Water Policy and Poverty Reduction in Rural Area: A Comparative Economy Wide Analysis for Morocco and Tunisia

Morocco and Tunisia are considered among the countries where the scarcity of water resources may cause a serious constraint to the development of their economies. During the past, huge efforts have been made by both governments in order to satisfy an escalating water demand expressed by all users. The main objective of this paper is to compare the impacts of alternative water policy management scenarios on Tunisia and Morocco. The fact that a same policy instrument applied to two different countries can have different impacts; represent the main motivation behind the adoption of a comparative analysis. A dynamic water CGEmodel taking into account the particularities of both countries’ economies in terms of agricultural production technologies has been implemented and used as a laboratory to explore the likely effects of water economic instruments. The results show that large public subsidies to water mobilization and distribution significantly affected the structure of agriculture production in both countries. The low cost of water has encouraged farmers to diversify their production towards more water-intensive activities. The combined effects have been a rise in farmers’ incomes but also an efficient uses of a scarce resources such as water. Reducing public subsidies on water will affect directly farm income which is expected to drop by about 20 per cent in the short and medium terms. A reduction in the number of crops available for farming can also lead to greater technical and economic vulnerability of the agricultural sector in both Tunisia and Morocco. Employment is likely to be affected also in both countries. However, the reduction in farmers’ incomes will be largely compensated by the saving in public expenditures but also in a better and more efficient uses of water resources. In the medium-long term, Tunisian and Moroccan farmers will adjust their activities to accommodate with the new public managements of water resources which will be manifested by a substitution among activities towards those that are more efficient in water uses.