The economics of water scarcity in the Middle East and North Africa: institutional solutions

The report confronts the persistence and severity of water scarcity in MENA. It draws on the tools of public economics to address two crucial challenges facing states in MENA: lack of legitimacy and trust. Evidence from the world values survey shows that people in the region believe that a key role of government is to keep prices down and that governments are reluctant to raise tariffs because of the risk of widespread protests. Instead of avoiding the “politically sensitive” issue of water scarcity, this report argues that reform leaders and their external partners can reform national water institutions and draw on local political contestation to establish a new social contract. The crisis and emotive power of water in the region can be used to bolster legitimacy and trust and build a sustainable, inclusive, thriving economy that is resilient to climate change.