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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.

Suggested Citation

  • Strzepek, Kenneth M. & Yohe, Gary W. & Tol, Richard S.J. & Rosegrant, Mark W., 2008. "The value of the high Aswan Dam to the Egyptian economy," Ecological Economics, Elsevier, vol. 66(1), pages 117-126, May.
  • Handle: RePEc:eee:ecolec:v:66:y:2008:i:1:p:117-126
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    Cited by:

    1. Rehdanz, Katrin & Berrittella, Maria & S.J. Tol, Richard & Zhang, Jian, 2008. "The Impact of Trade Liberalization on Water Use: A Computable General Equilibrium Analysis," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 23, pages 631-655.
    2. 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.
    3. 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.
    4. Roberto Ponce & Ramiro Parrado & Alejandra Stehr & Francesco Bosello, 2016. "Climate Change, Water Scarcity in Agriculture and the Economy-Wide Impacts in a CGE Framework," Working Papers 2016.79, Fondazione Eni Enrico Mattei.
    5. Osman, Rehab & Ferrari, Emanuele & McDonald, Scott, 2015. "Water Quality Assessment SAM/CGE and Satellite Accounts Integrated Framework-Egypt," 89th Annual Conference, April 13-15, 2015, Warwick University, Coventry, UK 204292, Agricultural Economics Society.
    6. 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.
    7. 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.
    8. repec:spr:waterr:v:32:y:2018:i:3:d:10.1007_s11269-017-1847-7 is not listed on IDEAS
    9. Sheila M. Olmstead & Hilary Sigman, 2015. "Damming the Commons: An Empirical Analysis of International Cooperation and Conflict in Dam Location," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(4), pages 497-526.
    10. 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.
    11. Osman, Rehab & Ferrari, Emanuele & McDonald, Scott, 2015. "Water Quality Assessment SAM/CGE and Satellite Accounts Integrated Framework," 89th Annual Conference, April 13-15, 2015, Warwick University, Coventry, UK 204291, Agricultural Economics Society.
    12. 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.
    13. repec:wsi:ccexxx:v:08:y:2017:i:01:n:s201000781750004x is not listed on IDEAS
    14. Dritan Osmani, "undated". "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.
    15. Rehab Osman & Emanuele Ferrari & Scott McDonald, 2016. "Water Scarcity and Irrigation Efficiency in Egypt," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 2(04), pages 1-28, December.
    16. Bruce McCarl & Mark Musumba & Joel Smith & Paul Kirshen & Russell Jones & Akram El-Ganzori & Mohamed Ali & Mossad Kotb & Ibrahim El-Shinnawy & Mona El-Agizy & Mohamed Bayoumi & Riina Hynninen, 2015. "Climate change vulnerability and adaptation strategies in Egypt’s agricultural sector," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 20(7), pages 1097-1109, October.
    17. 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.
    18. repec:eee:ecolec:v:146:y:2018:i:c:p:621-632 is not listed on IDEAS

    More about this item

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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