An empirical analysis of irrigation modernization projects using the CGE model

Water resources are indispensable for human existence and agricultural irrigation, particularly in countries where the agricultural sector occupies a substantial proportion of the gross domestic product (GDP). Consequently, improving agricultural water-use efficiency has become a critical strategic choice. Egypt is one of the countries in the world that falls below the water poverty line, and the water scarcity in Egypt has been exacerbated over the last several years. Sustainable growth and food security in Egypt necessitate more efficient use of the country’s water resources, particularly in the irrigation of crops and livestock. Therefore, this study analyzed the potential economic and social impacts of irrigation infrastructure development on Egypt’s economic growth. Furthermore, it sought to ascertain whether investments directed toward irrigation modernization projects are sufficient to alleviate Egypt’s water crisis, an essential question for Egyptian policymakers. The computable general equilibrium model was employed on the basis of a social accounting matrix for the Egyptian economy in its latest edition for the base year 2015. This study employed the latest version of the Agriculture Investment for Development Analyzer, developed by the International Food Policy Research Institute, which provided a more holistic account of the agricultural sector and a high diversity of population details. The results show that the effects of investments in irrigation are favorable for the economy but are relatively modest. Furthermore, the increase in investments in irrigation improves production in most sectors. Moreover, the GDP is anticipated to increase by 0.05% by 2030. In conclusion, adopting the modernization process for irrigation will enable Egypt to observe the success of the modernization program under various scenarios. Indeed, efforts to achieve irrigation modernization are insufficient heretofore. Finally, this study recommends that Egyptian policymakers invest more in developing irrigation infrastructure.