Essays on water resources and the Ugandan economy

Abstract

This thesis analysed the link between water resources and the Ugandan economy. The study was motivated by the fact that Uganda is largely an agro-based economy. In addition, agricultural activity on which many socioeconomic activities are anchored is rain-fed, with less than 1 percent of the country s arable land being currently under irrigation. Furthermore, reports suggest that many episodes of economic instability are attributed to disruptions in agricultural activities which, in many cases have been due to changes in water availability. This study first, used the System of Economic and Environmental Accounting for Water (SEEAW) in order to establish the available volume as well as use of water resources across the major sectors of the economy. It was established that the current level of water supply is adequate to meet the country s current demands. In addition, a framework for analysing the link between water resource policies and other socioeconomic policies in the economy was developed. This framework is envisaged to guide researchers and policy practitioners in the analysis of environment-economy policy issues. Second, the study investigated the economy-wide impact of drought on the Ugandan economy using a computable general equilibrium model (UgAGE-Water) for Uganda. An assessment of the resulting losses with respect to GDP, employment, the trade balance and household welfare was undertaken. Overall, the results show that even a short-term drought can cause substantial losses to the economy. Third, the effects of a water tax policy on the economy were investigated. Specifically, an investigation of the possibility of designing a tax that is capable of minimising the costs of environmental regulation while achieving the economic objective of raising tax revenue was undertaken. Underpinned by the double dividends hypothesis , the results show that whatever the degree of regressivity resulting from the tax, it is possible to design it in a way that benefits the economy. The overall findings in this thesis are designed to highlight the challenges which the economy faces whenever there are changes in water availability. It further articulates the possible interventions which can be used to mitigate such water related challenges in a developing country context.