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Economy

New Nile water-sharing agreement promises major shifts in economies of riparian states

A general view of Cairo on both sides of the Nile River. The river holds great economic potential for the entire basin. Photo/FILE
A general view of Cairo on both sides of the Nile River. The river holds great economic potential for the entire basin. Photo/FILE 

Water, the unlikely commodity that is expected to shape humanity’s future is threatening to direct public policy in Eastern Africa with the Nile -- the body of water that has for centuries shaped regional politics and social relations as its driver.

The Nile is a typical example of a transboundary water resource — one of many around the world that support 40 per cent of the globe’s population.

Stretching for 6,650km and serving 10 riparian countries of the Democratic Republic of Congo (DRC), Burundi, Rwanda, Tanzania, Uganda, Kenya, Ethiopia, Eritrea, Sudan and Egypt, the River Nile basin covers an area of three million square kilometres and supports the livelihoods of about 160 million people.

As the population of the region rises, demand for water for agricultural and industrial uses is expected to rise.

The Nile holds great economic potential for the entire basin.

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Except for Egypt and Kenya, all the riparian countries are among the world’s top 50 poorest nations with high susceptibility to famine and disease.

This disparity underscores the gravity and urgency of tackling the region’s problems with poverty alleviation and environmental sustainability being the guiding principles.

The genesis of the issue is a 1929 agreement between the British and Egypt, and the 1959 agreement between Egypt and Sudan that granted only Egypt and Sudan an absolute right to use the Nile waters.

This has impeded development of large-scale water-consuming projects in most of the other upstream countries because Egypt must veto such investments.

It is therefore not surprising that the other countries have expressed doubt over the validity of the agreement and asked for its revocation and entrenchment of a new framework that would guarantee a more equitable and efficient use of the Nile waters.

The recent attempt to agree on the Nile River Basin Cooperative Framework will formulate a mechanism that would accommodate other riparian nations in realising the benefits of the river.

From the view point of economics, the joint management of the river will optimise the mutual social and economic gains.

As a first step, water as a production factor in irrigation and energy generation can be enhanced through the cooperative management arrangements.

Currently, only Egypt and Sudan have the exclusive right to use Nile waters for large-scale irrigation.

As a consequence therefore, other riparian states have to depend on rain-fed agriculture.

Weather-dependent agricultural production is highly risky and discourages investment in modern production technologies, especially among poor households.

Research has revealed that most small-scale farmers are considerably hesitant to use chemical fertilisers, soil conservation techniques and other yield-enhancing technologies in rain-fed agriculture.

Providing water for irrigation is a first step in motivating smallholders to embrace modern production technologies as the adverse effects of weather variability are minimised.

As more people in the Nile Basin get access to water for irrigation, crop production in the region will increase, food security will be enhanced and agro-based industries will increasingly spring up.

All that is needed is an agreement on how to efficiently share water for this purpose.

But the benefit of irrigation goes beyond just food security and increased agricultural production.

Large irrigation projects upstream are effective in controlling floods downstream, and could be useful as permanent solution to the floods menace in the lowlands within the Nile Basin such as Kano plains and Budalangi in Kenya.

Thus, irrigation projects can be viewed as a means of ensuring security of farm assets and livelihoods against floods and ease off the funds that were hitherto spent on emergency for alternative development projects.

Arguably, increased and uncoordinated harnessing of the water for irrigation may deplete the river for some users due to the inherent dangers of open access.

This is the major reason transboundary water co-operation must ensure that water management is economically and socially sustainable.

Article 10 of the agreement on the co-operative framework (CFA), signed in 2010, emphasises subsidiarity in development and protection of the River Nile Basin as a vehicle through which local communities can maximise their gains from the Basin’s waters.

This article gives communities power to participate in planning and implementing projects that affect them within the Basin.

Participatory management is useful not only in ensuring that the local communities protect the Basin’s resources but also that these communities are appropriately rewarded through equitable benefit sharing.

Participatory management creates a sense of ownership, enhances proper utilisation and binds the communities to protect and conserve the Basin’s resources.

Diversify livelihoods

It also enables the different communities to diversify their livelihoods, income sources for general welfare.

The recently amended cooperative framework of agreement (CFA) could enhance efficiency in use of water.

There are mechanisms for ensuring equity and efficiency in the use of water.

For example, countries could have their quotas which are transferable such that more efficient users are able to sell the excess of their allocation to the less efficient ones.

Alternatively, countries could be charged for the volume of water used to discourage wasteful consumption of water, which could be a potential source of funds for conservation programmes.

