Transboundary Water Allocation in the Zambezi River Basin

Transcription

1 DISS.ETH NO Transboundary Water Allocation in the Zambezi River Basin Dissertation submitted to ETH ZURICH for the degree of Doctor of Sciences presented by Lucas Beck Dipl. Kult Ing. ETHZ born 26.February 1974 citizen of Switzerland accepted on the recommendation of Prof. Dr. Thomas Bernauer, examiner Prof. Dr. Wolfgang Kinzelbach, co examiner Dr. Tobias Siegfried, co examiner October 2010

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3 i Acknowledgements After a few years working in the private sector, it was quite a change to be back in academia writing this PhD work. This thesis would not have been completed, and I would also not have been able to focus on the one topic for a couple of years, had it not been for the support of many people who helped me in various ways. First and foremost, I would like to thank Thomas Bernauer who was in many respects probably the best supervisor imaginable and my host for four years. He introduced me to the world of political science and also motivated me on a personal level on many occasions. My utmost gratitude goes to Wolfgang Kinzelbach whose excellent and challenging comments and questions really inspired me to dig deeper into my research topic. To Tobias Siegfried I am deeply indebted. With him I had probably the most enriching and intense discussions on my thesis. He not only enhanced my own understanding of the subject but also helped me, on a personal level, to derive more and more pleasure from doing this work and stopped me losing my motivation for this exciting topic. When delving into the Pandora s box of the fair division of water resources, I was able to count on the excellent advice of Steven Brams from the NYU during my extended stay in New York. As part of a larger team working in different fields on the Zambezi River Basin, I received a lot of important feedback from Philipp Meier, Claudia Casarotto, David Senn and Amaury Tilmant, for which I am extremely grateful. Special thanks in this respect go to Johny Wüest who was an invaluable support during my field research in Zambia, Zimbabwe and Mozambique. I would also like to express my special gratitude to Janine Sutter for her extensive advice on GIS-related matters and, of course, to Luzia Bieri, Bettina Schäppi, Moritz Imfeld and Fabian Blaser who all contributed to this work, to a greater or lesser extent, in the writing of their own masters or bachelor theses. Last but not least, I would like to thank all my friends and especially my family, without whose support it would definitely not have been possible to find enough motivation to achieve this work. Lucas Beck, October 2010

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5 iii Summary The Zambezi River Basin (ZRB) is the fourth largest African river catchment and the largest within the Southern African Development Community (SADC). It extends over an area comparable to double the size of France and, in terms of its discharge at the delta into the Indian Ocean, is similar to the Rhine or Danube rivers. It is populated by roughly 36 million people and shared by eight riparian countries including Angola, Botswana, Malawi, Mozambique, Namibia, Tanzania, Zambia and Zimbabwe. The thesis presented here addresses three research fields in the context of transboundary water resources allocation using a case study on the Zambezi River Basin (ZRB). To complement this work, the fourth and final part addresses the monitoring of water quality in Europe. The first part concentrates on water use scenarios in the ZRB which are developed with the aim of identifying major impacts on the present system. The scenarios are based on strong assumptions in terms of socio economic and demographic development as well as extreme climatic conditions. These scenarios, which explore the limits of the possible water development opportunities, are compared to a moderate scenario that is designed according to a more customary approach and projects water use based on historic development trajectories. On the basis of these scenarios, the potential impact on water availability at various specific locations, as well as at country level, is assessed. The second part addresses the problem of fair water allocation. Assuming that countries continue to consume water resources in a non cooperative fashion, this part discusses how a fair distribution of benefits and costs might look, and enhances the assumption that externalities caused by disproportionate water use can be balanced out among the different countries by means of compensation payments. Based on three principles of fairness, namely efficiency, equitability and envy-freeness, a policy is then developed and applied to the ZRB, taking account of the same water demand scenarios developed in

6 iv the first part of this thesis. It is assumed that, under certain conditions, the principles of efficiency and equitability can be satisfied. We also see envy freeness as a result of interstate bargaining, where it is ultimately the capability of the countries that decides the extent to which upstream countries are willing to relax their insistence on their territorial sovereignty and make concessions in favor of downstream users. The third part looks at the influence of hydro political and economic asymmetry on transboundary water allocation, and a formal model is developed that describes how the political power exercised by downstream countries influences the allocation of water upstream. While existing research mainly concentrates on optimizing water allocation to the highest economic benefit, it is assumed in this part that, ultimately, water does not flow to the highest economic benefit but simply to the most powerful country. The result of such an allocation is illustrated by means of a case study on the Zambezi. The fourth part is a paper on water quality monitoring in Europe, which is complementary to the research on the allocation of water quantities in the ZRB. Here, we examine the political, economic and ecological aspects of international water quality monitoring, the main concern being whether the measuring and reporting of water quality are based on strategic considerations and, if so, how this impacts data quality. The first three parts of this thesis rely on a hydrologic model that simulates water availability at selected locations in the ZRB based on demands by the different users. Game theoretic methods are also used here alongside the conventional methods applied to the hydrological modeling of river basins.

