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The value of the high Aswan Dam to the Egyptian economy

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  • Strzepek, Kenneth M.
  • Yohe, Gary W.
  • Tol, Richard S.J.
  • Rosegrant, Mark W.

Abstract

The High Aswan Dam converted a variable and uncertain flow of Nile river water into a predictable and controllable water supply stored in Lake Nasser. We use a computable general equilibrium model of the Egyptian economy to estimate the economic impact of the High Aswan Dam. We compare the actual 1997 economy to the 1997 economy as it would have been if historical pre-dam Nile flows (drawn from a 72Â year portrait) had applied (i.e., the Dam had not been built). The steady water supply sustained by the High Aswan Dam increased transport productivity, and year round availability of predictable and adequate water sustained a shift towards more valuable summer crops. These static effects are worth EGP 4.9Â billion. Investments in transport and agriculture increased as a consequence; these investments, assuming that Egypt is a small open economy, added another EGP 1.1Â billion to the value of the Dam. The risk premium on the reduced variability is estimated to be EGP 1.1Â billion for a modest risk aversion, and perhaps EGP 4.4Â billion for a high risk aversion. The total gain of EGP 7.1Â billion to 10.3 EGP billion equals 2.7% to 4.0% of annual GDP in 1997.

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Bibliographic Info

Article provided by Elsevier in its journal Ecological Economics.

Volume (Year): 66 (2008)
Issue (Month): 1 (May)
Pages: 117-126

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Handle: RePEc:eee:ecolec:v:66:y:2008:i:1:p:117-126

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Web page: http://www.elsevier.com/locate/ecolecon

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  1. Anthony Letsoalo & James Blignaut & Theuns de Wet & Martin de Wit & Sebastiaan Hess & Richard S.J. Tol & Jan van Heerden, 2005. "Triple Dividends Of Water Consumption Charges In South Africa," Working Papers FNU-62, Research unit Sustainability and Global Change, Hamburg University, revised Apr 2005.
  2. Lofgren, Hans & El-Said, Moataz, 2001. "Food subsidies in Egypt: reform options, distribution and welfare," Food Policy, Elsevier, vol. 26(1), pages 65-83, February.
  3. Harold A. Thomas, Jr. & Roger Revelle, 1966. "On the Efficient Use of High Aswan Dam for Hydropower and Irrigation," Management Science, INFORMS, vol. 12(8), pages B296-B311, April.
  4. Decaluwe, B. & Patry, A. & Savard, L., 1999. "`When Water Is No Longer Heaven Sent: Comparative Pricing Analysis in an AGE Model," Papers 9905, Laval - Recherche en Politique Economique.
  5. Goodman, D. Jay, 2000. "More Reservoirs Or Transfers? A Computable General Equilibrium Analysis Of Projected Water Shortages In The Arkansas River Basin," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(02), December.
  6. Sherman Robinson & Andrea Cattaneo & Moataz El-Said, 2001. "Updating and Estimating a Social Accounting Matrix Using Cross Entropy Methods," Economic Systems Research, Taylor & Francis Journals, vol. 13(1), pages 47-64.
  7. Diao, Xinshen & Roe, Terry, 2003. "Can a water market avert the "double-whammy" of trade reform and lead to a "win-win" outcome?," Journal of Environmental Economics and Management, Elsevier, vol. 45(3), pages 708-723, May.
  8. Perry, C. J., 1996. "Alternative approaches to cost sharing for water service to agriculture in Egypt," IWMI Research Reports H 18207, International Water Management Institute.
  9. Perry, C. J., 1996. "Alternative approaches to cost sharing for water service to agriculture in Egypt," IWMI Books, Reports H018207, International Water Management Institute.
  10. Wichelns, Dennis, 2002. "Economic analysis of water allocation policies regarding Nile River water in Egypt," Agricultural Water Management, Elsevier, vol. 52(2), pages 155-175, January.
  11. Löfgren, Hans & Harris, Rebecca Lee & Robinson, Sherman, 2001. "A standard computable general equilibrium (CGE) model in GAMS," TMD discussion papers 75, International Food Policy Research Institute (IFPRI).
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Cited by:
  1. Dinar, Ariel, 2012. "Economy-wide implications of direct and indirect policy interventions in the water sector: lessons from recent work and future research needs," Policy Research Working Paper Series 6068, The World Bank.
  2. Alvaro Calzadilla & Katrin Rehdanz & Richard S.J. Tol, 2008. "Water Scarcity And The Impact Of Improved Irrigation Management: A Cge Analysis," Working Papers FNU-160, Research unit Sustainability and Global Change, Hamburg University, revised Apr 2008.
  3. Brouwer, Roy & Hofkes, Marjan, 2008. "Integrated hydro-economic modelling: Approaches, key issues and future research directions," Ecological Economics, Elsevier, vol. 66(1), pages 16-22, May.
  4. Maria Berrittella & Katrin Rehdanz & Richard S.J. Tol & Jian Zhang, 2007. "The Impact Of Trade Liberalisation On Water Use: A Computable General Equilibrium Analysis," Working Papers FNU-142, Research unit Sustainability and Global Change, Hamburg University, revised Aug 2007.
  5. Alvaro Calzadilla & Katrin Rehdanz & Richard S.J. Tol, 2008. "The Eonomic Impact Of More Sustainable Water Use In Agriculture: A Computable General Equilibrium Analysis," Working Papers FNU-169, Research unit Sustainability and Global Change, Hamburg University, revised Dec 2008.
  6. Gohar, Abdelaziz A. & Ward, Frank A., 2010. "Gains from expanded irrigation water trading in Egypt: An integrated basin approach," Ecological Economics, Elsevier, vol. 69(12), pages 2535-2548, October.
  7. Dritan Osmani, . "A note on optimal transfer schemes, stable coalition for environmental protection and joint maximization assumption," Working Papers FNU-176, Research unit Sustainability and Global Change, Hamburg University.
  8. Morimoto, Risako, 2013. "Incorporating socio-environmental considerations into project assessment models using multi-criteria analysis: A case study of Sri Lankan hydropower projects," Energy Policy, Elsevier, vol. 59(C), pages 643-653.
  9. Roberto Ponce & Francesco Bosello & Carlo Giupponi, 2012. "Integrating Water Resources into Computable General Equilibrium Models - A Survey," Working Papers 2012.57, Fondazione Eni Enrico Mattei.

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