More efficient users may also be subsidised while less efficient users are taxed so as to motivate investment in technology improvement.

Research shows that another way of enhancing efficiency is using the water upstream for electricity generation before freeing for downstream uses such as irrigation and fish farming (aquaculture).

In this respect, the upstream riparian states could specialise and expand investment in energy production for basin-wide use while downstream riparian states could specialise in crop production through irrigation and culture fisheries, a move that would facilitate trade and lead to basin-wide welfare improvement.

Although Egypt has a water storage mechanism which could reduce loss of water into the Mediterranean Sea, a lot of water is still lost through evaporation due to the country’s location in the Sahara desert.

Through the new cooperative management, this problem could be contained by means of construction of storage infrastructure upstream where evaporation has little effects on water quantities.

Article 4 under Rights and obligations of the new Nile Basin co-operative management framework envisages equitable and reasonable utilisation of the Nile basin waters.

This implies optimal and sustainable utilisation.

To achieve this, the riparian countries will consider social and economic factors such as the needs, population, contribution to Nile waters and economy of use of the basin’s waters of each state.

Other key factors that the cooperative framework promises to consider are:

(i) effects of use of the waters by one state on other states,

(ii) existing and potential uses of the waters in each riparian state and

(iii) protection and conservation measures being implemented by each state.

When these factors are faithfully dealt with, efficiency will be realised by:

(a) countries resolving to put the water to only profitable uses;

(b) more efficient users being allocated more access to water for increased total benefits which could be shared on an agreed basis;

(c) countries being compelled to implement water-efficient technologies; and

(d) collective action being instituted against polluters.

The new co-operative framework has the potential of providing opportunities beyond the exploitation of water resources among the riparian states.

Volume of trade, cross-border infrastructural development and emergence of industrial conurbations are economic possibilities that can result from the arrangement.

Economic activity

The Rhine basin in Europe and Mekong River basin in South East Asia are typical illustrations of importance of river basins for triggering economic activity and contributing to economic development of a large geographical area.

Other potential areas for transboundary co-operation include technology transfer, research and development, human capital development, information sharing and climate change mitigation and adaptation, all of which have a direct bearing on economic growth and development.

The new cooperative management may also be useful for inter-riparian financing.

Within the basin, countries could agree to co-fund a project in another country.

Alternatively, where countries are at different levels of development endowment, richer countries could help in funding projects in the poorer member states.

It is only unfortunate that most of the Nile River Basin countries are poor.

This not withstanding, these countries have the potential of jointly raising funds or bidding for a development loan for major projects with basin-wide benefits.

This presents an opportunity to locate projects where lowest costs would be incurred and highest benefits realised.

For example, instead of Egypt producing meat from irrigated pasture, upstream countries like Kenya, Uganda and Ethiopia could produce meat from rain-fed pasture while Egypt could specialise in production of high value irrigated crops such as rice and horticultural crops.

Article 7 of the new co-operative framework concentrates on data and information sharing on conditions of the Basin’s water resources.

Should one country demand information from another and this information is not readily available, the requested country has the obligation to collect it so long as the requesting country facilitates the process.

On this basis, the countries downstream may be forewarned by upstream countries of harmful conditions noted so that they take precautionary measures in their use of the water.

The Nile the River Basin Commission shall provide the channel through which data and information shall be shared as well as rules and procedures that the partner states shall adhere to.

If well executed, this could include transboundary early warning system that could minimise losses of life and property due to, say, floods.

It is easier for a group of countries acting together to manage a transboundary resource to win the support of the donor community or multilateral funding agencies, partly because such arrangements have larger impacts on poverty alleviation and partly because, as a group, the countries may easily repay.

Development of the institutional framework of the Nile Basin Initiative, for instance, was facilitated by the World Bank and this enhanced donor confidence in its sustainability and effectiveness.

Under the new co-operative framework of agreement, resource protection of water resources and their surrounding ecosystems is a primary concern of transboundary water co-operation in order to maintain biodiversity, ecological integrity as well as the viability of ecosystems.

This is important for tourism development and other ecosystem services such as carbon sequestration, ambiance and water purification.

Many of the Nile riparian countries depend on tourism to the extent that anything that disturbs the tourism industry ends up interfering with economic development.

Specific activities that could be enhanced through cooperative management include conservation of the catchment areas through tree planting, control of soil erosion and pollution, and proper land use plans.

