Measuring the impact of water scarcity on agricultural economic development in Saudi Arabia

Abstract

This research measures the impact of water scarcity on agricultural economic development and economic development indicators in the Kingdom of Saudi Arabia during 1995–2018. By examining the current status of available water resources and their uses, and estimating a model to study the impact of water scarcity on agricultural economic development. The study relied on descriptive and standard economic analysis to estimate the proposed regression model. It found that a 10% change in the amount of water resources available leads to a 5.1% change in the same direction of the crop area. A 10% change in the estimated crop area results in a 1.5% change in the same direction of the total agricultural output value. A 10% change in employment and agricultural loans leads to a change in the same direction of the aggregate agricultural output value of 5.1% and 7.2%, respectively. A 10% change in the total value of the estimated agricultural output leads to a 2.9% change in the same direction of GDP. Thus, a lack of water resources will decrease the crop area and have a negative impact on the value of agricultural output, thereby impacting GDP. We therefore include policy recommendations for the conservation of water resources: The government should stop the export of virtual water, particularly for water-depleting products; an economic accounting framework for water should be introduced to monitor the amount of water in excess of the water codification for various crops prevailing in the crop composition.