USING A SPATIAL EQUILIBRIUM MODEL TO QUANTIFY THE BENEFITS OF TURKEY’S WATER PROJECT Working paper presented at the Association of American Geographers Annual Meeting, February 2012 J.M. Fisch Woodrow Wilson School, Princeton University, Princeton, NJ Columbia Law School, New York, NY Author contact information: J.M. Fisch 504 West 110th Street New York, NY, 10025 Email: [email protected] ACKNOWLEDGEMENT The author is grateful to Ambassador Robert Finn and Professor John Waterbury for their help, advice, and support. Ambassador Finn, the author’s senior thesis advisor, possessed a depth of knowledge about Turkey and about the thesis-writing process that made him an essential resource. Professor Waterbury inspired the author’s interest in this topic, provided invaluable research guidance, and helped the author transform his thesis into publication format. This paper is based on an undergraduate senior thesis submitted to the Woodrow Wilson School at Princeton University. The author thanks the Princeton Environmental Institute Grand Challenges Program and the Woodrow Wilson School for providing research funding. The text of the senior thesis is available at http://www.columbia.edu/~jmf2143/fisch_thesis.pdf. TABLE OF CONTENTS Abstract 3 Introduction 4 Background 6 Approach 8 Estimating Runoff Modeling Tigris and Euphrates Flow Rates 12 Results of the Runoff Model 16 Estimating Benefits Modeling the Benefits of Project Components 17 Modifications to the Model 21 Limitations and Caveats 25 Results of the Benefit Model 26 Conclusions 31 Notes 33 Tables 35 Table Captions 40 Figures 42 Figure Captions 48 References 49 2 ABSTRACT This paper proposes a novel method for estimating the benefits of the Southeast Anatolia Project (GAP), a series of hydroelectric dams and irrigation networks under construction along the Tigris and Euphrates rivers in Southeastern Turkey. The analysis presented here is driven by a spatial equilibrium model that can be used to calculate the benefit generated by the components of the project (individual dams and irrigation networks) under various development scenarios. The paper also presents a correlation between temperature and precipitation measurements in the basin and annual river runoff on the Tigris and Euphrates. This correlation is used to make rough predictions of future river flows. These flow predictions are then incorporated into the spatial equilibrium model to observe how climate change may affect the benefit derived from components of GAP. The estimated value of the components completed as of 2009 vastly exceeds construction costs, suggesting that these components were a worthwhile investment. However, the estimated benefits of constructing one of the as-yet-uncompleted components of GAP, the Ilısu/Cizre project, fall much closer to estimated costs, especially when reductions in river flows are considered. Moreover, the benefit of constructing the remaining irrigation infrastructure falls well below estimated costs. While the lack of data and other limitations make reaching precise benefit estimates difficult, this study demonstrates the need for Turkey to reconsider planned water infrastructure investments in light of climate change predictions. Planners should reevaluate the project component-by-component rather than implement all of elements prescribed by the 1989 Master Plan. By customizing a spatial equilibrium model for the GAP region, this paper lays the groundwork for making the necessary reevaluations. 3 INTRODUCTION The Atatürk Dam rises out of the mist. Sixteen stories tall and a mile wide (Kaplan 1994), with a price tag of $2.3 billion (Kolars 1994, 62),1 the dam has the capacity to produce 6% of Turkey’s energy.2 The dam is the capstone of the Güneydoğu Anadolu Projesi (meaning Southeast Anatolia Project and abbreviated GAP), a project that already accounts for 16% of Turkey’s electric capacity3 and that calls for an expansion of Turkey’s irrigated area by nearly 60%.4 The Atatürk Dam and the ambitious project it is part of exemplify Turkey’s turbo-charged economy and aspirations for the coming century. But as GAP’s originally predicted completion date of 2005 (GAP Master Plan 1989, vol. 2, page 3.5) has come and gone, and as aspects of the project have been held up by protests (see Wildlife Extra 2008 and Schleifer 2008 for examples) and lack of financing (Hürriyet 2009b), some are asking whether the remaining components of GAP are worth the costs (Schleifer 2008). This question is complicated beyond a simple cost-benefit calculation by a number of factors, including the proposed displacement of residents living in the area and the project’s potential impact on the environment and cultural sites. This study makes progress toward an answer to this question by developing a method to estimate the most easily quantifiable benefits of the project, the monetary value of the energy and agricultural production generated by the project’s dams and irrigation networks. This study also investigates