In this week's edition, we discuss Egypt&rsquo;s water scarcity problems after the GERD&rsquo;s completion, and the untapped circular economy potentials.
<hr>
<h2>GERD is Complete&hellip;What Now?</h2>
On September 23rd, Minister Sameh Shoukri <a href="https://gadebate.un.org/sites/default/files/gastatements/%5Bvariable%3Acurrent_session%5D/eg_en.pdf">reiterated</a> before the UN General Assembly Egypt&rsquo;s long-standing refusal of any unilateral action regarding cross-border water management. Coming at the heels of Ethiopia&rsquo;s completing the fourth and <a href="https://african.business/2023/09/energy-resources/ethiopia-completes-final-filling-of-grand-ethiopian-renaissance-dam#:~:text=On%20Sunday%2C%20Ethiopian%20prime%20minister,a%20violation%20of%20international%20law.">final</a> filling of Grand Ethiopian Renaissance Dam (GERD), and shortly following yet another failed round of negotiations, what happens next is the question on everyone&rsquo;s mind. An agreement on the terms of operations and how much water can Ethiopia keep behind the Dam, is imperative for the sustenance of Egyptians.&nbsp;
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<h3>What are the expected impacts?</h3>
Without a clear understanding of the future operation of the GERD, the specific downstream impacts remain unclear. <a href="https://allafrica.com/stories/202309120111.html">Early reports</a> suggest that annual floods along Sudan&rsquo;s Blue Nile were conspicuously absent. The potential long-term impacts will pose a threat to Egypt's economy and future security.
<img style="display: block; margin-left: auto; margin-right: auto;" src="https://api-aps.aucegypt.edu/uploads/tinymce/1696813098imageEd. 42_Topic2 En 5.png" alt="" width="500" height="425">
Egypt&rsquo;s current <a href="https://www.al-monitor.com/originals/2022/01/egypt-officially-enters-state-water-poverty">water deficit</a> for example will only get worse. The majority of available freshwater resources feed Egypt&rsquo;s agricultural sector, which <a href="https://www.fao.org/in-action/scala/news/news/news-detail/egypt-scales-up-climate-adaptation-actions-of-its-agriculture-water-and-agrifood-sectors/en">accounts for</a> nearly three-fifths of food consumed in the country.&nbsp;
<img style="display: block; margin-left: auto; margin-right: auto;" src="https://api-aps.aucegypt.edu/uploads/tinymce/1696813180imageEd. 42_Topic2 En 3.png" alt="" width="500" height="425">
Some of the other expected impacts include&nbsp;&nbsp;
<ul>
<li>The volume of stored water in Lake Nasser will <a href="https://www.sciencedirect.com/science/article/pii/S2090447917300837#:~:text=Evaporation%20losses%20will%20increase%20by%205.9%25%20which%20will%20affect%20at,Nile%20water%20salinity%20%5B17%5D.">decrease</a>. Although some argue that less water in the Nile system will be lost to evaporation, freshwater reserves will be reduced in Lake Nasser &ndash; particularly in the absence of agreements between Egypt and Ethiopia.</li>
<li>Less flow through Aswan Dam will reduce national energy production <a href="https://www.sciencedirect.com/science/article/pii/S2090447917300837#:~:text=Evaporation%20losses%20will%20increase%20by%205.9%25%20which%20will%20affect%20at,Nile%20water%20salinity%20%5B17%5D.">by about 3%</a>.</li>
