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. The Botswana Economic Advisory Council (BEAC), a ministerial-level group from the government and private sector, chaired by Botswana’s President Ian Khama, has expressed strong support for the WAVES work program. 
 
Four priority areas for natural capital accounting were 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

In the first year of implementing an aggressive work plan for 2012-2016, WAVES-Botswana updated its water accounts from the 1990s to better assess the availability, uses, and economic contribution of this scarce resource. The second phase of the work plan is currently underway, covering the implementation of technical activities. Technical reports on water and minerals, a country note and policy note on water accounts have been completed. 

An update on the progress of WAVES-Botswana implementation was submitted to the Botswana Economic Advisory Council (BEAC) following the April 2014 WAVES-Botswana steering committee meeting. Also, NCA was incorporated in the Review of the Botswana Biodiversity Strategy and Action Plan 2015-2025.

An update on Botswana’s accounts:

 
Water Accounts: The second phase of water accounting has started with updating the annual water accounts, and data collection for monetary accounts (expenditures and revenues). Work on the water accounts has emphasized the institutionalization of the water accounting tool within government. A road map toward full institutionalization has been developed with the Department of Water Affairs, which envisaged establishing a water accounting unit to lead and coordinate water accounting. A policy brief on water accounts was published in May 2014, and the department approved the Water Accounts Report and the plan for the next two-year phase of work.
 
Preliminary results from the first accounts were presented to the government in November 2012. The main messages that emerged are:
  • Water use efficiency — make sure population and economic growth are not tightly linked to growth in water abstraction: The policy emphasis on water supply now needs to be complemented by demand management and integrated water resource management; there is an urgent need for wastewater strategies to improve reuse and recycling within sectors; rethink possibly unsustainable levels of water subsidy.
  • Water allocation — provide water to sectors and users that add most value, for example: Economic development to support economic growth and diversification; Social protection to secure basic water needs and keep water bills affordable; Environmental protection to secure ecological water requirements.

Land and Ecosystem and Tourism Accounts: A technical Working Group on Ecosystem Accounts has been established, led by the Ministry of Environment, Wildlife and Tourism. A Working Group on Tourism has already been established by the Government of Botswana and will work closely with the ecosystem group. A presentation on WAVES and the land and ecosystem accounts was given at a senior management meeting at the Ministry of Lands and Housing. A scoping mission took place in July 2014 to begin the complex process of drafting the roadmap to construct ecosystem accounts. The mission also included a one-day workshop on land and ecosystem accounting. A draft of the scoping study was submitted in August 2014.

Mineral and Energy Accounts: Preliminary mineral accounts were compiled over the past year with an emphasis on the link to macroeconomic and fiscal policy. The government is currently reviewing the first report. The first step to develop energy accounts was a scoping study carried out in April 2014 in cooperation with the United Kingdom’s Department for Environment, Food and Rural Affairs (DEFRA). Further action was discussed at the WAVES-Botswana Steering Committee meeting in September 2014.

 
Macroeconomic Indicators of Sustainable Development: A Natural Capital Accounting unit within the Macroeconomics Policy Division of the Ministry of Finance and Development Planning has been established to coordinate NCA objectives across relevant sectors, and ensure they are incorporated into the country's latest National Development Plan (NDP 11). Including NCA in Vision 2030 is also an essential step for its institutionalization in Botswana. Key presentations have also been made to the monthly meeting of the MFDP’s Economic and Financial Policy Division chaired by the Deputy Permanent Secretary and attended by 40 technical staff; and to senior management in MFDP.