An ecological economics framework for assessing environmental flows: the case of inter-basin water transfers in Lesotho

Abstract This paper used the Lesotho Highlands Water Project (LHWP) that transfers water from the Orange River Basin in Lesotho to the Vaal River Basin in South Africa as a case study to show how environmental sustainability aspects can be integrated into economic development planning. Using the Ecological Social Accounting Matrix (ESAM) for Lesotho that integrates ecological implications of the LHWP with economic benefits of the project, the paper analysed the impact of lost ecological services downstream the LHWP dams in Lesotho on the well-being of households directly affected by the project (riparians) and the general economy of the country. The results revealed that despite significant economic benefits, the project has unintended impacts on ecological resources and services with resultant deleterious well-being implications for riparians. The results from the ESAM analysis indicated that not only the income of riparians is likely to suffer, but also that of other households and social groups, as well as the general economy of Lesotho. While results of the ESAM analysis did not indicate large income impacts on the economy at large, they were significant for riparians. The importance of integrating ecological consequences into impact assessment of IBWT before such transfers can be implemented to ensure sustainable development and considering economy-wide impacts associated with IBWT was proven necessary for a holistic impact assessment of IBWT.