<li>Less sediment and a slower flow rate will put <a href="https://drive.google.com/file/d/1WhY5TyQvawwyL2E2spVZZtGTWFSJyOFm/view?fbclid=IwAR30lkgrv0Eq9UhD-JgnYRhnZho3Ww02fs6-9d3j0lT454PkpomunOfgUME">flora, fauna, and agricultural sustainability at risk</a>. Less downstream sediment accumulation may increase the longevity of river infrastructure, but it decreases important nutrient levels and increases the salinity of water in the River Nile. This leads to lower crop yields, a greater need for chemical fertilizers, a strain on irrigation systems, and more pollution; severe losses in fisheries and high rates of <a href="https://drive.google.com/file/d/1WhY5TyQvawwyL2E2spVZZtGTWFSJyOFm/view?fbclid=IwAR30lkgrv0Eq9UhD-JgnYRhnZho3Ww02fs6-9d3j0lT454PkpomunOfgUME">local species extinction</a>; and coastal erosion.</li>
<li>Agricultural land will be lost in the Nile Valley and Upper Egypt. Some researchers <a href="https://www.mdpi.com/2073-4441/14/3/312#:~:text=With%20GERD%2C%20however%2C%20food%20production,baseline%20scenario%20(Table%205).">estimate nearly a 23% loss</a> in agricultural land. The impact on annual food productivity is likely to be greater, given decreased yields.&nbsp;</li>
</ul>
<img style="display: block; margin-left: auto; margin-right: auto;" src="https://api-aps.aucegypt.edu/uploads/tinymce/1696813275imageEd. 42_Topic2 En 4.png" alt="" width="500" height="425">
In recent years, Egypt has turned increasingly to &ldquo;virtual water,&rdquo; the inclusion of foreign-sourced water usage in the form of agricultural imports, to close the water gap.&nbsp; In 2009, virtual water accounted for <a href="https://link-springer-com.ezproxy.ub.gu.se/article/10.1007/s11269-009-9560-9">about 24%</a> of total water needs &ndash; today that number is closer to 32%, and in 2030 it could be 37.5% or more.&nbsp;
And that is without the GERD. Egypt&rsquo;s dependence on food imports has had adverse economic effects. The war in Ukraine and Covid-19 beforehand showcase the country&rsquo;s vulnerability to external food market shocks (the current <a href="https://www.bloomberg.com/news/articles/2023-09-10/egypt-inflation-soars-as-higher-food-costs-add-to-currency-angst">record inflation</a> of 37.4% is driven largely by a 71.4% increase in food prices). <a href="https://egyptianstreets.com/2022/12/22/can-virtual-water-solve-egypts-water-scarcity/">Egypt's virtual water will surpass</a> the gift of the Nile, but without close coordination of the GERD and Egypt&rsquo;s Aswan High Dam, it may do so at a rate out of Egypt&rsquo;s control.
<h3>What next?</h3>
The only certainty is that&nbsp;<a href="https://www.longdom.org/open-access/cooperation-in-the-water-resources-management-in-the-nile-basin-and-the-permanent-risk-of-conflicts-96939.html">integrated and cooperative water management</a> of the Nile will be a continuous challenge. Egypt is actively pursuing initiatives to secure its water future, such as <a href="https://english.ahram.org.eg/NewsContent/1/2/507050/Egypt/Society/Sisi-calls-for-continued-govt-efforts-to-promote-f.aspx">modernizing irrigation systems</a>, shifting <a href="https://www.al-monitor.com/originals/2021/05/egypt-unveils-strategy-adapt-water-shortages#:~:text=The%20strategy%20will%20limit%20the,1.1%20million%20acres%20in%202019">away from water intensive crops</a>, developing advanced water treatment and <a href="https://www.reuters.com/markets/commodities/egypt-build-21-desalination-plants-phase-1-scheme-sovereign-fund-2022-12-01/">desalination plants</a>, and regreening the Sinai. There is <a href="https://www.sciencedirect.com/science/article/pii/S2090447917300837#ab005">potential</a> to create more water availability in Egypt. However, additional proactive <a href="https://aps.aucegypt.edu/en/articles/973/policy-paper-egypts-climate-water-nexus-risks-and-sustainability-pathways-to-adaptation">mitigation strategies</a> are needed, specifically:
