Egypt, Ethiopia, and the Nile: The Economics of International Water Law

Table of ContentsI. Introduction 29II. The Nile, Egypt, and Ethiopia 30III. The Law of International Watercourses 34A. The Convention and Customary International Law 34B. Egypt's Claim under International Law 35C. Ethiopia's Claim under International Law 37D. The Traditional Doctrinal Approach 38IV. An Economics Approach to the Law of International Watercourses 40A. Economics and International Law 40B. The Nile and Transaction Costs Economics 43V. Conclusion 46I. IntroductionRanging from traditional legal doctrinal analysis to social science research frameworks common to political science and economics, the methodological tools available to scholars, commentators, and students of international law have dramatically expanded. Research questions about the efficacy of international law, the operation of international institutions, the preferences of states, and the motivations for state behavior-questions often foreclosed by a narrow focus on international law doctrine-are now being increasingly asked and answered. The language of international law is not only one of treaties and custom, but also of incentives and rational self-interest.In The Economic Foundations of International Lair, Eric Posner and Alan Sykes contribute to the evolving study of international law by providing a conceptual framework to theorize and predict how international law will operate in the future.1 Beginning with the assumption that states are rational, self-interested actors, pursuing their policy preferences in an international system without a central enforcement mechanism, Posner and Sykes demonstrate the utility of an economic approach in various substantive areas of international law. They describe the conditions under which international cooperation is possible and explain the roles of reputation, bribes, sanctions, and mutual defection in the enforcement of international law. For them, the economics approach is a fruitful alternative to the more traditional, doctrinal approach for analyzing international law.This Article builds on their insights and evaluates the merits of an economic approach in the area of international water law. It compares the economic approach with the traditional doctrinal approach to international law by analyzing both in the context of the conflict between Ethiopia, Egypt, and nine other riparian states over the allocation of the Nile's water resources. The Article argues that the traditional doctrinal approach, while useful in framing the legal issues for the parties, is of limited value without an understanding of when, how, and under what conditions states will comply with or violate international law. An economics approach, however, moves beyond international law doctrine and exposes the underlying preferences of states and the obstacles to international dispute resolution. It also opens the door to think creatively about mechanisms to incentivize states to cooperate and achieve mutually beneficial outcomes. Applied to Egypt, Ethiopia, and the Nile, the economics approach shows that a combination of incentives and the threat of retaliation-not the substantive international law-shapes state decision-making, and it potentially offers a useful framework to better understand and resolve international water law disputes. …