**Water Resources and Poverty in Africa:**

**Essential Economic and Political Responses**

A paper for discussion

Presented by the World Bank

to the African Regional Ministerial Conference on Water (ARMCOW)

April 2002

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This working paper was prepared by the World Bank at the request of the
ARMCOW Chair. The paper was written by David Grey, Senior Water Adviser,
and Claudia Sadoff, Senior Economist, drawing from a technical paper
under preparation. Any errors or omissions are those of the authors.

**Water Resources and Poverty in Africa:**

**Essential Economic and Political Responses**

[1. Introduction 1](#introduction)

[2. Breaking the vicious circle 1](#breaking-the-vicious-circle)

[3. Africa's Water Resources Challenge
3](#africas-water-resources-challenge)

[The natural legacy of hydrological variability
3](#the-natural-legacy-of-hydrological-variability)

[The historical legacy of numerous international rivers
3](#the-historical-legacy-of-numerous-international-rivers)

[4. Social, economic and political risk
4](#social-economic-and-political-risk)

[The social and economic risk of hydrological variability
4](#the-social-and-economic-risk-of-hydrological-variability)

[The political and economic risk of shared rivers
5](#the-political-and-economic-risk-of-shared-rivers)

[5. Sustaining poverty 6](#sustaining-poverty)

[Limited capacity 6](#limited-capacity)

[Regional fragmentation 7](#regional-fragmentation)

[6. Limited water resources management
7](#limited-water-resources-management)

[Limited storage 7](#limited-storage)

[Degrading watersheds 8](#degrading-watersheds)

[Deteriorating water quality 8](#deteriorating-water-quality)

[Inefficient utilization 9](#inefficient-utilization)

[7. Policy and investment responses
10](#policy-and-investment-responses)

[Managing water resources 10](#managing-water-resources)

[Managing the economy 11](#managing-the-economy)

[Managing international relations 12](#managing-international-relations)

[8. Conclusion 13](#conclusion)

**Water Resources and Poverty in Africa:**

**Essential Economic and Political Responses**

# 

# 1. Introduction 

Water and poverty in Africa are entwined in many ways. It is widely
recognized that *access to water supply* both constrains, and is
constrained by, poverty. Basic water supply and sanitation service
coverage is lower than anywhere else in the world and irrigated
agriculture is little developed. In this paper we make an additional and
much less recognized case -- that Africa's *water resources endowment*
seriously constrains economic growth.

Poverty in Africa is, in part, a consequence of its water resource
endowment. Africa has a unique water legacy which is particularly
complex and costly to manage effectively. This water legacy has always
been, and remains, a fundamental constraint on the economic performance
of African societies and the growth today of African economies.
Recognizing this and ensuring appropriate political, economic and
technical responses are essential for Africa to escape the poverty trap
in which many of its people are locked.

# 2. Breaking the vicious circle

Africa's ***water resources*** pose an extraordinary challenge and can
be characterized by two principal features, a
![](media/image1.wmf){width="3.7777777777777777in"
height="2.7430555555555554in"}natural legacy and an historical legacy.
The natural legacy is one of very high hydrological variability, with
inter-annual and intra-annual extremes of precipitation, temperature and
river flows, relative to other regions of the world. The historical
legacy is one of abundant international rivers, to a great extent
defined by former colonial powers that drew the international boundaries
of Africa with little regard for the hydrological integrity of
watersheds or natural water boundaries (or for ethnic or other
boundaries). As a consequence, Africa has more international rivers
shared by three or more countries than any other continent in the world.

This extraordinary challenge generates significant ***economic and
political risk***. Hydrological variability results in constant economic
risk to small investors (such as individual farmer families) and large
ones (such as industries), and to societies and nations. The perception
of risk is amplified by occasional, but endemic, catastrophic droughts
and floods. Managing extreme variability has always required
considerable societal adaptation, reflected in the coping strategies of
early African societies. Today the management of extreme variability
requires high levels of investment and skill. Numerous international
rivers result in the ever-growing political risk of regional tension and
economic fragmentation. Managing many international rivers requires very
strong international relations and institutions. Yet here is the
conundrum: high levels of human and financial capacity and strong
institutions are the fruits of economic growth, and most African
countries are poor.