7 v Zusammenfassung Das Sambesibecken ist das viertgrösste Wassereinzugsgebiet Afrikas und erstreckt sich über eine Fläche vergleichbar mit der doppelten Fläche Frankreichs. Der Fluss selber entspringt im nördlichen Sambia und mündet nach rund 2600 km in Mosambik in den Indischen Ozean, mit einem Volumen das ungefähr dem des Nil oder des Rhein entspricht. Der Sambesi ist ein internationales Gewässer und beinhaltet Anteile von acht Ländern welche alle der Südafrikanischen Entwicklungsgemeinschaft (SADC) angehören. Dazu gehören Angola, Botswana, Malawi, Mosambik, Namibia, Tansania, Sambia und Simbabwe. Im Gebiet des Sambesi leben rund 36 Millionen Menschen welche zu einem grossen Teil von den Wasserressourcen des Flusses abhängig sind. Die vorliegende Arbeit untersucht drei Bereiche der Forschung über Grenzüberschreitendes Wasserresourcenmanagement mit besonderem Augenmerk auf der Allokation von Wasserressourcen im Sambesibecken im Südlichen Afrika. In einem vierten Teil wird zudem ergänzend der Aspekt der Wasserqualität behandelt im Zusammenhang mit der grenzberschreitenden Kontrolle von Wasserqualität in Europa. Der erste Teil widmet sich der Entwicklung von möglichen Nutzungsszenarien für den Zeitraum von Die Szenarien zeigen auf, welche Auswirkungen eine beschleunigte Entwicklung der wirtschaftlichen, sozioökonomischen und demographischen Sektoren des Gebietes unter ungünstigsten Klimaeinwirkungen auf die Wasserwirtschaft haben könnte. Dies im Vergleich zu einem moderaten Szenario welches der gängigen Praxis entspricht die mehrheitlich Szenarien aus der vergangenen Entwicklung extrapoliert und nicht erkundet, welche Folgen eine volle Ausschöpfung des Wassernutzungspotenzials haben könnte. Der zweite Teil der Arbeit befasst sich mit dem Entwurf einer Methode für eine gerechte Allokation von Wasserressourcen: Es wird angenommen, dass die verschiedenen Anrainerstaaten die Wasserressourcen auf ihrem Territorium nicht kooperativ sondern nur zur eige-

8 vi nen Gewinnmaximierung nutzen und damit nachteilige Folgen auf die Nachbarn in Kauf nehmen. Mit dieser Vorgabe wird ein Verfahren zur kooperativen Verteilung von Gewinnen und Kosten aus der Wassernutzung vorgeschlagen, welches Auswirkungen des Verhaltens von Obenanliegern auf die Untenanlieger über Kompensationszahlungen ausgleicht. Die hier entwickelte Methode schlägt eine gerechte Verteilung unter Berücksichtigung von drei wesentlichen Prinzipien vor: namentlich Effizienz (efficiency), Gleichwertigkeit (equitability) und Neidlosigkeit (envy-freeness). Während unter gewissen Bedingungen die Prinzipien von Effizienz und Gleichwertigkeit erfüllt werden können wird angenommen, dass Neidfreiheit das Resultat von zwischenstaatlichen Verhandlungen ist wo letztendlich die Verteilung von politischer und wirtschaftlicher Macht innerhalb des Einzugsgebiets darüber entscheidet in welchem Ausmass die Obenanlieger zugunsten von Untenanliegern in Bezug auf Wassernutzung auf ihre territoriale Souveränitt und somit auf ihre im hydrologischen Sinne privilegierte Position verzichten. Der dritte Teil behandelt den Einfluss von politischer Macht von Untenanliegern auf das Wasserallokationsverhalten von Obenanliegern. Während sich die bisherige Forschung vor allem mit der Frage beschäftigt, wie eine internationale optimale Zuteilung von Wasserressourcen unter dem Gesichtspunkt von höchster ökonomischer Effizienz aussehen müsste, geht dieser Ansatz davon aus, dass Wasser in Realität nicht zum höchsten ökonomischen Nutzen, sondern schlichtweg zum mächtigsten Anrainer fliesst. Wie eine solche Allokation aussehen könnte wird anhand des Sambesi aufgezeigt. Ergänzend zu der Forschung über die Allokation von Wasserquantitäten im Sambesi widmet sich der vierte Teil politischen, ökonomischen und ökologischen Bedingungen im Zusammenhang mit der internationalen Kontrolle von Wasserqualität in Europa. Das Augenmerk liegt hier vor Allem in der Frage ob die Berichterstattung von nationalen Qualitätskontrollen auf strategischen Entscheidungen beruhen und somit die Datenqualität beeinflussen. Der Beantwortung der Fragen aus den ersten drei Teilen dieser Arbeit dient ein hydrologisches Modell welches den Einfluss von räumlich verteilter Wassernachfrage auf die Verfügbarkeit an spezifisch ausgewählten Orten sowie auf Länderebene dynamisch über die Zeit simuliert. Hierzu werden neben herkömmlichen Programmiermethoden zur Modellierung von Flusseinzugsgebieten auch spieltheoretische Ansätze verwendet.

