The Water-Energy-Food Nexus in the Arab World and Financial Challenges

Martin Keulertz and I have published a new article in the International Journal of Water Resources Development: “Financial Challenges of the Nexus: Pathways for investment in water, energy and agriculture in the Arab world.”

Abstract:

The Water–Energy–Food (WEF) nexus is a development challenge in the Arab world,
particularly in the ‘core nexus countries’ with low to mid-incomes in which limited
water endowments permit agricultural production, such as Egypt, Morocco, Tunisia,
Lebanon, Algeria, Sudan and Jordan. The WEF nexus is often conceptualized in mere
technocratic terms, yet politics matter in the implementation of projects that address it.
Internalizing hydrological externalities or leaving them as they are and financing them
as a public good requires states whose capacities have been reduced as a result of
neoliberal reform. The article explores five different pathways of how Arab countries
could finance green growth projects ranging from regional financial markets to
concessionary loans by funds from oil rich Gulf countries.

Impact of Global Food Price Rise on the UAE

The recent rise in global food prices, particularly animal feed like corn and soybeans, impacts on the UAE, which has the highest pass-through of international prices in the GCC according to a Word Bank paper.

The UAE’s system of food price controls will come under pressure because of this. Either the government starts to give subsidies to retailers as it has already done with partly government owned Agthia, or retailers will withdraw certain items from sales should they perceive necessary cross-subsidies as excessive. A black market would develop.

Downward Sticky Food Prices and Saudi Price Monitoring

The King Abdullah Chair for Food Security at the King Saud University in Riyadh will monitor local food prices and compare them with global market developments.

The concerns tie into a World Bank study that found that despite extensive subsidy regimes there is considerable pass through of global food price increases in Saudi Arabia and elsewhere in the Gulf.

Yet if global food prices come down, local prices do not follow suit. They are downward sticky, which is often blamed on profiteering and collusion of traders.