Rational, risk averse responses to the economic and political risks that
arise from Africa's water resources challenge constrain growth, and
become contributory and underlying causes of sustained and widespread
***poverty*** in Africa. Among the many consequences of sustained
poverty are that human capacity is limited and institutions are weak,
investment capacity is low, and international relations are unstable,
with much regional economic fragmentation.

These poverty consequences result in ***limited water resources
management***, both at the national and international level. At the
local level, watersheds are vulnerable and degradation is widespread,
water quality is deteriorating, storage and other hydraulic
infrastructure is little developed and the effectiveness of regulatory,
economic and institutional instruments for water management is limited.
At the international level, management and development of shared rivers
is fragmented and sub-optimal, with non-existent or weak basin
institutions.

Limited water resources management exacerbates the ***water resources
challenge***, compounding the impacts of hydrological variability and
the complex nature of international rivers. This then becomes a vicious
circle, illustrated in Figure 1, increasing risks, increasing poverty,
further limiting water management, which again increases the water
resources challenge.

***Appropriate water resources policy, economic policy and foreign
policy responses*** are needed for Africa to break out of this vicious
circle. Water resources management policy and planning needs to ensure
appropriate institutional, economic and regulatory instruments for the
management of watersheds and water quality, efficient yet equitable
water allocation between uses, and sound investments in water
conservation and storage. Economic policy and planning needs to
recognize Africa's water resources legacy, and to choose development
paths that minimize risks and economic instruments that promote
water-resilient behavior by farm families, villages, towns, cities,
industries and nations. Foreign policy and diplomacy needs to recognize
the imperatives of regional cooperation in the management of
international rivers, and the consequent benefits of economic
integration, 'beyond the river'.

# 3. Africa's Water Resources Challenge

####### The natural legacy of hydrological variability

At first sight, Africa's natural legacy of water resources appears
generous. The continent is characterized by many great rivers and lakes.
However, this conceals the fact that rainfall across much of the
continent is exceptionally variable and unpredictable, both in time and
space, with year-on-year variation often exceeding 35% around the mean.
Movement of the Inter-tropical Convergence Zone results in inter-annual
and inter-seasonal coefficients of variation which are much higher than
in more temperate climates. One consequence of this hydrological
variability is frequent droughts and floods, which pose great risk to
the peoples and economies of Africa. Less important than hydrological
variability, but nevertheless highly significant, is that serious water
scarcity is spreading with rapidly growing populations and escalating
water demand. In 1990, eight countries were suffering from water stress
or scarcity; in 2025, this number is forecast to rise to 20. In these
countries, absolute water scarcity will itself become a constraint on
economic development.

Runoff, which equates to the useable and renewable water resources, in
Africa is extraordinarily low --- only 50% of that of Australia, North
America, Europe, and Asia (despite having about the same average
precipitation) and 25% of that of Latin America. High rainfall
variability coupled with low runoff gives highly variable and relatively
low seasonal and annual flows in many African rivers. High inter-annual
and intra-annual hydrological variability also increases the
vulnerability of the landscape to erosion and desertification.

These factors have a dramatic influence on African societies. Africa's
current cultural and socio-economic conditions have been profoundly
affected by its water resources. Water is, and always was, a primary
factor in the location and production patterns of human settlements, and
the structure and productivity of African economies. In order to manage
hydrological variability, early societies developed coping strategies,
such as pastoralism, mobility and even migration, with people moving in
response to water and land pressures. Many of these coping strategies
are less viable with the emergence of nation states, restricting
movement between nations, and greatly increased populations, restricting
movement within nations. Nevertheless, one consequence of hydrological
variability and the associated vulnerability of the landscape in much of
Africa today is increasingly unsustainable rural livelihoods and
consequent migration from rural areas to cities.

The effective management of Africa's natural legacy of hydrological
variability will require high levels of skill and investment -- much
higher, relatively, than in temperate (and generally wealthier) regions.