9 Contents vii Contents I Introduction 1 1. Introduction The Zambezi River Basin Research context Main Questions Existing Approaches Model Environment Water Quality Monitoring in Europe Authorships II Water Scenarios Water Scenarios for the Zambezi River Basin, Introduction Scenarios Supply Demand Model Results Conclusion III Fair Water Allocation Fair Water Allocation in Complex International River Systems Introduction Water Allocation: Existing Approaches The Notion of Fairness Fair Water Allocation Fair Water allocation in the Zambezi River Basin Results Conclusion IV Geography of Conflict The Geography of Conflict in International River Basins Introduction

10 viii Contents 4.2. Existing Models Hydro Political Model Case Study: The Zambezi River Basin Conclusions V Water Quality Monitoring in Europe Explaining the Spatial and Temporal Evolution of Water Quality Monitoring in Europe Introduction Spatial and Temporal Clustering of Reported Monitoring Domestic and International Driving Forces Empirical Design, Data, Statistical Approach Results Conclusion VI Appendix 129 A. Appendix to the Scenarios 131 A.1. Overview A.2. Data A.3. Hydrological model A.4. Water supply and demand scenarios for the ZRB, A.5. Additional results B. Appendix to Fair Water Allocation 153 B.1. Model B.2. Water Allocation in the ZRB C. Appendix to Geography of Conflict 163 C.1. Traditional River Basin Optimization Models C.2. Zambezi River Basin Model Data D. Appendix to Chapter D.1. Descriptive Statistics D.2. Binary Correlations D.3. Robustness Checks D.4. Dyadic Results D.5. Electronical Sources List of Figures 184 List of Tables 186

11 Contents ix References 197

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13 Part I Introduction The Zambezi River Basin p. 4 Zambezi River Basin (ZRB) overview history water resources management Research context p. 8 Research context of this PhD thesis Main Questions p. 9 Scenarios fairness in water allocation hydro political asymmetry Existing Approaches p. 13 AQUA Zambezi WaterGAP WWAP Model Environment p. 15 Demand supply modeling environment for this thesis Water Quality p. 18 Water quality monitoring in Europe

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15 3 1. Introduction Population and economic growth, environmental changes, poverty, and uneven socioeconomic development in different parts of the world have put water resources under increasing stress on a global scale. Prevailing public opinion on this matter is well reflected in a prominent speech given on World Water Day in 2001: Kofi Annan, then Secretary-General of the UN, expressed his concerns about the future of water. Notably, he stated that water resources would soon outstrip oil resources in terms of their importance. While this statement was rather speculative, it is evident that water scarcity problems, both in terms of water quantity and quality, are likely to increase the probability of domestic and international conflicts [50, 15]. Drier areas of the world are of major concern in this respect, particularly when they are characterized by low levels of socio-economic development and changing climatic conditions. Southern Africa is an important example of this type. The largest part of this PhD thesis (three papers) deals with the Zambezi River Basin (ZRB), the largest and politically most complex international river basin in Southern Africa. Based on computational simulations it develops scenarios for water demand and availability over the next 40 years. It also examines possibilities for establishing formal international water allocation rules. In addition, the fourth paper of the dissertation deals with water quality issues, and the monitoring of water quality in particular. While transboundary water quality issues are also emerging on the political agendas of ZRB countries in recent years, Europe has a much longer history with respect to water quality problems. This is why the fourth paper examines the historical evolution of water quality monitoring activity in Europe. It studies the factors that have influenced the spread of such monitoring activity across Europe in the past years.

16 4 1 Introduction 1.1. The Zambezi River Basin The Zambezi River Basin (ZRB) has its source on the Central African Plateau, 1585 meters above sea level, in the Kalene Hills in Northwestern Zambia. It is the fourth largest river basin in Africa and is roughly 14 times the size of Malawi, the smallest riparian state. Zambia makes up the largest share of the ZRB with 42%, followed by Zimbabwe (41%), Angola and Mozambique with roughly 11% each, Malawi with eight percent, Botswana with six and Namibia and Tanzania with two percent each [26]. The Zambezi River discharges an average of around 2600 m 3 /s (or 82 km 3 per year) into the Indian Ocean. In terms of discharge, the Zambezi is of a similar size to the Nile (2830 m 3 /s) or the Rhine (2200 m 3 /s). The average annual rainfall in the basin (950 mm/yr) varies from 400 to 1400 mm/yr [123, 84], but the average discharge into the Indian Ocean is only 70 mm per year. In terms of water usage in the ZRB we can distinguish between consumptive and nonconsumptive use. Non-consumptive water use consists mainly of hydropower production through a series of impoundments (Figure 1.1): Kariba, shared by Zambia and Zimbabwe, was dammed in 1959; the Kafue Hydropower Scheme in Zambia, consisting of the Kafue Reservoir (dammed in 1971) and the Itezhi-Tezhi Reservoir, 450 km upstream of the Kafue Dam (dammed in 1977), and the Cabora Bassa Reservoir in Mozambique, completed in Besides these there are several important floodplains that rely on the river and can therefore also be considered as non-consumptive users. These include the Kafue floodplains, the Barotse plains, and the Zambezi Delta in Mozambique, all of which are considered very important from an ecological point of view. Victoria Falls, which are located on the border between Zambia and Zimbabwe, are also highly dependent on the Zambezis water flow; they are extremely important to the region s tourism. The largest consumptive water user besides dams (evaporation through impoundment, approx. 13 km 3 /yr ) is irrigated agriculture (approx. 2 km 3 /yr). Domestic water use amounts to approx. 1 km 3 /yr and industrial water to around 0.2 km 3 /yr. In total, consumptive water use is presently around 15-20% of total annual runoff [98]. This relatively moderate water consumption, compared to the river flow today, offers many development opportunities for irrigated agriculture but also for hydropower production. In fact, the water allocation plans of the riparian countries suggest that con-

