Drought: Water shortage will cost the economy dearly
The national economy is likely to suffer a severe blow from drought and water scarcity. World Bank forecasts are not reassuring. «Morocco is one of the most water-poor countries in the world. With an estimated endowment of nearly 620 cubic meters of water per person per year, the Kingdom is already in a situation of structural water stress», says the Bretton Woods institution, in an analysis of the effects of drought and water scarcity on Morocco’s macroeconomic situation.
The World Bank added saying that «under the combined effects of demographic pressure, growing demand from economic sectors, and the negative repercussions of climate change, this allocation could fall below 500 cubic meters per person per year by 2030. This corresponds to a situation of absolute scarcity».
This water shortage could have an impact on almost every aspect of the country’s socio-economic development. In the long term, reduced water availability and lower agricultural yields induced by climate change could lead to a loss in gross domestic product (GDP) of up to 6.5%.
Agriculture, the heaviest toll
As water consumption increases in all sectors (drinking water, agriculture, industry, tourism), water scarcity will have a snowball effect on the economy as a whole. In all scenarios, the agricultural sector is likely to suffer the most. As a result, imports will increase, particularly of cereals to offset the shortfall in local production, potentially threatening national food security.
According to the analysis, droughts can have strong direct or indirect repercussions on the stability of the Moroccan banking sector. Losses suffered by the agricultural sector are likely to be passed on to others, due to the links between inputs and outputs, which are particularly strong in the agro-industrial or the agri-food sector (which accounts for around 27% of industrial production and 5% of GDP). «This situation can lead to non-repayment of loans (credit risk), unpredictable equity and debt markets (market risk), and strains on banks’ liquidity available for serious events (liquidity risk)», the report states.
Khadija SKALLI