####### The historical legacy of numerous international rivers

The patchwork of borders that now divides Africa's nations derives in
large part from the 'scramble for Africa' of the colonial powers in the
late 19^th^ and early 20^th^ centuries. Most of Africa's major river
basins are shared by two or more countries. Few of these international
rivers are effectively jointly managed. A measure of the scale of the
international rivers challenge in Africa is the number of international
basins, and the number of countries that share them. There are at least
34 rivers shared by two African countries, and some 28 rivers, virtually
half of the international rivers in Africa, are shared by three or more
countries. The majority of international rivers in the world that are
shared by three or more countries are in Africa. Ten basins, the Congo,
Limpopo, Niger, Nile, Ogooue, Okavango, Orange, Senegal, Volta, and the
Zambezi, are shared by four or more countries.

Another illustrative measure is the number of international basins in an
individual country. Every country in Africa has at least one
international river; 37 African countries have two or more international
rivers, and fifteen countries have five or more international rivers
within their territorial boundaries. Guinea has fourteen international
rivers; Cote D\'Ivoire has nine; Mozambique has eight. If joint
management of one basin is a challenge, joint management of many basins
by one country is particularly difficult, requiring extensive
international diplomacy and multiple political negotiation tracks.

The effective management of Africa's historical legacy of numerous
international rivers needs a particularly (and perhaps uniquely)
effective international order, with strong international relations,
sound regional institutions and effective mechanisms for allocating and
sharing resources.

# 4. Social, economic and political risk

####### The social and economic risk of hydrological variability

Hydrological variability poses very great risks to African societies.
Africa's economies remain largely agrarian, with agriculture
contributing the major share of GDP and with the majority of the
population dependent on farming. Agricultural production is highly
susceptible to extreme hydrological variability and associated landscape
vulnerability, threatening: the survival of the subsistence farmer at
one level; the competitiveness of agri-business in a globalizing world
at another level; and, at a third level, the structure and performance
of national economies. Agricultural production, in turn, determines the
incomes of a significant portion of Africa's population, whose increased
or decreased expenditures will amplify the effects of hydrological
variability throughout the economy. Yet agriculture is presumed to be
the dominant economic activity into the foreseeable future.

The catastrophic expression of extreme rainfall variability is endemic
and unpredictable drought and flood, with enormous direct social and
economic impact. In the 1968-73 drought which afflicted the Sahel
including Ethiopia and Somalia, it is believed that 250,000 people died
in six countries, 30-40% of cattle herds were lost, and agricultural
production fell by between 20-70%. In the last several decades, many
parts of Africa have experienced extended periods of rainfall deficit.
Drought in Southern Africa in 1991-92 afflicted 20 million people and
led to a \$2 billion dollar relief program. In Zimbabwe there was a 45%
decline in agricultural production in 1992. The 1997- 98 El Nino floods
in Kenya caused huge social dislocation and economic loss estimated to
exceed \$1.7bn, and were followed by the comparably costly 1999 -- 2000
La Nina drought. Mozambique suffered severe flooding and cyclone damage
in February-March 2000. Preliminary damage estimates of this flood
episode amounted to over US \$270 million in direct costs, and some
\$425 million in reconstruction costs. There was no flow control
infrastructure within the borders of Mozambique to mitigate the floods
of 2000. The coordinated operation of existing control infrastructure
(e.g., reservoirs) in upstream riparian countries, however, may have
helped.

In addition to, and possibly more important than, absolute levels of
rainfall, the condition of extreme variability will itself affect the
performance and the very structure of economies. The expectation of
variability and the unpredictability of rainfall and runoff (as opposed
to absolute rainfall and runoff) can constrain growth and
diversification by encouraging risk averse behavior at all levels of the
economy in all years, as economic actors, particularly the poor, focus
on minimizing their downside risks, rather than maximizing their
potential gains. Extreme rainfall variability poses serious risks to
individual farm families, who therefore -- quite rationally -- do not
invest in land improvements, advanced technologies or agricultural
inputs, which constrains agricultural output and productivity gains. An
unreliable water supply is a significant disincentive for investments in
industry and services, which will slow the diversification of economic
activities and maintain an economic structure that is based largely on
low-input, low-technology agricultural production.

