Environmental and Economic Impacts of the Grand Ethiopian Renaissance Dam in Africa

Abstract

A multidisciplinary study was conducted to investigate the environmental and economic impact of the Grand Ethiopian Renaissance Dam (GERD). Focusing on Egypt, we estimate projected losses in Egypt’s annual water allocation from the Blue Nile under the 3, 7, and 10-year GERD reservoir filling scenarios, which are part of an array of scenarios currently under consideration. We then examine the resultant losses in Egypt’s agricultural land and the corresponding impact on selected macroeconomic variables relative to a baseline (no GERD) scenario. For the 3-year filling period, in particular, we estimate projected losses in Egypt’s annual water allocation to be 51.29 ± 2.62%. This translates into annual losses of agricultural land of 52.75 ± 2.44% relative to the baseline, with a resultant decline in food production of 38.47 ± 2.18% and an overall decline in agricultural sector output by 17.51 ± 0.99%. This contributes to a rise in the national unemployment rate of 11.24 ± 1.77 percentage points above the baseline. Moreover, we estimate projected annual losses in real Gross Domestic Product (GDP) per capita to be 8.02 ± 0.45% relative to the baseline, which translates into an annual loss in real GDP of $26.30 ± 2.81 billion and a loss in welfare of 12.83 ± 0.73% annually, relative to the baseline.