Newsletter No 4 December 2013

Institutional-Economic Incentives for Sustainable Watershed Management in the Blue Nile River Basin

1.     Introduction

The natural resource base in the Blue Nile basin is under severe pressure due to unsustainable farming practices upstream of the basin. This causes both on-site productivity loss upstream (Ethiopia) and off-site externalities such as sedimentation of irrigation canals downstream (e.g. sedimentation of the Gezira irrigation scheme in Sudan). 

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Figure 1 Erosion in the Ethiopian highlands and the resulting sedimentation at the Gezira irrigation scheme in Sudan

2.     Objective

This PhD thesis focuses on the important interaction between land and water use in the Blue Nile river basin, and the role of institutional and economic incentives in sustainable natural resource management. The main objective is to test the institutional-economic terms and conditions needed to be in place for land and water resource users to internalize the externalities of currently unsustainable land use practices in the Blue Nile river basin. At the same time, the willingness of farmers living downstream in one of the largest irrigation schemes in the world, the Gezira, in Sudan, is assessed to compensate farmers upstream for taking soil conservation measures.

3.     Methodology

The methodological approach applied in this PhD thesis is a mix of literature research, drawing upon international experiences with payments for watershed services and field experiments targeting farm households in the Upper Blue Nile and the Gezira irrigation scheme. Choice experiment method is applied in farm household surveys to elicit willingness of farmers to invest in soil conservation measures upstream where the soil erosion problem is caused on the one hand and willingness of farmers downstream who are affected by the impacts of soil erosion to partly offset the costs of taking soil conservation measures upstream. An investment game based on behavioural game theory is also applied to investigate the role of trust in watershed management.

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Figure 2 Example of a choice experiment card used for survey upstream in Ethiopia

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Figure 3 Example of a choice experiment card used for survey downstream in Sudan

4.     Main findings

The study sheds light on the role of institutional-economic incentives in encouraging farmers to sustainably manage and maintain land and water resources in their resource use decisions. There is demand and positive willingness to pay for improved irrigation water supply among farmers at the Gezira irrigation scheme. They value transboundary cooperation significantly higher to reduce siltation of the irrigation canals than improving local irrigation water canals maintenance and management. The role of trust is also crucial for cooperation, both in a local watershed and transboundary river basin context.

5.     Conclusions

Institutionalizing the upstream-downstream linkages and common interests in the basin is expected to guarantee the continuity of positive externalities over and above the cost price of the provision of water services such as irrigation and hydropower and achieve sustainable watershed management. The shape and form of the transboundary cooperation to formalize benefits sharing between the upstream and downstream countries is something that obviously requires more attention and input from policymakers and stakeholders involved.

Contact: Dr. Abonesh Tesfaye Tulu