This risk averse behavior will have a structural impact, promoting
patterns of development that can trap economies in low-level
equilibriums. Individuals, entrepreneurs and governments will make
location, investment and production decisions that will make them less
vulnerable to water shocks. Many of these decisions will improve
efficiency, locating activities where they are most economic and
adopting appropriate technologies. But often the choice will be made not
to invest in productivity enhancing technologies because the risk
relative to the expected reward (given the uncertainty of water
availability and endemic droughts and floods) is simply too high. Thus
even in years of good rains, economic productivity and economic
development can be constrained by conditions of hydrological
variability. Overall, hydrological variability across Africa, coupled
with land degradation and desertification, is having enormous impacts on
African societies and economies.

####### The political and economic risk of shared rivers

Africa's shared rivers generate political risks and resulting tensions
as a consequence both of a country's concerns that without international
cooperation it cannot control variable and unpredictable river flows, as
well as its perceptions of the potential harm that can be caused by
co-riparian actions. To a greater or lesser extent, the control of
shared rivers is a source of tension and even dispute, and an issue of
sovereignty, strategic necessity, and national pride. In some river
basins in Africa, tensions are already high; without affirmative action
for cooperation, these tensions will grow across the region, as demand
for water grows with populations and economies. These tensions, even if
they do not manifest in dispute, may color the geo-political
relationships between states within a basin and become obstacles to
growth by constraining the regional political economy, preventing
economic cooperation and integration, and diverting resources from
economic development.

Tensions arising over shared rivers risk undermining broader relations
and inhibiting potential economic growth by blocking regional
integration, both in relation to river-related production and in
unrelated areas such as trade and infrastructure interconnection,
'beyond the river.' The benefits of regional integration of markets,
infrastructure, telecommunications, transport connections, labor flows
and financial systems are particularly important for the small,
developing economies characteristic of Africa, whose individual
resources and markets do not provide economies of scale. The economic
fragmentation that could result from tensions over shared rivers
encourages the adoption of economically inefficient polices that focus
on self-sufficiency, rather than on trade and integration. In the
agriculture and power sectors, for example, this could mean the
promotion of food and power self-sufficiency, which emphasizes the need
to produce, in-country, all the food and power the country demands even
if the cost of doing so is greater than the cost of imports. Generally
it is more economically efficient to promote food and power security,
which focuses on a state's capacity to secure its food supply either
through trade or production -- whichever is most cost effective. In
extreme cases, tensions could result in the diversion of strategic human
resources and policy focus from economic development to security
concerns related to water, and a diversion of financial resources to
military preparedness.

# 5. Sustaining poverty

Hydrological variability, water scarcity, and the pervasive perception
of the economic and political risks posed by Africa's water resources
endowment, constrain growth and contribute to sustained and widespread
poverty in Africa. Among the many consequences of sustained poverty are
that human capacity is limited and institutions are weak, investment
capacity is low, and international relations are unstable, with much
regional economic fragmentation.

####### Limited capacity

Africa has the lowest school enrolments in the world and low levels of
education translate into a relatively small number of professionals.
Although there are very capable professionals in the region, they are
far fewer than needed. Staff in public sector institutions are commonly
over-burdened, under-resourced and poorly compensated. Limited capacity
in the private consulting industry leads to extensive use of
international advisors and consultants, without adequate transfer of
skills. Addressing Africa's water resources challenge is complex and
needs high levels of skills -- arguably higher than in most other parts
of the world, and strong, competent institutions at the national and
international level. In addition, Africa has very low levels of
available investment capital, and low levels of private foreign
investment. Addressing Africa's water resources challenge is costly and
needs high levels of financial investment, again higher, relatively,
than in most parts of the world, where hydrological variability is
lower.

####### Regional fragmentation

Fragmented markets and infrastructure in the region are an obstacle to
growth and poverty alleviation. Regional integration is increasingly
recognized as an important growth strategy for the small, developing
economies of Africa. The growing number and growing strength of regional
economic groupings is a response to this. The fragmentation of regional
infrastructure in particular is a major obstacle to growth for small,
landlocked economies. But regional integration requires strong
international institutions and relations, and the region's institutions
are young and its relations are often strained by conflict. The
continent's shared rivers can serve either to support or to subvert
regional cooperation and integration.

