The economics of developing water resource projects in the Ethiopian Nile River basin : their environmental, and transboundary implications

Mekonnen, Kefyalew. (2003). The economics of developing water resource projects in the Ethiopian Nile River basin : their environmental, and transboundary implications PhD Thesis, School of Natural and Rural Systems Management, The University of Queensland.

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Author Mekonnen, Kefyalew.
Thesis Title The economics of developing water resource projects in the Ethiopian Nile River basin : their environmental, and transboundary implications
School, Centre or Institute School of Natural and Rural Systems Management
Institution The University of Queensland
Publication date 2003
Thesis type PhD Thesis
Supervisor Dr Malcolm Wegener
Total pages 342
Language eng
Subjects 12 Built Environment and Design
Formatted abstract
This thesis investigated and evaluated the economics of water development projects by farm households in the Nile River basin of Ethiopia. Water resources of the Nile River basin are not only scarce but also shared among several countries and have the potential of becoming a major source of conflict. More than 86% of the entire flow of the Nile River originates in Ethiopia but less than 1% of it is used in that country. In contrast, a negligible volume of the Nile River water originates from countries in the lower part of the basin, in Sudan and Egypt. Over 97% of the flow of the Nile River has traditionally been used by these countries. The fact that such a large volume of Nile water is controlled by downstream users makes this case different from many other transboundary rivers in other parts of the world.

The thesis provides information on two major conflicting issues. Firstly, the Nile River is a major source of freshwater, especially in Egypt, where the whole country depends on the Nile River for its fresh surface water. Secondly, Ethiopia is a country where drought and poor economic performance have degraded the quality of life, but about 65% of the country's rivers drain into neighbouring countries, leaving little option other than seeking to exploit its undeveloped water resources for irrigation, taking care to limit the impact on those who might be affected downstream. Egypt's lack of other sources of freshwater makes the demand for water more intense than elsewhere in the basin.

These are some of the considerations that led to initiation of the research carried out and reported in this thesis through the assessment and evaluation of irrigation development projects in the Ethiopian Nile River basin. The work was carried out to investigate some novel ways of developing irrigation schemes that would minimise effects on the existing fragile environment and perhaps confirm Ethiopia's current irrigation development plans for its part of the Nile River basin.

The situation in the Nile basin is so complex that it needs to be looked at from different angles using various methods. The research methods reported in this thesis involved a field survey that used various qualitative as well as quantitative techniques. The field survey carried out at farm household or “grassroots" level in the Ethiopian Nile basin examined whether the intended small-scale irrigation developments have sufficient socioeconomic impact on farm households. It was revealed that irrigation m Ethiopia has many roles to play, including improved food security, alleviating rural poverty, and slowing the decline in the area of dryland controlled by households due to the high rate of population growth. Irrigation would allow double or triple cropping on a small section of the farm, increasing marginal productivity of the land, boosting farmers' cash income, and improving the livelihood of farm families.

An extensive literature review was carried out in order to be able to comment on the legitimacy of Ethiopia's plan to use Nile water, from the viewpoints expressed in the principles of international law that relate to international waters, and by reviewing several existing transboundary water agreements. The outcome of both reviews clearly implied that Ethiopia has the right to use Nile River water, provided they use it equitably and without reducing significantly its availability for use by others. The real situation is, however, that almost the entire flow of the Nile River is already being used by Sudan and Egypt (the latter country is even demanding additional water) and there is no unused Nile water available to Ethiopia for current or future irrigation developments unless water is made available through technical or political means.

This thesis has focused on ways to find a solution for the problems in the basin by adopting quantitative and more technically oriented research methods. The study sought to find out how much water is physically available but also how might marginal productivity of water be maximised. It has tried to show how water use can be made more efficient, both physically and economically, and to describe methods that can be applied in order to save water for use by others.

Evaluation of physical water use efficiency involved analysing techniques used for water harvesting, storage, and delivery to irrigation fields. This was carried out by modifying the Runoff Storage Irrigation Model (RUSTIC) originally developed by Queensland Department of Primary Industries. RUSTIC was found to be a useful tool that helped to estimate the amount of water able to be delivered to a range of crops under various irrigation methods. In order to do that, it had to be able to estimate the quantity of water harvested and stored for use in potential reservoirs, the amount of water lost by evaporation, by infiltration, through seepage, and the amount lost by overflow.