1. Build on Nature-based Solutions (NbS) which take into consideration the nexus between water management, agricultural productivity, and land management
2. Invest in Climate Smart Agriculture (CSA) research and pilot projects
3. Invest in smart water and digital technology tackling leakage, managing water demand and developing climate-proof water infrastructure
4. Address water-scarcity not just as&nbsp; a cross-sectoral and institutional arrangements which necessitate coordination between different state actors (i) the Ministry of Planning (ii) the Ministry of Water Resources and Irrigation, (iii) the Ministry of Agriculture, (iv) the Ministry of Environment
<hr>
<h2>The Circular Economy in Egypt.. Untapped Potential</h2>
On September 12, 2023, the Ministry of Environment <a href="https://www.sis.gov.eg/Story/263394/%D9%85%D9%86%D8%AA%D8%AF%D9%89-%D8%A7%D9%84%D8%A7%D8%B3%D8%AA%D8%AB%D9%85%D8%A7%D8%B1-%D8%A7%D9%84%D8%A8%D9%8A%D8%A6%D9%8A-%D9%88%D8%A7%D9%84%D9%85%D9%86%D8%A7%D8%AE%D9%8A?lang=ar">organized</a> the Environmental and Climate Investment Forum to present green economic projects and economic activities that are sensitive to climate change and environmental impacts. During the forum, Minister of Environment Yasmine Fouad <a href="https://almalnews.com/%d9%8a%d8%a7%d8%b3%d9%85%d9%8a%d9%86-%d9%81%d8%a4%d8%a7%d8%af-6-%d9%81%d8%b1%d8%b5-%d8%a7%d8%b3%d8%aa%d8%ab%d9%85%d8%a7%d8%b1%d9%8a%d8%a9-%d8%a8%d9%85%d8%ac%d8%a7%d9%84%d8%a7%d8%aa-%d8%a5%d8%af%d8%a7/">said</a> that the forum provided model projects to attract investments, resulting in <a href="https://almalnews.com/%d9%8a%d8%a7%d8%b3%d9%85%d9%8a%d9%86-%d9%81%d8%a4%d8%a7%d8%af-6-%d9%81%d8%b1%d8%b5-%d8%a7%d8%b3%d8%aa%d8%ab%d9%85%d8%a7%d8%b1%d9%8a%d8%a9-%d8%a8%d9%85%d8%ac%d8%a7%d9%84%d8%a7%d8%aa-%d8%a5%d8%af%d8%a7/">several memorandums</a> of understanding to move forward to implementation. This type of event represents a step towards a circular economy in Egypt, although challenges of just transitions and effectiveness remain.
<h3>Challenges of the circular economy: piecemeal efforts</h3>
Egypt&nbsp;<a href="https://www.idsc.gov.eg/Studies%20and%20Policy%20Papers/details/7319">has developed</a> several plans to strengthen its circular economy. Nevertheless, government efforts <a href="https://www.idsc.gov.eg/Studies%20and%20Policy%20Papers/details/7319">remain</a> <a href="https://api-aps.aucegypt.edu/uploads/articlesAttachments/1633853175pdfAugust%202021-08.10.Amended.pdf">fragmented</a>, failing to take maximum advantage of resources.
<img style="display: block; margin-left: auto; margin-right: auto;" src="https://api-aps.aucegypt.edu/uploads/tinymce/1696813464imageEd. 42 circular economy_En 4.png" alt="" width="500" height="396">
This is especially important because Egypt, with China, Indonesia, Brazil, Mexico, and Vietnam, <a href="https://www.circularity-gap.world/2021">is one of six</a> &ldquo;grow&rdquo; countries, which are manufacturing hubs seeking to increase production. They are responsible for 47% of global emissions and 51% of global resource extraction, according to the Circularity Gap Report. Egypt must therefore <a href="https://www.circularity-gap.world/2021">optimize</a> its exploitation of resources and use them efficiently in all sectors to ensure sustainable growth. The challenges facing this sector can be summarized as follows:
1. Reduced capacity for recycling and treatment
<ul>
<li>Waste recycling</li>
</ul>
The Egyptian manufacturing sector <a href="https://www.idsc.gov.eg/Studies%20and%20Policy%20Papers/details/7319">produces</a> large amounts of solid waste&mdash;a large part of which is hazardous waste&mdash;but there are not enough recycling facilities to process it..