# 6. Limited water resources management

####### Limited storage

![](media/image2.wmf){width="4.151388888888889in"
height="2.9659722222222222in"}Managing extreme variations in river flows
needs storage to buffer variability. The amount of water storage
capacity in reservoirs in Africa is very low and, as a consequence, so
is the ability of African water resources managers to mitigate against
major variations in river flow. Very little investment has been made in
water storage in Africa relative to any other region of the world, and
much of the existing infrastructure is in poor condition and in need of
rehabilitation investment. In Ethiopia there are less than 50 m^3^ per
capita in storage; in South Africa, the nation with probably the most
hydraulic infrastructure in Africa, this figure is about 700 m^3^ . In
the USA this figure is over 6,000 m^3^ (Figure 2). Yet hydrological
variability in Africa is about three times that of the US -- arguably
justifying much more storage. Whatever the option for storage chosen,
the investment needs are very large.

# 

####### 

####### 

####### Degrading watersheds

Watershed degradation is a serious and rapidly intensifying problem in
many parts of Africa. Cultivation and livestock rearing on marginal
lands can seriously degrade land and water resources, changing the
pattern of runoff to rivers and groundwater. As populations and
pressures on land grow, the poorest of the poor are forced into more and
more marginal lands. In the river floodplains, it is the poor who settle
the most vulnerable and risky part of the plain. In river basin
headwaters, the poorest settle the vulnerable uplands, often with high
slopes and thin soils. Forests are cut down, wetlands drained and slopes
are cultivated. Soils are eroded, resulting in minimal crop yields and
unsustainable livelihoods. More insidiously, groundwater recharge is
reduced and levels lowered, river flows become much more flashy and
downstream flood and drought impacts can be greatly enhanced. Where
rivers are shared between nations, watershed degradation is a growing
international threat.

In 2000 and 2001 flooding of the Save and Limpopo rivers in Southern
Africa had major impacts, particularly on the poor populations living in
the floodplains in Mozambique. Smallholder settlement on vulnerable
headwaters upstream, coupled with recurring drought and flood, have led
to serious soil erosion and altered hydrologic regimes, with impacts
throughout the river basins of the region. In the case of Mozambique,
managing floods and droughts requires actions in the watersheds of
upstream states. In the highlands of the Nile Basin in Ethiopia, 70% of
the land is degraded to the point where livelihoods are no longer
sustainable, affecting as many as 30 million people in Ethiopia, as well
as causing damage downstream as a consequence of sediment loads and
regular flooding. Another critically important case is the Fouta Djallon
highlands in Guinea, the headwaters of 14 international rivers in
Africa, rivers that are shared with 14 other states. Extreme poverty in
Guinea is resulting in inevitable upland degradation with consequent
impacts on the flows of shared rivers. Unintentionally, the settlement
of vulnerable watersheds in one country, often by the very poor, can
have major impacts on a downstream country -- often on the very poor
settled in the floodplains there.

It is clearly in the interest of all downstream states to promote the
economic growth upstream that is needed to ensure sustainable watershed
management. There can be no reasonable solution to watershed degradation
without rationalizing the utilization of marginal lands, increasing
water storage, and promoting international cooperation.

####### Deteriorating water quality

The quality of Africa's water resources remains relatively good as a
consequence of low industrial and agricultural effluent loads, in
comparison to more developed regions. This situation, however, is
changing. Municipal wastewater loads are already having serious water
quality impacts, and water quality management is often a low priority.
If improved policies for water quality management are adopted now,
Africa may avoid the high environmental, social and economic costs of
poor water quality, and will not need to implement the costly and
complex solutions that pollution clean-up always entails.

