Water management and development play essential roles in development, underpinning the means to lift people out of poverty and reduce vulnerability to climate change. Many of the Sustainable Development Goals (SDGs) depend on managing water more effectively. Tapping into Africa’s tremendous, but currently underutilized, water resources will help improve livelihoods, strengthen water security, and fuel economic growth.

With 90 percent of Africa’s surface waters falling within 63 international river and lake basins, water management in Africa depends on cooperation that crosses borders. Collectively managing and developing water resources at the regional or basin-level can produce far-reaching benefits. When countries have shared priorities and clear methods for communicating and working together, floods can be prevented or subdued, droughts managed, ecosystems better preserved, more fields irrigated, and energy sources harnessed and delivered to people and businesses in need.

However, the ‘transboundary’ context for harnessing water’s socio-economic benefits is complex: each country has its own national objectives guided by their own political and economic interests, historical tension between countries may exist, resources and technical capacities may be uneven, and it can be very difficult to determine how to share the benefits of collective investments.

Furthermore, the sheer number of parties involved – from multiple ministries in multiple countries to local governments and civil-society organizations – can make decision making complicated and time consuming. While the largest shared river basins in Africa have established River Basin Organizations (RBOs) to help unify and clarify how to collectively manage shared waters, multiple barriers to effective cooperation still exist.

Despite the difficulties, countries in Africa are increasingly focusing on the importance of regional coordination in order to maximize collective development gains while also sustaining longer-term regional stability and peace. Coordination among countries is critical to:

• Avoid unilateral development of projects that may have impacts on other countries;

• Provide benefits beyond what individual countries could reap by acting alone; and

• Ensure that benefits are harnessed sustainably and shared equitably.

Increasing focus on transboundary water cooperation is driven by two inescapable long-term trends: i) growing populations, rapid urbanization, and accelerating development intensify the demand on water resources; and ii) increasing water variability driven by climate change.

Demand from African countries and institutions, as well as prior experiences on basins such as the Nile, led the World Bank and a group of development partners to launch CIWA in 2011. The CIWA partnership demonstrates the commitment of the international community to advance water-policy and development objectives set out by the African Union and the African Minister’s Council on Water to enable African countries to sustainably manage and develop their shared waters.

Institution-building is a long-term process. For that reason, CIWA uses a unique business model that prioritizes multi-year support while also providing short-term resources to meet stakeholder needs in water, food, energy, navigation, and other water-dependent sectors. CIWA provides grants to a range of implementing partners including national governments, river basin organizations, regional economic communities, and civil society organizations in order to support the range of policy, coordination, and operational actors that transboundary cooperation requires. The program also provides neutral third party facilitation, technical support and analysis, as well as develops knowledge products that help to strengthen shared understanding, trust, and confidence among riparian countries. Blending these instruments has led to tangible results in building transboundary cooperation throughout Africa. However, the demand for CIWA support currently outstrips supply, so opportunities for impact by both current and future partners are great.

CIWA’s formal objective is to support riparian governments in Sub-Saharan Africa to unlock the potential for sustainable, climate resilient growth by addressing constraints to cooperative management and development of international waters. By 2020, the program aims to influence US$10 billion in investment financing for cooperative management and development of transboundary waters across Sub-Saharan Africa, targeting benefits for 50 million people.

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Economic Rationale for Cooperation in International Waters in Africa: A Review

Executive summary

Transboundary river basins cover 62 percent of Africa’s total area and, with the exception of island states, every African country has at least one international river in its territory. Ten are shared by four or more countries. As a result of the dependence on transboundary waters, transboundary water governance in Africa is central to any national or regional water strategy and any economic, poverty reduction, and environmental strategy.