17 1.1 The Zambezi River Basin 5 sumptive water use might increase up to 40% of total runoff already by 2025 [98]. One problem with such a development is that the more densely populated areas with bigger needs are located in the medium to low rainfall areas. The asymmetry between water availability and population density and the density of economic activity is likely to become more pronounced in the future, especially with growing consumptive agricultural use in some parts of the basin. This heterogeneity and uneven expansion of water use is likely to become a source of conflict within and among the eight riparian countries. Tanzania Angola Upper Zambezi Lungue Bungo Luanginga Cuando Chobe Kabompo Zambia Kafue Itezhi-Tezhi Dam Barotse Victoria Falls Luangwa Mupata Kafue Gorge Dam Kariba Dam Kariba Namibia Botswana Zimbabwe Malawi Shire Tete Cahora Bassa Dam Mozambique Delta Important floodplains Figure 1.1: Overview of the Zambezi River Basin. Major dams, floodplains, riparian countries and subbasins To avoid or mitigate conflict and effectively deal with increasing water scarcity in the future, the proactive management of water resources in the ZRB is crucial. There are three main groups of interest concerned with water management in the Zambezi River Basin. 1) The more technical bodies that look at the optimization of actual water allocations, seasonal flows, prevention of floods, and water quality in the river. Today, these include in particular the Zambezi River Authority (ZRA) and the big hydropower companies ZESCO in Zambia, ZESA in Zimbabwe, and HCB for Cahora Bassa in Mozambique.

18 6 1 Introduction 2) The political authorities include governments and international institutions that represent the different countries national policies and interests in terms of food security, energy (through hydropower), and environmental water flows. These include the Southern African Development Community (SADC), an organization involving 14 Southern African countries (including all eight riparian countries of the ZRB), and government actors from the individual riparian states. The Zambezi Watercourse Commission (ZAM- COM), a basin-wide organization, is still in the making. 3) Academic institutions conducting research on the ZRB are based primarily in Mozambique (notably, Eduardo Mondlane University in Maputo), Zimbabwe (notably the University of Zimbabwe in Harare) and Zambia (notably the University of Zambia in Lusaka). These three countries cover the biggest part of the Zambezi Basin. As to the institutional history of the ZRB, the collection of data concerning the flows of the Zambezi and its tributaries began in 1905, when the Rhodesia Railways started recording water levels at its bridges at Victoria Falls and the Kafue Railway Bridge. The Central African Council, which was initiated by the British government and established in 1946, created the Inter-Territorial Hydroelectric Power Commission as one of its first activities. This commission intended to coordinate the common services of Northern Rhodesia (Zambia), Southern Rhodesia (Zimbabwe) and Nyasaland (Malawi) concerning the management of the Zambezi River [114]. In 1950, a technical conference on the development of the Zambezi River and the use of its waters was held in Salisbury, Rhodesia (Harare, Zimbabwe). Attended by the Portuguese government, the three Central African territories and the Hydroelectric Commission, an agreement concerning water requirements was reached to control the needs of the riparian countries during the construction and operation of dams [114]. In 1954 the Federal Hydroelectric Board was established to coordinate the generation and supply of electricity within the Federation of Rhodesia and Nyasaland. This initiated the construction of the Kariba Dam, which was officially opened on May 17, When the Federation of Rhodesia and Nyasaland was dissolved in 1964, the Federal Power Board was replaced by the Central Africa Power Corporation (CAPCO) whose tasks and duties were taken over by the ZRA [85]. The first organization put in place to deal not only with technical issues but also social and environmental matters was the Kariba Lake Development Company, an organization that was active until the breakup of the Federation of Rhodesia in From 1965 until 1987 there was no organization that actively