One example of serious impacts of poor water quality can be found in the
Niger Delta, a valuable but vulnerable ecosystem with half a million
hectares of mangrove swamps. The Delta is densely populated, with a
population of over 5 million people growing at 3.5% per year. It is also
the center of Nigeria's petroleum and gas industries, with three
refineries generating large quantities of toxic sludge and occasional
oil spills. Fertilizer production also generates large quantities of
effluent. Rich in phosporous and nitrogen, effluent treatment is only
intermittent, with major spills occurring in 1992 and 1993 and resulting
in massive fish kills. The urban centers in the Delta have poorly
functioning municipal and industrial wastewater treatment plants, with
direct discharge to drains and rivers and associated algal blooms and
fisheries depletion. Appropriate policies and capacities are needed to
ensure the prevention of such water quality degradation in Africa.

####### Inefficient utilization 

![](media/image3.wmf){width="3.9027777777777777in"
height="2.6909722222222223in"}To meet the growing demands of Africa,
water resources must be managed efficiently. Capacity constraints and
regional tensions, however, generally give rise to inefficient water
utilization policies and instruments which do not provide the
appropriate incentives for water conservation and efficient allocation.
Human resources capacity constraints can undercut efforts to design and
implement efficient water resources policies. Financial constraints can
preclude implementation if resources are not available to make essential
investments in water management and infrastructure. One example is the
limited investment in hydropower development, relative to the rest of
the world, as shown in Figure 3. Regional tensions and fragmentation
encourage the adoption of polices that focus on national
self-sufficiency, rather than economic efficiency. Much water resources
planning and development is entirely based on national analysis and
perspectives, considering shared rivers without recognizing the often
much greater opportunities of integrated basin-wide management. The
first principle of effective water resources management is consideration
of the basin as a unit. Even though doing this is significantly more
complex when basins are shared by many countries, the net benefits of
integrated planning across the basin (even accounting for the costs of
cooperation) can be much higher than the sum of the benefits derived by
each country planning individually. Together, these constraints can lead
to poorly designed and implemented policies which result in economically
inefficient utilization and allocation of water resources.

# 7. Policy and investment responses

# 

Proactive policy and investment responses can break the vicious circle
(see Figure 1), in which Africa's natural and historical water resources
legacies generate social, political and economic risks, which sustain
poverty, which limits the effectiveness of water resources management,
which then aggravates the impacts of the water resources legacy, and so
on. Policy responses and investments are needed simultaneously in each
of three main areas, to a greater or lesser extent: water resource
management; economic policy and planning; and foreign policy and
international relations.

####### Managing water resources

*Capacity building*. At the heart of managing and mitigating Africa's
water resources legacies is the imperative of building the knowledge,
skills, policy and institutional base at the national and local level to
utilize the relatively new and multidisciplinary tools of integrated
water resources management. During the last decade, several countries in
Africa have launched serious water resources management review and
reform processes to achieve this goal. The focus of knowledge and skills
goes beyond hydrology and engineering, to include economics, law and the
social sciences and requires the engagement of young professional and
technical staff in a range of analytical and practical activities, thus
'learning by doing'. Innovative regulatory and river basin institutional
arrangements are also needed and emerging, overcoming the fragmentation
of multiple agencies involved in allocating water resources for
different uses. The effective stewardship of Africa's water resources
ultimately needs the engagement of all segments of society, as everyone
has a responsibility to use water wisely, conserving and protecting the
resource for future generations. 'Self-help' is a traditional strength
of Africa and needs to be harnessed, to make managing water 'everyone's
business'.

*Investments in storage*. There is no doubt that mitigating Africa's
legacy of hydrological variability requires increased water storage, to
buffer the impacts of unpredictable and greatly varying rainfall and
river flow. Increasing storage capacity must become a priority in the
coming years. Engineering solutions have historically been used to
address variations in river flow, and have generally focused on the
construction of surface storage reservoirs for regulating seasonal and
annual discharges. The development of large-scale storage has
significant social and environmental impacts, so the challenge is to
minimize such impacts through appropriate approaches towards storage,
including watershed and wetland conservation, as well as artificial
surface water and groundwater storage. At the same time, non-structural
alternatives, such as regulatory and pricing schemes, can modify water
use patterns and mitigate against the adverse economic impacts of
hydrological variability.

