Economics of the Middle East

Lecture 4

Noha Nagi Elboghdadly

Faculty of Economic Studies and Political Science/Alexandria University

Second Semester 2019/20

Noha Nagi Elboghdadly Economics of the Middle East

Outline

Water Scarcity and Food Security in Middle East Economies

In this lecture, we will discuss:

Water resources in the Middle East.
Water scarcity and water security.
Food self-sufficiency and food security
The impact of climate change on water scarcity.
Measures to mitigate water scarcity threat.

Noha Nagi Elboghdadly Economics of the Middle East

Introduction

The World Economic Forum asked experts and leaders in the

region:

“For which global risks is your region least prepared?”

The majority of respondents identified water crises as the greatest

threat to the region—greater even than political instability or
unemployment (World Economic Forum 2015).

Noha Nagi Elboghdadly Economics of the Middle East

Introduction

Water scarcity poses a global threat, but its effects are more
visible in arid or semi-arid regions like the Middle East, which
is the most water scarce region in the world.
The region’s renewable water only represents 1.1% of the
world’s total renewable water resources.
Water scarcity is a central challenge for the development and
stability of the ME.
The potential impact of water scarcity on conflict-cooperation
dynamics in the region is high, because the region’s water
resources are transboundary.
Factors like climate change worsen the problem of water
scarcity significantly.
Water is also a pressing issue in the ME because of its link to
the production of food.

Noha Nagi Elboghdadly Economics of the Middle East

Water Resources
Some Definitions:
Groundwater: is the portion of the water beneath the surface
of the earth that can be collected with the wells, tunnels or
that flows naturally to the earth’s surface via seeps or spring.
Internal Renewable Water Resources: is the average annual
flow of rivers and lakes (surface water) and recharge of
groundwater generated from endogenous precipitation.
External Renewable Water Resources: is the average annual
renewable water resources that are not generated in the
country. It includes inflows from upstream countries
(groundwater and surface water), and part of the water of
border lakes and/or rivers.
Nonrenewable Groundwater Resources: are groundwater
bodies (deep aquifers) with negligible rate of recharge.
Transboundary water: the aquifers, lake and river basins
which are shared by two or more countries.
Noha Nagi Elboghdadly Economics of the Middle East
Water sources in the Middle East (Supply Side)
1) The Euphrates and Tigris River Basins
Two major water sources in the Middle East are the Tigris and
Euphrates Rivers.
Syria, Turkey and Iraq are riparian countries in the Euphrates
basin. The river rises in Turkey (Turkey is an upstream
country) and flows through Syria before entering Iraq where it
joins the Tigris. (Syria and Iraq are downstream countries).
The Tigris basin shares the same political boundaries (Syria,
Turkey and Iraq) with the addition of Iran as a fourth riparian
country.
Turkey has been controlling the discharge of both rivers across
its borders with Syria and Iraq.
98% of Turkey water resources originate within its borders.
Whereas Syria and Iraq respectively have about 28% and 39%
of their water inside their borders.
Noha Nagi Elboghdadly Economics of the Middle East
Water sources in the Middle East

2) The Nile River Basin

The Nile River is fed by two main river systems: the White
Nile, with its sources on the Equatorial Lake Plateau , and the
Blue Nile, with its sources in the Ethiopian highlands.
Ethiopia is considered an upstream Nile Basin country, while
Egypt (together with Sudan) is a downstream country.
The main source of water in Egypt is surface water from the
Nile. In addition, Egypt relies on groundwater resources, and
to a lesser extent on desalination.
Water generated from non-conventional resources such as
seawater desalination constitutes a negligible percentage of
0.76% of the total aggregate water supply.

Noha Nagi Elboghdadly Economics of the Middle East

Water sources in the Middle East

3) The Jordan River Basin System

The Jordan River System(JRS) is of great importance to
Jordan, Palestine and Israel.
40% of the basin is located in Jordan, 37% in Israel, 10% in
Syrian, 9% in Palestine, and 4% in Lebanon.

