Water Scarcity and Improved Water Use Efficiency in Tunisia: A Computable General Equilibrium Analysis

Maha Mili, Mohamed Dhif and Houyem Chekki
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Maha Mili: University of CarthageAuthor-Email: maha.mili@ept.ucar.tn
Mohamed Dhif: Universit´e de Carthage
Houyem Chekki: Universite de la Manouba

No 1798, Working Papers from Economic Research Forum

Abstract: Under global warming conditions, projections from the Tunisian National Institute of Meteorology indicate that Tunisia will face decreased annual rainfall and increased demand for water resources in the coming years. This research aims to quantify the potential impacts of water scarcity on the Tunisian economy, with a particular focus on the agricultural sector, which is crucial for food security and economic stability. Using a recursive dynamic Computable General Equilibrium (CGE) model, we analyze the effects of four water-related hypotheses on GDP growth, social welfare, and trade balance by 2050. Then, we simulate three specific water use efficiency (WUE) scenarios—rehabilitation of water network infrastructure, modernization of irrigation systems, and the use of plant varieties with less water requirements—to assess their effectiveness in mitigating water scarcity. The simulation results reveal that declining water availability significantly hampers agricultural production, adversely affecting the food processing sector and exacerbating food security concerns. These limitations lead to an increased trade balance deficit and a projected decline in GDP by 2050. In contrast, improvements in WUE partially alleviate these impacts by enhancing agricultural productivity, reducing imports, and boosting exports, which collectively improve the trade balance and stimulate GDP growth. The findings underscore the urgent need for practical actions to conserve water resources and highlight the importance of negotiating trade agreements that prioritize low-water-requiring products while managing the import of more waterintensive goods.

Pages: 37
Date: 2025-10-20, Revised 2025-10-20
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