*Investments in watershed management*. Directly related to investments
in storage, investments in watershed management are critical to the
sustainability of Africa's land and water resources. In upland areas,
set-asides, re-afforestation and soil conservation on a large scale are
essential. In floodplains, land zoning to provide space for inevitable
flooding is preferable to enormously costly (and often eventually
unsuccessful) efforts to control floods. However, this may require the
identification of alternative sustainable livelihoods for large numbers
of poor people, and the solutions are not simple. The continued
development of extensive agriculture -- the growth strategy of many
countries -- almost guarantees continued watershed degradation.
Alternative strategies, such as agricultural intensification and
industrialization, must be explored, together with community-based
programs for natural resource management. There are a growing number of
cases where the role of rural people as guardians of the watersheds that
feed cities and industries downstream is recognized, with funds (e.g.,
levies on water, energy and other utility sales) raised for rural
development programs. This also needs to be recognized in international
river basins, where upstream nations are commonly the guardians of the
watersheds for downstream nations. Upstream nations may not always need
water, but they do need to see benefits from investment and development.

####### Managing the economy

Under highly variable hydrological conditions, water shocks cannot be
totally eliminated. Economic policies can be adopted, however, to make
economies less vulnerable to these shocks. Key policies include
diversification and structural reforms as well as trade and integration.
Together these policies will increase the resilience of economies to
hydrological variability.

*Diversification and structural reforms.* The structures and policies of
some economies will make them more vulnerable to hydrological
variability than others. African economies are heavily reliant on
agriculture (and particularly rainfed agriculture) for income and
employment, and are therefore highly vulnerable to water shocks. Africa
will be less vulnerable to hydrological variability if: the structures
of national economies are more diversified, generating an increasing
share of income and employment from manufacturing and services; sectoral
policies encourage the production of goods and services that are
resilient to water shocks, and the import of those that are vulnerable
to water shocks; and investment policies promote the use of production
technologies and processes less dependent on water. Water pricing
policies, sectoral policies and investment incentives can all be used to
promote patterns of production and investment that help insulate
economies from the impacts of water shocks.

*Trade and integration.* Trade and regional integration can also help
insulate economies against the impacts of hydrological variability.
Historically, African societies coped with hydrological variability
through mobility (e.g., pastoralism, migration and even conquest), with
populations moving when land vulnerability and water variability
threatened their livelihoods. Today, this sort of mobility is no longer
feasible. Rather than moving populations, however, production can be
moved in response to resource availability and variability, and then
traded. Trade and integration effectively broaden the potential spatial
distribution of production across borders, lessening the localized
production risks posed by hydrological variability in 'normal' years by
allowing a regional smoothing of surplus and deficit production. The
Southern Africa Power Pool is a strong example; it provides power
interconnection among seven countries, lessening the vulnerability of
energy supplies to the hydrological variability faced by each individual
country, and at the same time reducing generation capacity and reserve
requirements. While extreme events will require broader interventions,
policies that encourage trade and integration can moderate the effects
of hydrological variability on economies.

####### Managing international relations

*The benefits of cooperation*. Where rivers cross national borders and
river flow variability is high, foreign policy that promotes effective
international cooperation is essential, generating a wide range of
benefits for co-riparian states. Cooperation will enable better
management of ecosystems, providing *benefits to the river*, and
underpinning all other benefits that can be derived. Efficient,
cooperative management and development of shared rivers can yield major
*benefits from the river*, in increased food and energy production, for
example. Cooperation on an international river will result in the
*reduction of costs because of the river*, as tensions between
co-riparian states will always be present, to a greater or lesser
extent, and those tensions will generate costs. International rivers can
be catalytic agents, as cooperation that yields benefits from the river
and reduces costs because of the river can pave the way to much greater
cooperation between states, even economic integration among states,
generating *benefits beyond the river* (see Figure 4). The Nile Basin
Initiative provides an excellent example of cooperation where all ten
riparian states are proactively seeking to generate and share benefits
at all of these levels.

