Economic and hydrological impacts of the Grand Ethiopian Renaissance Dam on the Eastern Nile River Basin

We propose an ‘allocate-and-trade’ institution to manage the eastern Nile River Basin for Ethiopia, Sudan and Egypt as the basin faces a new reality of the Grand Ethiopian Renaissance Dam (GERD). We find that a social planner could increase the region's economic welfare by assigning water right...

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Bibliographic Details
Published in:Environment and development economics 2016-08, Vol.21 (4), p.532-555
Main Authors: Nigatu, Getachew, Dinar, Ariel
Format: Article
Language:English
Subjects:
Agreements
Agriculture
Alternative water use
Basins
Conservation
Dams
Economic models
Economic statistics
Economic theory
Economics
Environmental economics
Equilibrium
Hydroelectric power
Hydrology
Impact analysis
Income distribution
Irrigation
Natural resources
Optimization
Riparian rights
River basins
Rivers
Social interactions
Studies
Trade
Water markets
Water rights
Water use
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Summary:We propose an ‘allocate-and-trade’ institution to manage the eastern Nile River Basin for Ethiopia, Sudan and Egypt as the basin faces a new reality of the Grand Ethiopian Renaissance Dam (GERD). We find that a social planner could increase the region's economic welfare by assigning water rights to the riparian states. An alternative intrabasin water rights arrangement and trade could achieve more than 95 per cent of the welfare created by the social planner. GERD will change both the economic benefits and hydrological positions of the riparian countries. Economic benefits from alternative water use would be sufficient to make riparian countries better off compared with the status quo. Furthermore, riparian countries could raise more than US$680 m annually for protecting and conserving the natural resources of the region.
ISSN:1355-770X
1469-4395
DOI:10.1017/S1355770X15000352