Integrated ecological economics accounting approach to evaluation of inter-basin water transfers: An application to the Lesotho Highlands Water Project

Abstract This study developed a generalised analytical framework that can be applied to integrating environmental sustainability aspects into economic development planning in the case of exploiting water resources through inter-basin water transfers (IBWT). The study developed and applied a multi-country ecological social accounting matrix (MC-ESAM) for Lesotho and SA to evaluate the ecological implications of the Lesotho Highlands Water Project (LHWP) and their consequent economic costs and benefits for the two countries. The study further used the developed MC-ESAM multipliers to analyse the impact of lost ecological services downstream the LHWP dams in Lesotho on the wellbeing of households directly affected by the project in Lesotho and the general economies of Lesotho and SA. The results revealed that while the LHWP has significant direct and indirect benefits in terms of social and economic development in Lesotho and SA, the project has serious unintended impacts on ecological resources and services, with deleterious wellbeing implications for populations residing within the reaches of the LHWP rivers and downstream the LHWP dams in Lesotho. The empirical analysis results showed relatively small impacts in general, but were significant for groups of people directly affected by the project in Lesotho. An important limitation of the empirical contributions of the study relates to the inability to measure and include in the analyses values of critical other ecosystem services of affected freshwater resources. Nevertheless, the study demonstrated the importance of integrated ecological economic accounting for comprehensive assessment of IBWT projects' impacts.