19 1.1 The Zambezi River Basin 7 supervised and/or regulated activities in the Zambezi basin. However, the Zambezi River Authority (ZRA) entered the scene on October 1, 1987 [112] following the reconstitution of the Central African Power Corporation (CAPCO) under the Zambezi River Authority Acts. It is jointly owned, in equal proportions, by the governments of Zambia and Zimbabwe [86]. Today, the ZRA is organized through the Zambia Electricity Supply Corporation (ZESCO) and the Zimbabwe Electricity Supply Authority (ZESA). In 1987, the Southern African Development Community (SADC) 1, initiated the Zambezi River Action Plan (ZACPLAN) within the framework of economic cooperation and development of the Southern African countries. The objective of ZACPLAN is to achieve environmentally sound planning and management of water and related sources in the Zambezi River Basin. In line with the strategy of ZACPLAN and with a view to Integrated Water Resources Management in the ZRB, the first focus was on the development of a data system and water use sector studies. A further achievement was the signing of the agreement on the establishment of the Zambezi Watercourse Commission (ZAMCOM), which was initiated by SADC and organized through the ZRA. The ZAMCOM agreement was signed by seven of the eight riparian countries on July 13, Zambia has not signed so far and Malawi, Tanzania and Zimbabwe have not yet ratified. The agreements aim is to promote the equitable and reasonable use of the water resources of the Zambezi River Basin. It is also expected to promote efficient management and sustainable development among the riparian states of Angola, Botswana, Malawi, Mozambique, Namibia, Tanzania, Zambia and Zimbabwe. Even though attempts to create international institutions since 1900 show that the countries involved are willing to cooperate and jointly organize water use in the basin, the present institutional setting is widely considered to be weak and water use in the ZRB mainly occurs on a non-cooperative basis [75]. A look at the geography and history of water management in the Zambezi basin reveals several characteristics that make this basin a challenging case for research on integrated water resource management (IWRM), both in scientific and policy terms. The ZRB is 1 The main aim of the SADC (until 1992 Southern African Development Co-ordination Conference (SADCC)) is to coordinate development projects in order to lessen economic dependence. It includes the following countries: Angola, Botswana, the Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, South Africa, Swaziland, United Republic of Tanzania, Zambia and Zimbabwe.

20 8 1 Introduction large and includes eight countries. It involves several types of water management issues: notably water allocation, hydropower production, flood protection, wetland protection, and water quality. Moreover, the basin faces very dynamic development prospects in which improved analytical tools can help to avoid mistakes that have been made in the past in most parts of the world, particularly in the context of large dam projects [123] Research context Research for this PhD thesis was carried out in the framework of a larger project on water resources management in the Zambezi River Basin. The larger project is entitled African Dams Project (ADAPT). The present thesis was funded by the Swiss National Foundation (SNF), together with another PhD thesis that develops a hydrological model for the Kafue basin. The SNF funded project, which constitutes a subproject of the ADAPT project, is entitled Combined Modelling of Water Availability and Water Demands in Large Scale International Riverbasins (Water Management in the Zambezi River Basin). Other research in the ADAPT project focuses on biogeochemistry, biology, agronomic issues, hydraulic engineering and aquatic physics. The aim of this study in particular is to deliver sound policy analysis and concepts in the form of a computational socio-economic demand simulation model that can be coupled with a hydrologic-hydraulic model. We want to improve the understanding of how, where and when particular anthropogenic and geophysical (notably climate and land use) changes in the system may increase (or decrease) vulnerabilities. The goal is to identify possibilities for improved policy choices, particularly with respect to the allocation of water resources subject to optimized beneficial use and improved policy choices. In parallel to the combined social sciences hydrological research for this PhD thesis, another study in the ADAPT project concentrates on the development of advanced hydrologic-hydraulic models and new concepts in hydrological modeling related to the ZRB. In particular, this research seeks to develop real-time hydrological models [83]. It aim is to develop a deterministic hydrological system model with the option of simulating in real time and assimilating observation data. Satellite remote sensing data together with traditional gauging station data is used in the data assimilation procedure.

21 1.3 Main Questions 9 Demand modeling, which includes both the development and application of policy choices, requires insights from different scientific disciplines. While the hydrologicalhydraulic modeling work lies primarily within the area of civil and environmental engineering (which is already an interdisciplinary field on its own), the development of water demand models and their coupling with hydrological-hydraulic models requires close collaboration between social scientists and engineers. The water demand modeling presented in the present PhD thesis builds and expands on previous work by Hoekstra [56, 57]. It operates with a simple state-of-the-art hydrological model that is able to mimic the main underlying physical processes. For the demand side, a computational model is developed that reproduces spatially and temporally disaggregated predictions of water demands by the most important types of water consumers in the ZRB. The development of this model involved local expert and stakeholder surveys Main Questions To identify the topics that are essential in the Zambezi River Basin, a survey was conducted among decision makers and experts in the field of water resources use. This survey was conducted in in the form of semi-structured expert interviews 2 in the ZRB. This survey lead to three main questions that are of major concern with respect to the availability of and demand for water in the ZRB: What are the possible water demand scenarios for the Zambezi River Basin? Today, hydropower and agriculture are the major water users in the basin and are perceived as similarly important. Stakeholders argue almost in unison that agriculture in particular could become much more important in terms of water consumption in the future, competing more and more with environmental and hydropower development plans. Irrigated agriculture could expand enormously due to the huge amount of arable land available as well as the growing need for food within the ZRB and worldwide (export opportunities). Compared to agricultural development plans, it is likely that hydropower will expand more slowly. The reason is that many stakeholders are mindful of the fact 2 Transcripts are available from the author. A list of interviewed persons can be found in the appendix of chapter 3

