Economic and social adaptations to climate change impacts on water resources: A case study of Egypt

Literature is emerging on the adaptation of water resource systems to climate change (Stakhiv, 1995; Strzepek & Smith, 1995). These adaptations are generally discussed at either the sectoral or at the micro-economic level. However, little has been said about the macro-economic adaptation to shifts in water resources due to climate change. This lack of discussion is primarily due to the fact that very few countries have been able to make a comprehensive national assessment of climate change impacts on water resources at the same scale as a macro-economic modelling analysis. Where macro-economic modelling has been done, the water resource systems are highly regional and difficult to aggregate to a single national impact. Where homogenous water resources systems exist, macro-economic impact modelling has not incorporated water resources. This paper examines the macro-economic adaptations to climate change impacts on national water resources. Because of the problems listed above, a 'laboratory' country was chosen. Egypt has a single water resource - the Nile - and a substantial portion of Egypt's economic activity is related to this river. Changes in Nile discharges can be directly linked to macro-economic accounts, yet obviously more strongly linked to the agricultural sector. For this reason, a macro-economic model has been used which contains a disaggregated agricultural sector and a highly aggregated non-agricultural sector. A discussion of technical adaptations to climate change-induced reductions in Nile flows is presented. While these technical adaptations of the Nile are important, the macro-economic impacts of decreases or increases in Nile River discharge are shown to be minor compared with future socioeconomic development and domestic policy strategies. The paper concludes with a discussion of anticipatory economic and policy adaptations that appear to be more significant than technical adaptations for Egypt.