Noha Nagi Elboghdadly Economics of the Middle East

Water sources in the Middle East

The Arabian Peninsula (Bahrain, Kuwait, Oman, Qatar, Saudi

Arabia, UAE, and Yemen) is the most disadvantaged
sub-region in the Middle East, which has only 1% of the
renewable water resources in the ME.
For example, Kuwait has almost no internally renewable water
resources.
Water resources in the Arabian Peninsula are dominated by
groundwater, in particular non-renewable groundwater sources.
During the last 20 years, the countries of the Arabian
Peninsula became increasingly dependent on desalination to
meet their water resource requirements.
Desalination is the process of converting seawater, brackish
water, or waste water into fresh potable drinking water.

Noha Nagi Elboghdadly Economics of the Middle East

Water sources in the Middle East

60% of desalination plants are located in the Middle East.

The world’s largest plant is located in Saudi Arabia.
Desalinated water is very expensive to create.
From the availability of revenues from oil resources,
desalination has been looked on as a viable method in the
Arabian Peninsula.

Noha Nagi Elboghdadly Economics of the Middle East

Water sources in the Middle East
Water Dependency Ratio: expresses the share of the total
renewable water resources originating outside the country as a
percentage. This indicator may vary between 0% (the country
receives no water from neighboring countries) and 100%
(country receives all its water from outside).

Noha Nagi Elboghdadly Economics of the Middle East

Water demand

The demand for water rises due to:

Population growth
Income growth
Rapid urbanization
Agricultural policies

Noha Nagi Elboghdadly Economics of the Middle East

Water Scarcity
Water scarcity is defined as scarcity in availability due to
physical shortage, or scarcity in access due to the failure of
institutions to ensure a regular supply or due to a lack of
adequate infrastructure.
Water scarcity has been assessed by looking at the
population-water equation. An area is experiencing:
Water stress when annual water supplies < 1,700 m3 per
person.
Water scarcity when annual water supplies < 1,000 m3 per
person.
Absolute water scarcity when annual water supplies < 500 m3
per person.
Most countries in the ME region fall below the generally
accepted water scarcity line of 1000 m3 per capita per annum
of renewable water resources.
Nine out of 15 countries in the region are characterized by
absolute water scarcity.
Noha Nagi Elboghdadly Economics of the Middle East
Water scarcity

Annual renewable water resources per capita, 2014

Noha Nagi Elboghdadly Economics of the Middle East

Water Security

The concept of water scarcity is closely linked to “water

security”.
According to the United Nation’s definition, water security is
“the capacity of a population to:
safeguard sustainable access to adequate quantities of
acceptable quality water to sustain livelihoods, human
well-being, and socio-economic development.
ensure protection against water-borne pollution and
water-related disasters.
preserve ecosystems in a climate of peace and political stability.
Water security goes beyond water scarcity to take account not
only of a country’s water resource endowment, but also of the
productive and protective actions the country has taken to
secure water.

Noha Nagi Elboghdadly Economics of the Middle East

Water consuming sectors in the Middle East

The three large water-consuming sectors:

1 Agriculture (irrigation and livestock watering).
2 Water supply (domestic/municipal use)
3 Industry.
Agriculture uses more than 85% of the water withdrawn in
the region, i.e. agriculture is the predominant user of water in
each country.

Noha Nagi Elboghdadly Economics of the Middle East

Water consuming sectors in the Middle East

Noha Nagi Elboghdadly Economics of the Middle East

The effect of government policies on water scarcity

1) Water Subsides
Despite water scarcity, the region’s water service fees are very
low, and its effective water subsidies are the highest in the
world.
The ME region has the lowest water prices in the world and
spends massive resources on water subsidies (about 2% of
GDP).

Noha Nagi Elboghdadly Economics of the Middle East

The effect of government policies on water scarcity

Note: subsidies are defined as the difference between actual water charges to
water users and a reference price that would cover all costs associated with
supplying that water.

Noha Nagi Elboghdadly Economics of the Middle East

The effect of government policies on water scarcity

2) Energy Subsidies:
The widely used subsidies are in pumping water, where cheap
energy prices have driven groundwater depletion.
In many countries in the Middle East, energy subsidies have
made it cheaper to pump water, which have contributed to
the decline of renewable and non-renewable groundwater
reserves in some locations.