22 10 1 Introduction that no new dams have been constructed for more than twenty years and, in terms of power production in Southern Africa in general, hydropower contributes only 20% to total electricity production. The remaining 80% come from thermal power plants [99]. What form might new water allocation rules take? With regard to potential future water requirements, the main concern is how water could and should be allocated, both with regard to quantity and in terms of the benefits and costs from water use. Several issues were highlighted by many stakeholders: What to do, for instance, if Botswana or Namibia decides to export water from the ZRB to South Africa? Who should bear the costs if Zambia consumes water disproportionately compared to the other countries? Would downstream countries compensate upstream countries if the latter had to abstain from water use in favor of downstream users? At present the riparian states mainly agree on bilateral and informal agreements on the optimization of dams to regulate the seasonal flows of the river. There is also much lobbying in terms of minimum flows for the environment, which are defined for different places in the basin even though they are no legally binding arrangements in place in the ZRB for environmental flows [14, 13]. In terms of consumptive water use the eight ZRB countries act in a non-cooperative way as they consider themselves to be sovereign states and claim the right to use their own water resources in any way that suits their needs. Hence, while mainly looking at optimizing present water use on a bilateral basis at the moment, countries are also concerned about running out of water in the future, not only as a result of their own water consumption, but also because of externalities caused by users in other ZRB countries. Many stakeholders argue that an institution like ZAMCOM could reduce that risk if it had sufficient legal power. ZAMCOM, they argue, would consider the river as a property of all with equal rights (following the concept of total riverine integrity) and new allocation rules should therefore provide for compensation for externalities. Neither scientists nor policy-makers have thus come up with systematically thought through ideas on how a water allocation system for the ZRB could or should look like. What is the impact of power asymmetries on water allocation? The third important concern mentioned by many stakeholders in the ZRB is the fact that some countries are much more powerful and could therefore alter river flow and water availability by forcing other riparians to follow their allocation policies. Besides the fear of being forced to abstain from water use, the main concern of most riparian countries is

23 1.3 Main Questions 11 having to suffer from externalities without compensation. Decision makers from Zambia, for example, believe that they could be dominated by Mozambique, which is the most downstream country 3. Many users are also concerned about economically more powerful countries, like Namibia or Botswana, who could afford to abstract water from the Zambezi even though they have only very small shares of the ZRB. With these key concerns of stakeholders in the ZRB in mind, this PhD thesis includes three papers on the ZRB, each of which addresses one of the aforementioned questions. The first paper develops scenarios for water requirements and availability in the ZRB from 2000 to The second paper examines principles for a fair allocation of benefits and costs from water use. The third paper develops a model on the influence of political and economic asymmetry on the allocation of water resources among the different riparian states. The first paper (chapter 2) addresses the development of water demand and supply in the Zambezi River Basin. Experts and decision makers in the ZRB widely assume that water in the ZRB is available in excess today. The development plans of the riparian countries indicate, however, that consumptive water use might increase up to 40% of total runoff by 2025 [98]. The first paper thus analyzes possible demand scenarios for the time-period and juxtaposes them onto a rainfall-runoff model for the ZRB that is calibrated on the best available runoff data for the basin. The paper considers a wide range of water demand drivers. These drivers include expansion in agriculture, industrial development, population and economic growth and changes in population distribution (urbanization), climate change predictions about precipitation and evaporation, possible water transfers, and plans for new dams. Using the hydrological rainfall-runoff model (RRM), the paper studies the implications for runoff at key points in the water catchment. The results show that the absence of effective international cooperation on water allocation issues is likely to have very important transboundary implications. In particular, such implications involve drastically reduced runoff in the dry season and changing shares of ZRB countries in terms of runoff and water demand. The results presented in the first paper indicate that allocation rules should be set up within the next few years before serious international conflicts over the sharing of 3 Some decision makers from upstream areas even compare the situation of the Zambezi to the Nile where Egypt dominates the upstream countries

