Impacts of political instability on economics in the MENA region

Abstract

Throughout human history, struggles over access and control of water resources have been a root cause of tension and armed conflict. In Middle Eastern scheming for power, water is viewed as a strategic resource, quickly becoming the dominant resource issue. As water shortages are acute and laden with emotive conflictual tones, this is exacerbated by the lack of a mechanism short of war or external governance for allocating the resource. A strategy based on economic efficiency gains will lead to improved equity and will reinforce any peace prospect. Some of the most conflictual issues may thus be settled through a rational and equitable foundation of incentives and institutions. An evaluation of the potential welfare gains under constrained conditions provides an assessment of economic incentive to be derived from an existential gap in multinational water basins.