Anticipated Economic Impacts of Reducing the Cost of Desalination Water Intended for Use in Agricultural Production in the Kingdom of Saudi Arabia

Due to water scarcity and low rainfall rates, the Ministry of Environment, Water and Agriculture has been compelled to make structural adjustments to crop composition and reduce cultivated areas from 1.04 million hectares in 2015 to 534.5 thousand hectares in 2022. With the expansion in modern technology applications, desalination costs decreased from 6 riyals/m3 in 2015 to 1.2 riyals/m3 in 2022. This study aimed to measure the anticipated economic impact of reducing the costs of desalinated water intended for agricultural production. When the cost of desalination reaches 1.2 riyals/m3, it can be used in the production of both wheat and rice, in addition to vegetables and fruits.The shift towards using desalinated water in wheat production would lead to an increase in cultivated area and domestic production, thereby increasing the self-sufficiency rate from 28.7% in 2023 to 60.0% in 2030. By replacing imports with local production, the quantity of imports needed to cover local consumption decreases from 3.27 million tons in 2023 to 2.13 million tons in 2030. With stable average import prices, the value of imports and the amount of the deficit in the wheat trade balance decrease. Finally, this study recommends the need to expand investments and localize modern technologies for water desalination (such as solar and nuclear energy) for use in agricultural production in coastal regions along the Red Sea and the Arabian Gulf, as long as the cost of desalination does not exceed the value of marginal productivity (marginal return) per unit of water.