24 12 1 Introduction the Zambezi s waters arise. To address the question of allocation rules, the second paper (chapter 3) examines in what ways water could be allocated fairly among the eight riparian states. While I assume that the ZRB countries will continue to behave largely in a non-cooperative manner, as assumed for the scenarios examined in the first paper, I intend to identify ways and means for a future international institution to cope with this non-cooperative water consumption behavior of riparian countries. Even if water quantities cannot be allocated cooperatively, then at least the benefits and costs from water use should be allocated in a cooperative way. This would take into account that each country considers itself sovereign and claims the right to use ZRB water according to its own preferences and policy, notably with a view to food self-sustainability, hydropower production, industry, domestic water use and the environment. While non-cooperative behavior leads to transboundary externalities I seek to find a rule that balances out the benefits and costs among the different users in a fair manner. This approach is contingent on the riparian countries deciding to share the benefits and costs cooperatively and respect the paradigm of riverine integrity, which holds that the river belongs to all countries. For the allocation of benefits and costs we assume that countries already have bilateral agreements, defined minimum flows and existing water demands that are not subject to the negotiation process for the allocation. Fair allocation is then based on three criteria: efficiency, equitability and envy-freeness [23]. Based on these criteria, I develop a sharing policy that allocates utilities from water use to the eight ZRB countries. The proposed allocation mechanism suggests that from the viewpoint of total riverine integrity (and with respect to existing bilateral agreements and existing water use), compensation flows from upstream to downstream because, hydrologically speaking, this is the common pattern in which externalities are generated. The fair division approach suggests that water allocation based on fairness results in compensation payments from countries that expand their water use disproportionately to the other countries. In the ZRB these are mainly Zambia, Angola and Malawi which would have to compensate the other countries under such a rule if their water consumption expands as projected in the first paper of this dissertation. The compensation mechanism proposed in the second paper balances disproportionate expansion of water use by upstream countries. However, it does not take into account water allocation per se. This issue is addressed in the third paper of the dissertation. This paper argues that the allocation of water quantities is determined mainly by political and economic power asymmetries. This argument cuts against the view that water is (or

25 1.4 Existing Approaches 13 should be) allocated to the highest needs or to the highest benefits of users in economic terms. While allocation based on political and economic power is also non-cooperative, the results of the third paper (chapter 4) suggest that such water allocation could potentially increase total basin-wide welfare in some cases. If after allocation according to political and economic asymmetries utilities from water could be distributed in a fair way as suggested by the second paper, then cooperation in transboundary water allocation could become more likely Existing Approaches The existing literature is discussed in each of the three papers mentioned above. However, I briefly discuss three models that are not discussed in detail in the three papers at this point. Many hydrological models include some economic, social and political elements. These are usually specified in terms of very simple boundary conditions or assumptions, particularly increasing water demands. In recent years, some efforts have been undertaken to develop a better understanding of water demands at the catchment area level (river basins). The most sophisticated models with relevance to the ZRB are the AQUA Zambezi model by Hoekstra [58], [57], the global WaterGAP model by [1], and a model by the World Water Assessment Program (WWAP) [127]. All three models serve to estimate (predict) the effects of population and economic growth as well as climate change on water demand. The AQUA World model and its Zambezi-specific implementation, the AQUA Zambezi model, in Hoekstras words, seek to improve insights between water and long-term socio-economic development. In exploring the full range of possible long-term futures for the Zambezi Basin, its goal is to estimate the risks of various water management strategies [56]. The WaterGAP model seeks to estimate the effects of demographic, socio-economic and technological changes on water use, and also focuses on the impact of climate change and variability on water availability and irrigation water use [1]. The WWAP model concentrates on assessing the availability and use of freshwater globally.

26 14 1 Introduction The study of future scenarios for the water resources concerned extends to the year 2050 in the AQUA and 2075 in the WaterGAP model. The WWAP model is a static tool for simulating water-related dependencies online; unlike in the AQUA and WaterGAP models, prospective simulation is not possible. The AQUA model consists of four interrelated sub-models. It starts with a pressure model that simulates processes that affect the state of the water system. The state system simulates hydrologic processes and water quality. The impact system focuses on human activities that depend on water and the functioning of ecosystems, and the response model concentrates on human action that is undertaken in reaction to impacts [57]. The WaterGAP model consists of two linked models, the Global Hydrology Model and the Global Water Use Model [1]. Whereas interactions between the different parameters and variables in the WWAP tool are defined individually by the user of the tool, sophisticated routines are already being implemented in the AQUA and the WaterGAP models. The main mechanisms in the AQUA and the WaterGAP models are based on water balances and linear functions. Another very important difference between the three models is their spatial reference and resolution. The AQUA Zambezi model has the lowest resolution. It uses eight subbasins and eight countries, thus representing the hydrological areas and main (national) political boundaries. The WaterGAP model is based on data from various scales and calculated on a 30 raster covering the world. This is also the resolution of the output of the model. The highest resolution is implemented in the WWAP model, with a raster grid of a 6 resolution based on global data. The results from all three models point to increasing water scarcity and a negative impact from climate change. In the AQUA model, one of the most important results is the fact that growing water demand leads to increasing vulnerability to drought. Upstream areas of the Zambezi Basin that lack external water resources are exposed to the greatest risk. Hoekstra notes that a shift from supply to demand-side policy is needed to cope with or reduce risks [57]. The results of the WaterGAP model indicate a strong global increase in water scarcity, which will slow down economic development and population growth in some countries. The three models just discussed provide a good foundation for further-reaching models