Cooperative governance of transboundary basins is important for several reasons. First, even if fears of water wars are overstated, reducing water conflicts also reduces the risk that disagreements over water will spill over to other economic or political spheres. Conversely, while disagreement over shared waters can have negative spillover effects, cooperation can facilitate broader levels of cooperation and support positive interaction outside the water sector in areas including trade and economic integration. Second, from an efficiency perspective, cooperation over transboundary waters expands opportunities (that is, Pareto improvements) to create added economic value from water and for internalizing potential negative externalities from uncoordinated action. In the case of Africa, cooperation can create scale economies needed for efficient investment. Third, and related, institutionalized cooperation over water can open opportunities for essential water infrastructure financing. Finally, cooperation over transboundary water can provide a means by which the broader environmental and social values of water can be recognized and the costs and benefits of change can be reviewed in the best interests of current and future generations.

Despite the potential payoff from water cooperation, forging meaningful agreements for shared water management faces numerous challenges. Impediments to negotiated cooperation include differences in up- and downstream views on water rights and histories of water use; negotiating philosophies focused on the belief that water is a zero-sum game; geographic and political power differentials that conflict with basinwide solutions; and uncertainty over basic water resources data that increase the perceived risks of cooperation.

However, a large body of international water law and scholarship shows that these impediments can be overcome and provides approaches for doing so. These include:

• linking of issues beyond the water sector to neutralize the hydrology of upstream/downstream relations;

• transforming negotiations over water to negotiations over the benefits of water to overcome the zero-sum problem and increase the size of negotiating spaces;

• using side-payments and the involvement of outside parties to dissolve deadlocks; and

• improving the use of data and information to reduce the uncertainty and the sovereignty risk of formal agreement formation.

Finally, while including a broad range of stakeholders can initially slow processes, experience has shown that consideration of multiple viewpoints increases the probability of long-term success and helps ensure that cooperation brings the promised benefits.

For cooperation to occur, riparian states, other stakeholders, and the facilitators of negotiation must be aware of the possible benefits of cooperation, whether benefit distribution will be shared, and what pathways are most likely to overcome potential barriers to negotiation. Economic theory and empirical analysis can play a productive role in providing the necessary information. Cost-benefit analysis (CBA) originated in the water sector and has long been the standard framework for assessing project feasibility. Hydroeconomic modeling has been used to provide much more detailed understanding of the potential for cooperation in specific hydrologic regimes and to provide an understanding of differential impacts on riparian states. Game theory has been used to show how differential impacts may influence willingness to negotiate and measures that might be taken to expand bargaining space and to create outcomes that increase overall benefits while being politically acceptable to individual riparian states. More recently real options analysis and multi-criteria analysis have been used  to  take the processes further and provide enhanced platforms to broaden stakeholder input in decision-making processes. Multi-criteria analysis specifically conforms to Article 6 of the 1997 Convention on the Law of the Non-Navigational Uses of International Water Courses, which states that “in determining what is a reasonable and equitable use, all relevant factors are to be considered together and a conclusion  reached on the basis of the whole” (United Nations 2014).

This paper provides a review of the challenges to transboundary water cooperation, pathways for overcoming those challenges, and the role of economics in facilitating the discovery of those pathways. While it is written to focus on African transboundary waters, the report draws from broader transboundary water literature. Appendices include case studies on both game theory and hydro-economic analysis in transboundary cooperation for several river basins, including some from Africa.

Key findings include the following:

• Published studies of the economics of transboundary water cooperation have used a range of methods though the majority employ hydro-economic modeling and game theory. Though they have been applied to a wide variety of basins, a significant number focus on the Aral Sea and its tributaries, the Nile River, and the Ganges River.

• The limited studies that have quantified the gains from cooperation or costs of noncooperation show that the potential benefits are substantial. Recognizing the potential gains and costs for all parties provides a motivation for cooperation.

• Other studies have used economic analysis to discover insights for overcoming barriers to transboundary water cooperation.

• Information and analysis needs vary by the history and status of the cooperation process.

• The process of collecting the data needed for quantitative economic analysis as well as the analysis itself can also provide mechanisms to forge cooperation and, if done well, this joint effort can increase transparency in decision-making processes and help ensure hearing voices of all critical stakeholders including those supporting the environment.

• Some methodological approaches may be useful in motivating the cooperation of a broader range of stakeholders into cooperation processes. This can be valuable both to ensure broad support for a decision and to ensure that the full range of costs and benefits and their distribution among stakeholders are considered.