+--------------------+----------------------+--------------------------+
| **Figure 4: Types  |                      |                          |
| of Cooperation on  |                      |                          |
| International      |                      |                          |
| Rivers**           |                      |                          |
+--------------------+----------------------+--------------------------+
| **Type**           | **The Challenge**    | **The Opportunities**    |
+--------------------+----------------------+--------------------------+
| **Type 1**         | Degraded water       | Improved water quality,  |
|                    | quality, watersheds, | riverflow                |
| Increasing         | wetlands, &          | characteristics, soil    |
| Benefits           | biodiversity         | conservation,            |
|                    |                      | biodiversity and overall |
| ***To the River*** |                      | sustainability           |
+--------------------+----------------------+--------------------------+
| **Type 2**         | Increasing demands   | Improved water resources |
|                    | for water,           | management for           |
| Increasing         | sub-optimal water    | hydropower &             |
| Benefits           | resources management | agricultural production, |
|                    | & development        | flood-drought            |
| ***From the        |                      | management, navigation,  |
| River***           |                      | environmental            |
|                    |                      | conservation & water     |
|                    |                      | quality                  |
+--------------------+----------------------+--------------------------+
| **Type 3**         | Tense regional       | Policy shift to          |
|                    | relations &          | cooperation &            |
| Reducing Costs     | political economy    | development, away from   |
|                    | impacts              | dispute/conflict; from   |
| ***Because of the  |                      | food (& energy)          |
| River***           |                      | self-sufficiency to food |
|                    |                      | (& energy) security;     |
|                    |                      | reduced dispute/conflict |
|                    |                      | risk & military          |
|                    |                      | expenditure              |
+--------------------+----------------------+--------------------------+
| **Type 4**         | Regional             | Integration of regional  |
|                    | fragmentation        | infrastructure, markets  |
| Increasing         |                      | & trade                  |
| Benefits ***Beyond |                      |                          |
| the River***       |                      |                          |
+--------------------+----------------------+--------------------------+

*Sharing benefits.* Allocation of the water of international rivers is
often contentious. However, the underlying interest of many involved is
commonly not the water itself -- but rather the potential benefits
derived from the use of water in a river system (i.e. not cubic meters
but dollars). Focusing on these benefits, rather than the physical water
itself, will broaden the perspective of basin planners. Equitable
sharing of benefits may require some sort of redistribution or
compensation, and could involve monetary transfers, granting of rights
to use water, financing of investments, or the provision of non-related
goods and services. The broader the range of benefits under discussion,
the more likely a mutually acceptable solution can be found.

# 8. Conclusion

Much of the focus of the policy debate on water and poverty and Africa
is, quite rightly, on ensuring access of the poor to basic and
sustainable levels of water supply and sanitation services. Health,
productivity, well-being and dignity depend on access to these services.
There is a growing policy focus on water for food production and the
imperative of increasing the efficiency of water use in Africa's
agriculture to increase production reliability and yields. This debate
is entwined with broader questions of food security, trade and the focus
of production in Africa. Over the past decade, there has also been a
growing policy focus on water resources management. Many countries in
Africa have launched water policy review and reform initiatives,
recognizing the imperative of integrating water management across uses
and users at the river basin level. Many difficult policy issues such as
water regulation and pricing are being debated, adopted and implemented.

In this paper we propose that Africa's unique water legacies of
hydrological variability and the shared nature of many of its rivers are
significant contributory factors to the prevalence, depth and continued
existence of poverty. Coping with these legacies requires more than just
integrated water resources management policy adoption and
implementation. In addition, it is essential that economic policies are
designed and adopted to encourage economic diversification and trade,
thereby increasing the resilience of Africa's economies to these
legacies. Finally, it is also essential that foreign policy promotes and
enables international cooperation on transboundary rivers, creating the
opportunity to generate and share substantial benefits. All three of
these policy interventions need to be linked to appropriate investments
in water management institutions and infrastructure and alternative
livelihoods.

Integrating all three policy actions -- water resources policy, economic
policy and foreign policy -- in a proactive and strategic approach is
essential to break the vicious circle that Africa's water resources
pose. The New Partnership for Africa's Development (NEPAD) provides an
ideal forum to promote and monitor such policy actions and to call for
appropriate investments.