payback period. The results revealed that the annual economic cost of water losses in Libya may reach approximately LYD 630 million. The implementation of digital transformation technologies could generate annual financial savings ranging from LYD 63 million to LYD 189 million, depending on the level of water loss reduction achieved. Over an assumed project lifetime of ten years, cumulative economic benefits were estimated to range between LYD 630 million and LYD 1.89 billion. The findings also indicated that the investment payback period ranges from approximately eight months to one year and eleven months, highlighting the strong economic feasibility of digital transformation initiatives in the water sector. The study concludes that digital transformation represents a strategic investment capable of enhancing operational efficiency, reducing economic losses, and supporting sustainable water resource management in Libya. It recommends adopting a national digital transformation strategy, strengthening digital infrastructure, and enhancing institutional capacities to support smart water management.