Such stewardly investments by the upstream countries (e.g. Kenya or Uganda) could also be compensated by the downstream users through mechanisms set out and agreed on in the cooperative management Plans.

At the same time, the downstream riparian countries (Sudan and Egypt) can be compensated by upstream countries for, say, construction of additional storage capacity.

For non-quantifiable costs and benefits such flood mitigation, regulation of run-off and water supply, it may be important to use a special approach like payment of ecosystem services (PES).

Riparian countries

Article 5 demands of the riparian countries to utilise the water resources in a manner that does not cause significant harm to other member states.

According to the cooperative management framework, preventive actions will be undertaken by riparian countries either individually or jointly.

Where such harm occurs, the country responsible is required to take appropriate corrective measures or compensate the countries affected.

This compels all the riparian countries to be responsible in harnessing of water resources and ensures ecosystem sustainability to the advantage of biodiversity and related industries.

However, it must be accepted that the concept of “significant harm” is still vague and may need to be clearly defined.

As far as protection and conservation of the River Nile ecosystem is concerned, responsibilities of the riparian countries include:

(i) protecting and improving water quality within the Nile River Basin;

(ii) preventing introduction of alien and new species which have the potential of damaging the ecosystem;

(iii) protecting and conserving biodiversity;

(iv) conserving wetlands within the Basin; and

(v) rehabilitating the natural resource base.

The Nile River Basin Commission will provide the lead in harmonising policies of the riparian countries in realising this objective.

In this respect, it is imperative to note that protection and conservation of transboundary water resources requires collective action rather than disjointed individualised approaches.

The motive force behind this is that any country that errs can be held accountable by the other members and the dangers of open access are identified and conclusively dealt with.

The riparian states are advised to conduct Environmental Impact Assessment (EIA) for projects that are likely to impact negatively on the Nile River Basin, taking into account local effects as well as effects on other partner countries.

River Nile Basin Commission will set the criteria that countries will use to determine whether or not an activity is bound to have adverse environmental impacts, a move that will ensure uniformity among the member states.

Criteria for environmental audit will also be developed by the Commission, and may involve the other riparian states that are also affected by the activities of the country being audited.

Thus, this article provides a legal framework through which an affected country can forward complaints and have it objectively addressed.

Perhaps the only limitation of this is that EIA is project based and may be unable to disclose sector-wide effects of an activity but it may be addressed by introduction of Institutional Strategic Environmental Assessment (ISEA).

River Basin is a common pool resource in the sense that its use by one riparian reduces benefits to the other member countries.

In other words, water use in one location has external effects in other regions of the basin.

Unless such adverse effects are internalised, benefits to society are reduced as inferior outcomes are realised.

This connotes competition for water among the upstream and the downstream users which can be an unnecessary recipe for destructive conflicts.

Basin-level cooperation provides channels for resolving such conflicts and discussing modalities of sharing the basin-wide benefits.

The new co-operative framework emphasises the need for all the Nile basin countries to co-operate in order to achieve and sustain water security, and not significantly affect water security of any other member state.

The cooperative framework also defines peaceful resolution of disputes as an important principle.

While the benefits of new co-operative management of trans-boundary waters are not in doubt, success of such arrangement is dependent on a myriad of complex factors:

(i) sincere political commitment and will at all levels;

(ii) appropriate legal instruments to guide the operations of the cooperation;

(iii) adequate institutional framework and capacity with well defined mandates and powers at national, trans-boundary and regional levels;

(iv) multi-sectoral approach in planning;

(v) joint monitoring and audit, and continuous sharing of information;

(vi) participatory planning and management; and

(vii) equitable sharing of costs and benefits.

Poverty alleviation

The Nile Basin, like other transboundary water bodies, provides hydrological, social and economic inter-dependence among the riparian states.

This is important for economic development, poverty alleviation, and general realisation of the Millennium Development Goals (MDGs).

But the potentials for conflicts must not be under-rated.

However, with carefully crafted and all-inclusive management framework coupled with appropriate institutional edifice, the Basin can be transformed into an instrument for fostering sustainable regional peace and security as well as economic growth.

All that is needed is for the riparians to think positively and widely, ignore micro interests and focus on the basin-wide interests.

At individual country level, some losses may be registered but at basin level, marginal social benefit is expected to rise, marginal social cost is expected to fall and general welfare improvement is expected to be realised.

The key concerns should therefore be on how to maximise the gains and how to compensate the losers.

Dr Omiti and Mr Ogada are policy analysts with the Kenya Institute for Public Policy Research and Analysis (KIPPRA).

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