The Zambezi river basin is of utmost importance to its riparian countries in terms of energy, food production and natural resources. Even though there is no legal agreement on the sharing of Zambezi waters, an assessment of basin-wide economically efficient allocation policies will provide valuable information at a time where water managers and policy makers in the region are negotiating the establishment of a unified river basin institution, called the Zambezi Watercourse Commission (ZAMCOM). That institution would be responsible for, amongst other things, the design of allocation rules. In this study, basin-wide allocation policies are derived from a hydro-economic model that considers the largest existing and planned hydraulic infrastructure and irrigation schemes in the basin. Our results illustrate that the economic value of water varies spatially, driven primarily by large changes in elevation and on the locations of existing or proposed dams. This observation may have implications for future decisions about the siting of expansions in irrigated agriculture. For example, some of the planned irrigation schemes in upstream countries are not economically sound if the power stations that are in an advanced planning phase are implemented. This study also reveals that the economic value of the three largest storage infrastructure (Kariba, Itezhitezhi, Cahora Bassa) is around US$443 million/year.

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