27 1.5 Model Environment 15 of water demand in the Zambezi basin. The gaps to be filled are primarily the following. First, existing models focus chiefly on anthropogenic challenges and do not take account of ecological 4 water needs or other in-stream utilities such as recreational values or strategic political values as described in chapter 4. Second, due to their macroscopic global view and/or low resolution, existing models are not able to represent regional specifications. The AQUA model in particular operates with aggregate variables that are not observed as such and, as Hoekstra noted, it was very difficult to find accurate data for the basin level [56]. Third, the three models do not take account of the inter-annual and inter-seasonal variability of precipitation and temperature. Fourth, the validation and calibration of existing models is either restricted to the hydrologic processes (WaterGAP) or based on the same empirical data that is also used for the input (AQUA). As Hoekstra points out, the congruence of simulation results with empirical observations is therefore not surprising [56] Model Environment This section provides a brief overview of the model developed for the ZRB, which serves as a base for all the simulations carried out for the first three papers of the dissertation. Some specific details of the features of the overall modeling environment are described in the three papers. A hydrological model describes the supply distribution in space and time while a demand model describes the demand in space and time for the intended activities of households, industry (including hydropower production), and agriculture as well as for ecosystems. Because actual water use can never be larger than supply, decisions concerning the actual allocation of the resource and the resolution of conflicting demands are necessary. To assess the allocation options, supply and demand models have to be coupled. In a two-way coupling, decisions on allocation feed back into the supply model, taking account of the redistribution of water volumes in time and anticipating the influence of upstream allocations on downstream supply. The model environment used for this dissertation is based on the concept of Integrated 4 e.g., for wetlands that are valuable from a biodiversity and also a tourism industry perspective

28 16 1 Introduction Water Resource Management (IWRM), which has been formalized since the 1960s [78]. IWRM is based on the interaction of three interdependent management subsystems. 1) The natural hydrologic system that delimits the physical constraints on water availability in space and time. 2) The institutional framework that forms the basis for a juridical and administrative management among the different users and riparian states. This system is meant to facilitate decisions, planning and management in the basin in order to constrain consumptive and non-consumptive uses of the water system. 3) The socio-economic system that includes decisions of key water users and driving forces behind human activities. It includes preferences that shape the actions and behavior of the main stakeholders who try to maximize their utility from water use. The main goal of the model is to capture the key factors affecting the demand for and allocation of water resources based on the three IWRM management subsystems. The model consists of two major elements: 1) a deterministic demand simulation model that links socio-economic development and stakeholder decisions to a hydrological model, and 2) a dynamic game theoretic model that allows experiments to be designed in the demand simulation by implementing different mechanisms of strategic interactions (see Figure 1.5). The model is designed such that stakeholders (players) interact with each other based on the condition of the physical system that delivers information to the players. At the same time, the interaction of the stakeholders leads to different policy choices and gives rise to different outcomes that affect the demands and behavior of the different players. The main model components as illustrated in 1.5 can be described as follows: The Physical System is a dynamic hydrological simulation model with temporally and spatially distributed supplies and the possibility to couple decisions on allocations that dynamically feed back into the supply model. The calculations are based on a monthly timescale. River flows are based on precipitation and temperature data provided by CRU [84] and calibrated on river flows provided by a study by SADC [29], the global runoff data base [GLWD], and data obtained from the different Ministries of Water Affairs. Spatially, the model is based on 13 subbasins as defined also by SADC [29], and it also calculates water flows and availability at the country level. Stakeholders with deterministic water demand: This model component is represented by means of a demand model based on the main development trajectories of

29 1.5 Model Environment 17 strategic interactions between stakeholders which lead to different behaviour and outcomes dynamic game theoretical model stakeholder with deterministic water demand Information feed back physical system simulation model Figure 1.2: Demand- supply simulation framework including the strategic interaction of the different stakeholders. consumptive and non-consumptive water requirements. Consumptive use includes requirements from agriculture, population and industry. It takes account of spatial distribution and changes in spatial distribution over time, including parameters such as urbanization, economic growth and population development. Non consumptive requirements include hydropower production (including evaporation from reservoirs) and environmental requirements. Data sources for the specific demands are described in the relevant chapters. While input parameters into the model are spatially resolved up to a resolution of 30, I also apply aggregate demands lumped to the same resolution as in the physical model, namely the eight countries and 13 subbasins. Strategic interactions between stakeholders are modeled on the one hand through a qualitative survey of key water users in the ZRB. This survey is the basis for information on user preferences, strategic interactions and utilities from water use of the different user groups. On the other hand strategic interactions are modeled by means of game theoretic concepts. This includes an analysis based on the Theory of Moves [21] as applied in chapter 3 but also dynamic computational game models and the application of agent-based methods implemented with an artificial intelligence approach, as discussed in more detail in chapter 4.