Botswana - Natural Capital as a Diversification Tool

Botswana is rich in natural resources. A combination of minerals, energy, protected areas, and crop, pastureland and non-timber forest products make the country’s natural capital worth a third of its total wealth.

This natural capital already plays a huge role in supporting Botswana’s economy—providing food, fuel, shelter and a livelihood to thousands of people while underpinning key activities, such as diamond mining which has dominated Botswana’s economy for more than 30 years.

But if this natural wealth is important now, it looks set to be even more critical in the future. The country’s government has identified several areas for growth — including nature-based tourism, mining and agriculture — which it hopes will simultaneously help diversify the economy and reduce poverty. To meet all three development goals, the government will need to optimize use of natural resources.

But the economic information needed to do that is often incomplete or missing. Moving beyond GDP—which does not explicitly incorporate the value of natural resources—as an indicator of economic growth is a priority. So too is finding ways to account for the broad mix of natural capital and better answer questions such as what role does Botswana’s huge coal reserves have to play, or how can local communities benefit from tourism?

Making WAVES in Botswana

The WAVES project in Botswana will help the country fill key information gaps to support policy dialogue and improve economic decision making.
 
Four priority areas for natural capital accounting have been identified, with water accounts being the top priority:

  • Water Accounts: Water accounts help the government better assess the availability, uses, and economic contribution of this scarce resource.
  • Land and Ecosystem Accounts, with a particular focus on tourism: Protected areas account for 40 percent of Botswana’s land area. Accounts can help influence the benefits of tourism reaching local communities and can balance land usage. National and ecosystem-based tourism accounts can be used to inform management of eco-tourism in four key ecosystems: Okavango, Chobe, Makgadikgadi Pans, and Central Kalahari.
  • Mineral and Energy Accounts: In addition to diamonds, Botswana possesses other mineral deposits, particularly coal, that could be developed for export or to alleviate regional energy shortages. Energy accounts can help determine the optimal energy mix for the future and examine the role of Botswana’s coal in a green economy.
  • Macroeconomic Indicators of Sustainable Development: Using the methodology approved in 2012 by the U.N. Statistics Division, Botswana will develop indicators for natural capital and changes to natural capital (depletion/additions), including adjusted net national income, adjusted savings, and national wealth accounts with natural capital to assess the prospects for long-term, sustainable growth.

Botswana has a long history of economic planning for development and since 1966 has prepared 10 National Development Plans. Their long-term Vision 2016 strategy also highlights the need for new sources of economic growth while ensuring the sustainable use of natural resources. The WAVES project is expected to strengthen the planning process by ensuring a true consideration of natural resources and ecosystems; and so enable better decisions.

The story so far

During the first year of implementing an aggressive work plan for 2012-2016, WAVES-Botswana updated its water accounts based on direction from the Botswana Economic Advisory Council (BEAC) and the President of Botswana.

A Water Accounting Working Group was established, chaired by the Department of Water Affairs, to compile the update. The preliminary results from the accounts were presented to the Government in November 2012. The main findings showed:

  • Botswana has increased its water-use efficiency but needs to increase it further to support economic growth and diversification, especially the irrigation and mining sectors.
  • GDP contributions per unit of water vary greatly by sector. Agriculture has high water consumption but contributes relatively little to GDP or employment. The service sector consumes little water but contributes significantly to GDP and formal employment.
  • Sectoral water efficiency should be considered in designing strategies for future economic growth and diversification.

The rest of the work plan was reviewed by the newly constituted Steering Committee in July 2013 in order to integrate it with the recommendations of the Midterm Review of 10th National Development Plan (NDP10) and preparations for NDP11.

Further work on water accounts will be done to separate data on consumption and production, water consumption in rural settlements, waste water accounts, and water accounts for irrigation schemes.