the effects of regional climate change on the project’s future benefits. A reduction in river flow in the basin has the potential to significantly alter the cost-benefit calculation, and this study estimates the magnitude of that change.5 While previous studies, such as the 1989 GAP Master Plan, estimate benefits of the entire project, no previously published estimate isolates the benefits from specific components of the project6 or determines how the benefits will change 4 under forecasted climate change scenarios. A method of quantifying these benefits brings us closer to determining whether certain components should be completed. If the monetary benefits of a component of the project outweigh projected construction costs, the component would be viable if social, environmental, and other costs are low. If monetary benefits generated by the project do not outweigh construction costs, however, the component is unlikely to be viable unless large unquantified benefits exist. The most pressing question that this analysis addresses is the viability of the Ilısu/Cizre project. The biggest dam remaining to be completed, Ilısu is expected to generate 3833 GWh/year (DSİ 2009b, 5) and cost about $2.54 billion (Hürriyet 2009a). Cizre, which is downstream of Ilısu and cannot be completed without Ilısu, will produce 1208 GWh/year (DSİ 2009b, 5) and irrigate 70,000 ha of farmland (Bağiş 1989, 63). The project has sparked protests in the affected region, in part because the project will displace residents and submerge historic sites. Estimates for the number of residents that will be displaced by the project range from 55,000 (Ilısu Consortium 2006, 5) to 108,000 (Hasankeyf Girisimi 2009, 6). The project was repeatedly stalled due to lack of financing, most recently after European banks withdrew financing for the dam in July 2009 (Luxmore 2009). Most recently, a Turkish regional court with the power to stop the construction ordered an investigation into the damage that the project would cause to Hasankeyf, a 3,000-year-old town that would be flooded by Ilısu (Güsten 2011). With the fate of the project up in the air and Prime Minister Recep Tayyip Erdoğan calling for completion of the Ilısu by 2014 (Letsch 2011), examining how climate change can affect the benefits of the project takes on new urgency. Although the data utilized in this report are not detailed enough to produce a firm policy 5 recommendation, I describe and implement a novel application of a spatial equilibrium model to determine benefits of infrastructure investment. I demonstrate the importance of incorporating reductions in river flow into benefit predictions. I conclude that the benefits of the components of the project completed as of 2009 greatly outweigh measured costs, even when accounting for reductions in river flow, suggesting that those parts of the project were good investments. However, I conclude that projected benefits from the Ilısu/Cizre project fall much closer to measured costs, and further evaluation of those projects is recommended before construction is completed. This study shows that a new benefit analysis of the remaining components of GAP is necessary and develops a method for conducting such an analysis. BACKGROUND7 The GAP administration calls GAP “the most ambitious regional development initiative of the Republic of Turkey” (GAP 2001, 1). Proponents of the project argue that the project is a necessary boon to the depressed economy of the Southeast Anatolia region (Aydın 2000). Planners of GAP envision an “integrated regional development project,” including expenditures on health, education, transportation, and other sectors alongside water infrastructure development (Ünver 1997, 459-460). Since this article is primarily concerned with the water- related components of the project, I do not evaluate the cost-effectiveness of these other aspects, except to view water infrastructure investment in the context of these goals. The GAP Master Plan called for thirteen dams capable of generating hydroelectricity (vol. 2, figures 5.2 and 5.3). The five hydroelectric dams planned for the Euphrates, Keban, Karakaya, Atatürk, Biricik, and Karakamış, were completed as of 2009. On the Tigris, the Kralkızı, Dicle, and Batman dams have been completed. The Garzan, Silvan, Kayser, Ilısu, and Cizre dams are not yet built (DSİ 2009b, 8). The Ilısu and Cizre dams will be located 6 downstream on the main branch of the Tigris north of the Iraqi border. Plans call for the Silvan and Kayser dams to be built on Batman Suyu, and the Garzan Dam will be built on the Garzan tributary (Sofer 1999, 95).8 A list of dams is presented in table 1. The Master Plan called for 1.6 million hectares of irrigated land (vol. 2, page 3.5), but by 2009 the number of hectares planned had expanded to 2.07 million (DSİ 2009b, 5).9 However, only 287,295 hectares were irrigated as of 2009 (DSİ 2009b, 9). A list of irrigated areas can be found in table 2. A list of urban demand nodes is provided in table 3.