This helped to make better decisions on how much and when to irrigate, how much to keep in the reservoir and how much to release for other users at the lower parts of the basin. Thus, the RUSTIC model showed that the storages in two of the case-study schemes operated at more than 97% reliability over the 49 years testing period, and that about half of the water that might be used, could be saved by choosing drip irrigation. While RUSTIC is capable of estimating the physical information about water use, it does not involve any economic analysis such as choice of the most economic crop mix or the lowest cost irrigation method.

Using some of the outputs from the RUSTIC model, such as crop water requirements and other data collected from the case-study sites, a mathematical programming model was used to undertake an economic evaluation of farming options for each case-study site. The economic evaluation focused on maximising gross family cash income, where best crop-mix was associated with the most efficient irrigation method. It was also able to save water while at the same time meeting the farm family' s food and cash requirements. The mathematical programming was automatically linked to a benefit cost analysis package to appraise the economic desirability and financial viability of each project. This was assessed at the irrigation scheme level with a sensitivity analysis using Monte Carlo simulation.

Values for key input variables that were drawn from appropriate probability distributions were used to construct risk profiles of important project evaluation criteria. Automatic linking of Runoff Storage Irrigation Model (RUSTIC) with the Linear Programming model (LP) and the Benefit Cost Analysis (BCA) module, for which risk was analysed based on Monte Carlo simulation technique using @Risk program, as RUSTIC => LP => BCA<=>MonteCarloSimulation, allowed the author to check the distribution of output variables. That is, the model could be altered by entering multiple input variables and the respective values of output variables would all change at the same time. The steps described to interlink the techniques just mentioned did enable the complex issues that are involved in dealing with transboundary river water resources planning and development to be handled in a holistic manner.

Consequently, the results from the techniques described above were capable of showing the best crop mix to be grown under drip irrigation on each of the case-study irrigation projects. The results indicated that, on average, about 48% of the irrigation water that could have been used was saved as a result of choosing drip irrigation. This implies that a huge quantity of water could be saved by using drip irrigation m Egypt and Sudan where evaporation is high. The model has also resulted in saving over 35 % of the energy required per megalitre of water delivered to the crop roots as a result of choosing drip instead of sprinkler irrigation. Surface irrigation does consume the least amount of energy but it has other disadvantages compared to sprinkler and drip irrigation.

The model has indicated that farmers' welfare would be significantly improved with irrigated agriculture. For example, the farmers m the Northern Nile River Basin of Ethiopia, (such as m the Zana case-study area of the Amhara Regional State) were not self-sufficient in food from their existing dryland which is on average below 1.2 ha per family but an additional 0.15 hectares of irrigated land (assuming double cropping and using less than 0.5 megalitre of water per cropping period) was sufficient to overcome the family's existing food deficit which ranged up to 400 kilograms of cereal equivalent per household per year. With irrigation the farmers were even able to generate about Birr 6,470 gross cash income per year (labour cost not included in the model).

The incremental net present values of the projects examined were up to Birr 168,960 per household (depending on area of irrigated land) implying the projects are financially viable and economically desirable. The risk simulation analysis has also indicated that the net present values and internal rates of return for each of the case-study projects were within acceptable levels of risk under most assumptions, while the sensitivity analysis indicated that the projects were more sensitive to yield and prices for irrigated crops than they were sensitive to inputs and prices or yields of dryland crops.

Finally, the higher investment cost of drip irrigation is one limitation of this approach while the fact that farmers in Ethiopia are less familiar with drip irrigation is another disadvantage. Nevertheless, economic viability and efficient water use with drip irrigation as revealed in this thesis is a good policy argument which it is believed can be used as a basis for cooperation among nations in the basin. A demonstrated case of water use efficiency in the upper part of the basin could show that huge quantities of water could be saved throughout the basin for the benefit of all countries in the basin which will require assistance, capital, and skilled resources which should be contributed by all countries in the whole basin.
Keyword Water resources management -- Ethiopia -- Nile River Valley
Water resources development -- Environmental aspects -- Ethiopia -- Nile River Valley
Irrigation farming -- Ethiopia -- Nile River Valley -- Management
Irrigation -- Economic aspects -- Ethiopia -- Nile River Valley
Water-supply -- Economic aspects -- Ethiopia -- Nile River Valley
Water-supply -- Environmental aspects -- Ethiopia -- Nile River Valley
Additional Notes

Variant title: The economics of the Ethiopian Nile basin water development projects
The economics of developing water resource projects in the Ethiopian Nile River basin

Document type: Thesis
Collection: UQ Theses (RHD) - UQ staff and students only
Citation counts: Google Scholar Search Google Scholar
Created: Wed, 14 Sep 2011, 09:48:45 EST by Ning Jing on behalf of The University of Queensland Library