Natural Resources and Economic Growth in Africa: The Curse of Water Eric Strobl Dpartement de Scienc

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Natural Resources and Economic Growth in
AfricaThe Curse of WaterEric
StroblDépartement de Sciences ÉconomiquesEcole
Polytechnique
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INTRODUCTION

• African Growth Tragedy in the late 1950s /
  early 1960s Sub-Saharan Africa (SSA) was seen as
  the continent of the future but by the 1980s
  this had changed.

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GDP per Capita Trends
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INTRODUCTION

• Various Theories
• (a) POLITICAL Poor Policies and Political
  Institutions - Ex Fiscal, ER, Trade Policies
  Lack of Democracy etc.
• (b) EXOGENOUS outside immediate domestic
  political domain - Ex Aid, (lack of)
  diversification, Ethno-Linguistic Diversity,
  Landlockedness, Tropical Climate etc.
• In this Presentation Focus is on the Role of
  Water as a Natural Resource for African Growth

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OUTLINE of PRESENTATION

• Characteristics of Sub-Saharan Africa (SSA) with
  regard to Water
• Water as a Determinant of Economic Growth in
  Africa
• Water as a Potential Factor in Conflict
• Concluding Remarks

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1. Renewable Water Resources
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1. Climatic Regions
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2. What is the Role of Water in Economic Growth
in Africa?

• Two Main Channels
• Agriculture
• Dams

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2. AGRICULTURE

• Agriculture is important component of SSA growth
• of Agr. in GDP
• 1960 1970 1980 1990 1997 2004
• SSA 39.2 33.9 32.0 29.9 29.7 28.1
• Other DCs 24.4 23.0 18.7 16.3 14.1 12.9
• But agriculture (1) is mostly in Semi-Arid areas
  and hence (2) sensitive to climate/geography
  since in these
• (a) Evapotranspiration is high, (b) soils
  fragile, (c) river run-off low, (d) rivers
  sensitive to rainfall variation (e) too little
  land irrigated
•  ? Reliance of crops on rainfall (rainfed)

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2. Climatic Regions
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2. DAMS

• Over last 50 years Africa has invested heavily in
  hydropower, but lakes and reservoirs are
  particularly vulnerable to climatic change
• energy from Hydro-power 1960 1970 1980 199
  0 1997 2004
• SSA 27.9 37.3 46.5 42.9 46.6 47.8
• Other DCs 35.0 39.4 37.6 39.6 34.1 33.2
• and Hydropower plants are heavily dependent on
  rainfall

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2. Dams
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2. Rainfall Trends inSSA Other DCs
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2. GDP per Capita Growth and Rainfall in Other
DCs
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2. GDP per Capita Growth and Rainfall in SSA
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2. ROLE of RAINALL IN GROWTH

• Econometric Study confirmed the importance of
  Rainfall for Economic Growth in SSA
• Simulations showed that GDP gap relative to other
  DCs could have been reduced between 20-40 per
  cent (if rainfall had been higher)

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3. WATER CONFLICT

• Recent Media Hype Potential Water Wars, Blue
  Gold(BBC, OECD, UN, etc.)
• Facts
• Most (80) river basins in Africa are
  international
• Many main rivers cross or define borders
• Rivers and lakes are dependent on Rainfall.
• WWF estimates that 14 countries in Africa are
  already experiencing water stress, another 11
  countries will join by 2025 nearly 50 per cent
  of Africas predicted population will experience
  water stress or scarcity by 2025.

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3. Water Scarcity Distribution across the Globe
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3. Water Conflict Hot Spots
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2. Water Conflict

• But there hasnt been a war over water in over a
  1000 years
• Most water scarcity seems to be economic rather
  than physical
• While there is as of yet no official body to
  oversee international water agreements, there are
  signs of greater cooperation.

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3. International Water Related Events in Africa
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Concluding Remarks

• Water as a Natural Resource and Economic Growth
  in Sub-Saharan Africa
• Shortages in rainfall have been an important part
  of the African Growth Tragedy Story
• Policy Implications decrease sensitivity of
  economies to rainfall i.e., less rainfed
  agriculture, less reliance on hydropower, more
  diversity of production
• Conflict and Water in Sub-Saharan Africa
• Little evidence of this yet
• Most water scarcity now is economic, but with
  climate changes.
• Slow but positive movements towards greater
  international cooperation