Botswana - Natural Capital as a Diversification Tool

Botswana's vast stock of natural resources—a combination of minerals, energy, protected areas, crops, pastureland and non-timber forest products—account for one-third of the country's total wealth and underpin many important contributions that drive the economy such as nature-based tourism, mining and agricultural activities.

Natural capital accounting (NCA) is a tool that can help the government determine the true value of those natural resources, optimize their use, and determine how they can be used to diversify the economy and reduce poverty.

Botswana has a long history of economic planning for development and is currently formulating the 11th National Development Plan (NDP), which incorporates NCA as a tool to inform their strategies on climate change adaptation, poverty eradication and the post-2015 development goals. 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 Government of Botswana co-hosted the Summit for Sustainability in Africa in 2012, which resulted in the Gaborone Declaration—a concrete set of proposals related to recognizing the role of natural capital in development. In 2013, the 10 signatory countries reconvened to take stock and operationalize how to bring natural capital from the periphery to the center of all economic decision-making.


Making WAVES in Botswana

The WAVES partnership enables Botswana to fill key information gaps to support policy dialogue and improve economic decision-making. As a core implementing country, Botswana has access to international expertise to build their own capacity to be able to construct the accounts regularly.
Botswana is working on four priority areas for NCA:

  • Water Accounts: To better assess the availability, uses, and economic contribution of water.
  • Land and Ecosystem Accounts: 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: To develop indicators like adjusted net national income, adjusted savings, and national wealth accounts to assess the prospects for long-term, sustainable growth. 


The story so far

The first task of WAVES Botswana was to review data availability, gaps, and lessons from previous natural capital accounts with the ultimate aim of being able to institutionalize NCA.
The government welcomed preliminary results from the first water accounts, and a second phase is underway. Work has begun on ecosystem, mineral and energy accounts. 
Technical reports on water and minerals, a country note and policy briefing on water accounts have been completed. 

The WAVES-Botswana steering committee provides regular updates to the Botswana Economic Advisory Council (BEAC), a ministerial-level group from the government and private sector chaired by Botswana’s President Ian Khama. In 2014 for the second year in a row, President Khama highlighted the importance of NCA to Botswana’s economic development in his annual State-of-the-Nation address.

Institutionalization has already begun: The Department of Water Affairs has established a water accounting unit, and a unit has been set up within the Macroeconomics Policy Division of the Ministry of Finance and Development Planning to coordinate NCA objectives across relevant sectors. Also, technical working groups that are multi-sectoral and chaired at the policy level by deputy permanent secretaries provide oversight function to the activities of the WAVES sectors.

Some of the preliminary findings emerging from the accounts are the following:

Water Accounts: 
  • Groundwater accounts for the largest share of water use.
  • Botswana’s total water use has increased by one third between 1993 and 2011—a slower rate than the rate of economic and population growth because of water use efficiencies. Water use per person has fallen by 10 percent in the same period.
  • The agricultural sector (livestock and irrigation) is the highest water user (43 and 44 percent in 1993 and 2011 respectively), but a low contributor to GDP and formal employment. The sector supports a large share of informal employment, providing a social service.

Mineral Accounts:

  • Mineral (resource) rents have made a major contribution to Botswana’s economic growth; however, rents are declining in real terms and in relation to GDP. The declining contribution of resource rents to GDP means that new sources of growth will be needed, emphasizing the importance of diversification.
  • Mineral accounts show the vast majority of resource rents have been derived from diamond mining, with a small contribution from copper-nickel mining; the resource rent from coal has been negative, which suggest that is has been underpriced relative to its economic cost.

In January and February 2015 a series of training workshops will take place for water, minerals, and energy accounts. There will also be a workshop for the estimation and use of new macroeconomic indicators that provide a better measure of long-term prospects for development by more fully reflecting natural capital.