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

Published online by Cambridge University Press:  09 November 2015

Getachew Nigatu  and
Ariel Dinar
Getachew Nigatu
Affiliation:
Market and Trade Economics Division, ERS/USDA, 335 E St. SW, Washington, DC 20024, USA. Tel: (202) 694-5303. E-mail: [email protected]
Ariel Dinar
Affiliation:
School of Public Policy, University of California, Riverside, CA, USA. E-mail: [email protected]
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Abstract

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.

Type
Research Article
Information
Environment and Development Economics , Volume 21 , Issue 4 , August 2016 , pp. 532 - 555
Copyright
Copyright © Cambridge University Press 2015 

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