Multi-market Economic Model: An updated economy-wide, multi-market (EMM) model (based on

[122] and [123]), explicitly focused on agriculture and hydropower resources, will be developed for this

study to quantify the economic implications of local-scale decisions at regional and national scales. The

current version models the detailed structure of the Ethiopian agricultural sector, while the nonagricultural

economy is aggregated into two broad sectors: industry and services. Specifically, there are 32

agricultural commodities or commodity groups. Both agricultural and nonagricultural production and

consumption are further disaggregated into subnational regions in order to capture the geographic

heterogeneity of sectors and households. The model captures 56 total administrative zones and all supply

and demand functions are defined at the zonal level. Unlike most multimarket models, which are partial

equilibrium, the EMM per capita income at the zonal-level is an endogenous variable determined by the

zonal level production revenue divided by urban and rural population. The model has a general

equilibrium nature, which allows production and consumption decisions to be linked at the zonal level.

The model will be modified to include an agricultural water extension to capture the important links

between water/hydropower demand-supply and economic activity in the agriculture sector.