The Impact of Trade Liberalization and Removal of Non-Tariff Barriers on Water Use and Agricultural Production: A CGE Analysis of the Nile Basin Countries

Tewodros Negash Kahsay, Onno Kuik, Roy Brouwer and Pieter van der Zaag

No 332534, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: A multi-country multi-sector computable general equilibrium (CGE) model is used to evaluate the economic and water resource scarcity effects of trade liberalization (removal of import barriers) and facilitation (removal of non-tariff barriers) among the Nile Basin countries. The analysis uses the new version of the GTAP-W model that distinguishes between rainfed and irrigated agriculture and implements water as a factor of production directly substitutable in the production process of irrigated agriculture. The GTAP Africa Data Base, which includes data for the Nile Basin countries, is used for the analysis. A full trade liberalization scenario coupled with trade facilitation is considered. The findings of the study reveal that water use in irrigated agriculture tends to decline or remain stable in most agricultural sectors in the Nile Basin countries. With the decline of water use in the irrigation-intensive agricultural sectors in Egypt and Sudan, trade liberalization is expected to reduce the pressure on scarce water resources in the Nile River Basin. Consistent with neoclassical trade theory, trade liberalization and facilitation is 1 expected to stimulate economic growth and improve welfare in the Nile Basin countries. The simulated trade policy measures enhance agricultural production in Ethiopia and Sudan and stimulates manufacturing in Egypt and to some extent in the Equatorial Lakes region.

Keywords: International Relations/Trade; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Pages: 27
Date: 2014
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