Tewodros Negash Kahsay_2023 AGRODEP Annual Conference

Tewodros Negash Kahsay_2023 AGRODEP Annual Conference
The Economic Significance of the GERD to the Eastern Nile Economies Tewodros Negash Kahsay
Modeling framework and data Modeling framework The GTAP – W model Data GTAP 9 database International Model for Policy Analysis of Agricultural Commodities and Trade (IMPACT) model
Data aggregation  Regional aggregation 140 regions are aggregated into eight regions: Egypt, Ethiopia, Sudan, the Equatorial Lakes (EQL) region, Rest of East Africa, Rest of North Africa, Rest of Sub-Sahara Africa and Rest of the World (ROW).  Sector aggregation 68 sectors are aggregated into twenty sectors Eight are agricultural and twelve non-agricultural sectors  Endowments Five endowments in the standard GTAP model disaggregated into eight endowments in the GTAP-W model
Macro projection The base year of the GTAP 9 Database used for the study is 2011 Macro-projection implemented to update the baseline to 2020 The economic effect of the GERD is evaluated relative to this updated baseline equilibrium
Scenario design Two components of the analysis: First component: assessing the economic effects of GERD operation assuming it will be realized in 2024 (4 – year filling period) Main assumptions underlying GERD operation (% change) Ethiopia Sudan Egypt Hydroelectricity production +142.7 +35 -8 Capital stock +6.3 +3 0 Irrigation water supply 0 0 +3.6
Scenario design (continued) Second component In this stage, the economic cost of delaying GERD operation beyond 2024 is assessed What is the economic consequence to East Nile countries if GERD filling is extended beyond four years to up to 10 years? Economic repercussions of extending GERD operation is examined for six scenarios GERD operation realized in 5, 6, 7, 8, 9 and 10 years Results evaluated relative to 4 – year GERD operation
Simulation results Part I: Economic effects of GERD operation in 2024 The effect of GERD operation on real GDP 170 6788 1112 8070 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 Egypt Ethiopia Sudan Eastern Nile Basin Million USD
Simulation results (continued) The effect of GERD operation on economic growth 0.04 6.00 1.20 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 Egypt Ethiopia Sudan Percent
Simulation results (continued) The effect of GERD operation on household income and consumption expenditure 14.05 14.12 1.62 1.64 0.92 0.91 0 2 4 6 8 10 12 14 16 HH income HH consumption expenditure HH income HH consumption expenditure HH income HH consumption expenditure Ethiopia Sudan Egypt Percent
Simulation results (continued) Welfare effect of GERD operation  Measured in Equivalent variation: the amount of income that would have to be given to an economy before building the dam so as to leave the economy as well off as it would be after the dam has been built 1171 6834 1167 9172 0 2000 4000 6000 8000 10000 Egypt Ethiopia Sudan Eastern Nile Basin Million USD
Simulation results (continued) Part II: The economic consequences of extended GERD filling  Effect on Real GDP 170 140 152 165 179 194 210 6788 4990 4638 4151 3780 3780 3780 1112 842 840 839 837 835 834 8070 5972 5631 5155 4796 4809 4825 4 - YEAR 5 - YEAR 6 - YEAR 7 - YEAR 8 - YEAR 9 - YEAR 10 - YEAR MILLION USD GERD FILLING PERIOD Egypt Ethiopia Sudan Eastern Nile Basin
Simulation results (continued)  Effect on economic growth 0.04 0.03 0.03 0.04 0.04 0.04 0.04 1.5 0.9 0.7 0.53 0.41 0.32 0.25 1.2 0.92 0.91 0.91 0.91 0.9 0.9 4 - YEAR 5 - YEAR 6 - YEAR 7 - YEAR 8 - YEAR 9 - YEAR 10 - YEAR PERCENT GERD FILLING YEARS Egypt Ethiopia Sudan
Simulation results (continued)  Welfare effect 1171 930 1073 1220 1377 1551 1746 6834 4733 4257 3844 3471 3118 2774 1167 1032 1033 1035 1036 1039 1042 9172 6695 6363 6099 5885 5707 5562 4 - YEAR 5 - YEAR 6 - YEAR 7 - YEAR 8 - YEAR 9 - YEAR 10 - YEAR MILLION USD GERD FILLING PERIOD Egypt Ethiopia Sudan Eastern Nile Basin
Simulation results (continued) Loss in real GDP due to delayed GERD operations 30 158 297 448 612 790 1798 7140 12265 16787 20567 24347 270 1114 1955 2796 3635 4471 2098 8411 14518 20032 24815 29608 5 - YEAR 6 - YEAR 7 - YEAR 8 - YEAR 9 - YEAR 10 - YEAR MILLION USD GERD FILLING PERIOD Egypt Ethiopia Sudan Eastern Nile Basin
Simulation results (continued)  Welfare loss due to delayed GERD operation 170 310 462 626 805 999 6788 11778 16416 20567 24348 28128 1112 1954 2794 3633 4470 5306 8070 14042 19672 24827 29623 34432 5 6 7 8 9 10 MILLION USD GERD FILLING YEAR Egypt Ethiopia Sudan Eastern Nile Basin
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