Estimation of the transboundary economic impacts of the Grand Ethiopia Renaissance Dam: A computable general equilibrium analysis

Employing a multi-region multi-sector computable general equilibrium (CGE) modeling framework, this study estimates the direct and indirect economic impacts of the Grand Ethiopian Renaissance Dam (GERD) on the Eastern Nile economies. The study contributes to the existing literature by evaluating the impact of the dam under three different climatic and hydrological scenarios, taking into account both the transient GERD impounding phase and the long-term operation phase in a global CGE setting. The results demonstrate the significance of the GERD in generating basin-wide economic benefits and improving welfare in the Eastern Nile basin. During the impounding phase, the GERD benefits mainly Ethiopia and to some extent Sudan. GERD impounding inflicts economic costs, however, on Egypt, especially if it occurs during a sequence of dry years, and depending on the level of water withdrawal in Sudan. The negative effects of the GERD on Egypt׳s economy are reversed when the GERD becomes operational. In that case, the GERD generates substantial economic benefits and enhances economic growth and welfare in all the Eastern Nile countries. Instituting a basin-wide power trade scheme would substantially boost Egypt׳s economy and thereby further increase the economic value of the dam.