<img style="display: block; margin-left: auto; margin-right: auto;" src="https://api-aps.aucegypt.edu/uploads/tinymce/1696813654imageEd. 42 circular economy_En 2.png" alt="" width="500" height="396">
<ul>
<li>Wastewater treatment</li>
</ul>
Wastewater treatment in Egypt <a href="https://www.idsc.gov.eg/Studies%20and%20Policy%20Papers/details/7546">represents</a> a substantial <a href="https://api-aps.aucegypt.edu/uploads/articlesAttachments/1633853175pdfAugust%202021-08.10.Amended.pdf">opportunity</a>, especially given the risks of scarce water resources. But wastewater <a href="https://www.idsc.gov.eg/Studies%20and%20Policy%20Papers/details/7319">remains</a> a problem in the industrial sector, which in 2018/19 used about 9.5 billion cubic meters of water. Much industrial waste runs off into waterways and sewage networks, and since only half of it is treated, it causes environmental and health problems.
2. Financing challenges
Recycling projects <a href="https://aps.aucegypt.edu/en/articles/733/financing-the-circular-economy">face</a> difficulties in finding financing due to risk concerns, which make financial institutions, especially banks, reluctant to extend loans. In Egypt, SMEs <a href="https://aps.aucegypt.edu/en/articles/733/financing-the-circular-economy">account for</a> 80% of GDP, but only 6% of them can obtain bank loans.
<h3>Towards waste recycling for a sustainable economy</h3>
To overcome these challenges, the government should develop a national circular economy strategy with clear goals and time-bound plans to put it into action, as&nbsp;<a href="https://www.shorouknews.com/news/view.aspx?cdate=09042023&amp;id=24ac23f2-6dad-4531-9ecc-43e4e0c4807d">demanded</a> by some senators. In this regard, Egypt could benefit from the <a href="https://api-aps.aucegypt.edu/uploads/articlesAttachments/1633853175pdfAugust%202021-08.10.Amended.pdf">experience</a> of the European Union in 2015 and China, which <a href="https://aps.aucegypt.edu/en/articles/733/financing-the-circular-economy">adopted</a> the principles of a circular economy in 2002. Under this strategy, the following steps must also be taken:
<ul>
<li style="font-weight: 400;" aria-level="1">Encourage <a href="https://ideas.repec.org/a/ssi/jouird/v5y2023i3p45-57.html#:~:text=The%20analysis%20reveals%20that%20although,as%20well%20as%20a%20receptive">investment</a> in the infrastructure of the circular economy and <a href="https://aps.aucegypt.edu/en/articles/733/financing-the-circular-economy">incentivize</a> the private sector to contribute, in addition to <a href="https://ideas.repec.org/a/ssi/jouird/v5y2023i3p45-57.html#:~:text=The%20analysis%20reveals%20that%20although,as%20well%20as%20a%20receptive">implementing</a> <a href="https://fount.aucegypt.edu/cgi/viewcontent.cgi?article=1103&amp;context=studenttxt">local</a> projects requiring minimal investments.</li>
<li style="font-weight: 400;" aria-level="1">Stimulate the informal sector, which controls a large part of waste collection and recycling activities in Egypt, resulting in unsafe recycling operations.</li>
<li style="font-weight: 400;" aria-level="1">Facilitate financing and training for projects producing high quality recycled <a href="https://api-aps.aucegypt.edu/uploads/articlesAttachments/1633853175pdfAugust%202021-08.10.Amended.pdf">materials</a>.</li>
</ul>
<hr>
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"Adasa" is a weekly policy digest by Alternative Policy Solutions. "Adasa" provides an analysis of a select number of policy developments and their effect on inclusive development and socioeconomic change.

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