The value of the high Aswan Dam to the Egyptian economy
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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