Noha Nagi Elboghdadly Economics of the Middle East

The effect of government policies on water scarcity
3) Agricultural Policies
The productivity of water used in agricultural production may be
measured in two main ways:
Physical water productivity: is the volume of agricultural
production per unit of water consumed in the production of
that output.
In the ME region, the physical water productivity is highest
for vegetables and fruits, followed by cereals and livestock
products.
Economic water productivity: is the value of production per
unit of water used.
In the ME countries, the highest value per cubic meter of
water used is obtained for vegetables and fruits.
Therefore, fruit and vegetables offer higher returns to land
and water than crops such as the cereals that have historically
dominated ME agriculture.
Noha Nagi Elboghdadly Economics of the Middle East
The effect of government policies on water scarcity

Agricultural policies in the Middle East countries focus on

achieving food self-sufficiency.
At this point, we need to have a look on the food status in
the ME.
Any nation can obtain its food in only three ways:
by producing it (national production),
by buying it (imports), or
by being given it (food aid).
The first two are the most important for all but the very
poorest countries.

Noha Nagi Elboghdadly Economics of the Middle East

The effect of government policies on water scarcity

The ME region is the largest food importer in the world. That

is, the ME region is not self-sufficient in food production and
relies mainly on food imports to feed its increasingly growing
population.
According to the the Food and Agriculture Organization
(FAO), “The concept of food self-sufficiency is generally taken
to mean the extent to which a country can satisfy its food
needs from its own domestic production”.
Food self-sufficiency can be measured by self-sufficiency ratio
(SSR), which is defined as the percentage of food consumed
that is produced domestically:
SSR = Production
Production+Imports−Exports × 100

Noha Nagi Elboghdadly Economics of the Middle East

The effect of government policies on water scarcity
Examples of SSR in the MENA region for some crops:

Noha Nagi Elboghdadly Economics of the Middle East

The effect of government policies on water scarcity

Food import dependence in the ME countries is most

pronounced for cereals (like wheat, corn, barley and rice),
which are strategically crucial.
MENA countries import around 50% of their wheat and
barley, 40% of their rice, and 70% of their maize (corn).
Turkey is one of the few countries in MENA that is a
significant agricultural exporter and it has considerable
self-sufficiency in cereals.
Countries such as Jordan, Lebanon and Egypt have export
capacities for fruit and vegetables.
SSR are generally the lowest in the GCC countries.

Noha Nagi Elboghdadly Economics of the Middle East

The effect of government policies on water scarcity

It is important to note that food self-sufficiency is not the

same as food security, although the two can interact in
important ways.
Food security can be explained as follows: households are
food secure when they have access to the amount and variety
of safe foods needed for active and healthy lives.
The concept of food security does not include a consideration
of the origin of food or a country’s capacity to produce it, so
long as it is available, accessible, nutritious, and stable.
For example, food importing countries like Kuwait can be
perfectly food secure if they have the foreign exchange to pay
for food imports and world food markets are not disrupted by
political crises.
Nowadays, food security situation is most critical in countries
such as Yemen, Syria and Iraq due to political unrest.

Noha Nagi Elboghdadly Economics of the Middle East

The effect of government policies on water scarcity

Low SSR are a concern in MENA countries, as they are a

strategic vulnerability in times of geopolitical and food crises.
In the past, food imports have been threatened during World
War I, World War II, US food embargoes in the 1970s and the
food crisis in 2007/08.. etc.
The vulnerability of countries to perceived risk from
dependence on imported food has pushed some governments
to support the cultivation of cereals in the region.
For example, ME governments, like Iraq, Iran and Egypt have
subsidized wheat production for many years using three main
policy interventions: guaranteed prices, input subsidies, and
import tariffs. The purpose of these policies is to raise the
price and lower the costs for domestic production of wheat in
order to increase self-sufficiency in wheat production.

Noha Nagi Elboghdadly Economics of the Middle East

The effect of government policies on water scarcity

Agriculture policies in the region are difficult to reconcile with

the degree of water scarcity.
While fruits and vegetables both consume less water and
provide higher economic returns per drop, about 60% of
harvested land remains in water thirsty cereals, despite the
fact that most countries in the region have a comparative
advantage in the export of fruits and vegetables.
Therefore, water scarcity can be created by a forced
promotion of agriculture irrigation aimed at achieving food
self-sufficiency and avoiding dependence on the global food
market.
While such higher-value crops (fruits and vegetables) could
potentially increase farmer incomes, improve nutrition, and
use water more sparingly, they require a higher level of export
market knowledge.

