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GTAP Resource #4391

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

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 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. The static nature of the model constitutes a major limitation to the study. A dynamic model would, according to theoretical expectations, yield larger effects of trade liberalization and facilitation in the Nile Basin economies through adjustments in national capital stocks. Nevertheless, the results of the current analysis demonstrate that the role of trade liberalization and facilitation in generating basin-wide economic benefits and saving the
Basin’s scarce water resources is potentially substantial. Freer trade policy coupled with other relevant policy measure...

Resource Details (Export Citation) GTAP Keywords
Category: 2014 Conference Paper
Status: Published
By/In: Presented at the 17th Annual Conference on Global Economic Analysis, Dakar, Senegal
Date: 2014
Created: Kahsay, T. (4/11/2014)
Updated: Kahsay, T. (5/1/2014)
Visits: 1,531
- Multilateral trade negotiations
- Non-Tariff barriers
- Africa (East)
- Africa (Southern)

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