1. 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 Benefits
Industrial Economics, Inc.
.

2. Introduction
• Purpose of study
• Assess Impact of the Upstream Nile
Development on Egypt’s 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
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3. Source of Nile Inflow to Egypt
Blue Nile 59%
Sobat 14%
River Atbara 13%
Bahr El Jebel 14%
85% Ethiopian plateau
15% African riparian countries
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4. Page 4

5. WITHIN YEAR VARIATION
Mean Monthly Nile Flow at Aswan
25.0
Winter Crops Summer Crops
20.0
10^9 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

6. Allocation of Nile Waters 1959
Average Annual Nile Flow 84.0
Allotment to the Sudan 18.5
Inflow to ASWAN 65.5
Reservoir Losses (10.0)
Allotment to Egypt 55.5

7. Hydropower Development on Blue Nile
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8. 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.
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9. Nile Inflow Scenarios
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10. HAD Lake Level Scenarios
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11. Hydropower Production Scenarios
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12. Irrigation Supply Scenarios
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13. 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
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14. 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

15. Model Aggregation
Disaggregation of factors, institutions, and activities
Institutions (12) - Households (rural and urban, by quintile)
- Government
- Rest of the world
Factors of - Capital (agricultural and nonagricultural)
production (5) - Labor (agricultural and nonagricultural)
- Water
- Summer land
- Winter land

16. Ag GDP as % of TOTAL
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17. Page 18

18. Dynamic Role of Water in Egyptian Economy
GDP Change vs. HAD Releases
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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.
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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.
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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 Egypt's economic impacts can be greatly
reduced by regional cooperation and sharing of the
benefits of Nile Development.
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