Noha Nagi Elboghdadly Economics of the Middle East

Climate Change and Water Scarcity in ME
The Middle East is the region of the world that is most
exposed to negative impacts resulting from climate change.
The 2014 Intergovernmental Panel on Climate Change (IPCC)
Fifth Assessment Report estimates that the MENA region will
face a temperature increase of 0.9 to 4.1°C by the end of the
century, accompanied by a decrease in rainfall and an increase
in evaporation.
Climate change will affect water availability, largely negatively.
Therefore, climate change will create major risks for
agriculture.
Soil moisture is likely to decrease.
Rivers arising within the region are likely to experience
decreased flows.
All water storage is likely to suffer increased evaporation due
to higher temperatures.
Higher temperatures will also increase crop water
requirements, leading to increased agricultural water demands.
Noha Nagi Elboghdadly Economics of the Middle East
Measures to mitigate the threat of water scarcity

Not only is water in the Middle East scarce, but it is largely

sub-optimized. This means there is substantial room for measures
to raise the efficiency of resource use.
Recycling and reusing wastewater
This is a vital strategy in maximizing water availability. In the
ME region, 82% of wastewater is not recycled. Therefore,
there are significant opportunities for recycled water to meet
increasing water demands in the region.
For example, Saudi Arabia, the third largest water reuse
market in the world after the United States and China, aims
to reuse 100% of urban wastewater by 2025.
Modern irrigation techniques
using modern irrigation techniques, such as sprinklers or trickle
irrigation systems, should be used for reducing water wastage.

Noha Nagi Elboghdadly Economics of the Middle East

Measures to mitigate the threat of water scarcity

Desalination
Desalination plants offer one way to generate alternative
freshwater. The high costs associated with building and
operating desalination plants and their energy-intensiveness do
not make them viable solutions for low-income countries.
However, desalination will continue to play an important role
in the ME region. If they can be operated with renewable
energy – instead of the fossil fuels used today – the costs of
desalination plants could go down.

Noha Nagi Elboghdadly Economics of the Middle East

Measures to mitigate the threat of water scarcity

Water pricing policy reforms

Placing a value or price on water would help to signal its
extreme scarcity and promote its conservation in the Middle
East. However, the management of water subsidies is a
political issue, as under-pricing of water is often used as an
instrument to contribute to political stability. Nevertheless,
they produce a high fiscal burden and are relatively ineffective
safety nets for the poorest. Thus, reforms should be
undertaken to reduce subsidies for a more efficient use. Some
policy reforms are being implemented in Bahrain, Saudi
Arabia and the United Arab Emirates.
Energy subsidy reform
The reduction of energy subsidies for groundwater pumping
would reveal the true costs of production, making agriculture
uneconomical especially in areas relying on deep fossil aquifers.

Noha Nagi Elboghdadly Economics of the Middle East

Measures to mitigate the threat of water scarcity

Food security policies

A revision of food security policies away from self sufficiency
towards poverty elimination would focus the attention of
policymakers on rural development and on building the
capacity of farmers to minimize risk while raising higher value
crops.
Climate mitigation and adaptation policies
Design national climate change policies that will address their
long-term food and water insecurity, like imposing carbon tax
on energy-intensive industries.

Noha Nagi Elboghdadly Economics of the Middle East

Summary

https://www.mei.edu/multimedia/video/
water-crisis-middle-east

Noha Nagi Elboghdadly Economics of the Middle East

References

Water Scarcity in the Middle East

(https://thesouthernhub.org/publications/
nsds-hub-publications/
water-scarcity-in-the-middle-east-).
Food and water security in the Middle East and North Africa
(special report NATO).
The Middle East and North Africa: Prospects and challenges
(OECD and FAO).
Agriculture and Development in the Wake of the Arab Spring.

Noha Nagi Elboghdadly Economics of the Middle East