Impact of a New Nile Basin Agreement on the Economy of Egypt: Shared Water and Benefits . Kenneth Strzepek MIT and UNU-WIDER Sherman Robinson IFPRI Brent Boehlert Industrial Economics, Inc.
Transcript
Kenneth Strzepek Impact of a New MIT and UNU-WIDER Sherman
Robinson Nile Basin Agreement IFPRI on the Economy of Egypt: Brent
Boehlert Shared Water and BenefitsIndustrial Economics, Inc. .
Introduction Purpose of study Assess Impact of the Upstream
Nile Development on Egypts economy from an economy-wide perspective
Analytical tools Nile Hydrologic Model Operational model of
Egyptian Water System A dynamic CGE model of Egypt that takes the
hydropower and irrigation water supply from Water Model Page 2
Source of Nile Inflow to EgyptBlue Nile 59%Sobat 14%River
Atbara 13%Bahr El Jebel 14%85% Ethiopian plateau15% African
riparian countries Page 3
Page 4
WITHIN YEAR VARIATION Mean Monthly Nile Flow at Aswan 25.0
Winter Crops Summer Crops 20.010^9 cubic meters 15.0 10.0
Navigation Minimum Flow 5.0 0.0 Aug Sep Oct Nov Dec Jan Feb Mar Apr
May Jun Jul
Allocation of Nile Waters 1959Average Annual Nile Flow
84.0Allotment to the Sudan 18.5Inflow to ASWAN 65.5Reservoir Losses
(10.0)Allotment to Egypt 55.5
Hydropower Development on Blue Nile Page 7
Worst Case Impact on Egypt of Upstream Development via a New
Agreement A historical 53 year record Impose the worst 5 year
Drought on Record on the decades of the 2010s, 2020s, 2030s, 2040s
Full Ethiopian Irrigation of Blue Nile by 2020 Rapid completion of
All Blue Nile Dams & rapid filling Driest Climate Change
Scenario to 2050. Equally unlikely is increased Blue Nile flows.
Page 8
Nile Inflow Scenarios Page 9
HAD Lake Level Scenarios Page 10
Hydropower Production Scenarios Page 11
Irrigation Supply Scenarios Page 12
Examine Economy-wide Impacts of these Changes in Hydropower and
Irrigation Supply via a CGE Model CGE models are widely applied to
policy analysis Good for analysis of: policy changes affecting one
sector if the feedback effects are large, making partial
equilibrium analysis misleading policy changes that simultaneously
affect different sectors in the economy Page 13
Schematic of EGYPT CGE Model Factor Domestic Private Savings
Factor Markets Wages Costs & Rents Gov. Savings Taxes
Intermediate Input Cost Households Government Sav./Inv.Activities
Transfers Private Government Investment Product Consumption
Consumption Demand Domestic Markets Sales Imports Foreign Transfers
Exports Foreign Savings Rest of the World
Model AggregationDisaggregation of factors, institutions, and
activitiesInstitutions (12) - Households (rural and urban, by
quintile) - Government - Rest of the worldFactors of - Capital
(agricultural and nonagricultural)production (5) - Labor
(agricultural and nonagricultural) - Water - Summer land - Winter
land
Ag GDP as % of TOTAL Page 17
Page 18
Dynamic Role of Water in Egyptian Economy GDP Change vs. HAD
Releases Page 19
Unmitigated Economic Impacts 2020 - 3 years of 2.5 % loss of
Total Energy 50% Hydropower Production 5% of Total 2020 - 2 years
of 35% loss irrigation supply 2020 - 2 years of 1.5% GDP loss and 1
year of .5% GDP loss These type of economic variations were
commonly observed pre-HAD . This same water impacts on the economy
of the 2040s would be close to zero impact. Page 20
Potential Measures to Mitigate Impacts In Egypt Unilaterally
Irrigation Management Improvement Alternative Crop Selection
Conversion of Flood Control Storage Regional Collaboration A new
Nile Basin agreement on water sharing Ethiopia refrain from
Reservoir Filling during Drought years Sudan and Ethiopia reduce
irrigation consumption during Drought African Regional Power Pool
makes up electricity shortfall Increased and secure agricultural
imports Long-term importing of low cost electricity from Ethiopia
accelerates the movement away from Nile dependent economy in Egypt,
reducing impacts of reduced Nile Flow. Page 21
Conclusion Long-term economic impacts of upstream Nile
Development on Egypt are significant in early decades, but
decreasing over time Even worst case scenarios are manageable Egypt
will benefit if it receives low cost electricity produced by Nile
hydropower Egypt would benefit in times of drought through a
regional management of the Nile flows Many of Egypts economic
impacts can be greatly reduced by regional cooperation and sharing
of the benefits of Nile Development. Page 22