Regional Economic Impact of Grand Ethiopian Renaissance Dam: A Computable General Equilibrium Approach

This study provides a comprehensive economy-wide assessment of the Grand Ethiopian Renaissance Dam (GERD), analyzing its macroeconomic and regional integration impacts under realistic hydro-political constraints. We employ a Computable General Equilibrium model, calibrated with Ethiopia's 2022 Social Accounting Matrix constructed from national accounts, household surveys, and energy sector data, to evaluate scenarios incorporating climate variability and political risk. Simulations indicate full GERD operation could increase Ethiopia’s GDP by 2.1–3.5% annually, create over 1.2 million jobs, and generate roughly $1.2 billion in yearly electricity exports under optimal conditions. However, these benefits are highly conditional. Climate variability could reduce gains by 40%, while political instability in importing nations might cut export revenues by 30%. Critically, the realization of these economic outcomes is fundamentally contingent upon resolving the Nile water allocation conflict and establishing cooperative basin-wide frameworks. The GERD’s potential as a catalyst for regional integration depends on transforming the current hydro-political stalemate into a formal benefit-sharing agreement. Success requires simultaneous progress on diplomatic resolution of water rights, development of regional energy market institutions, and strategic infrastructure investment. Policy interventions should therefore prioritize creating transparent operational rules and building trust through incremental technical cooperation.