Egypt and Ethiopia have certain legal tools and precedents to help them manage the Nile's water. But arbitration may well be needed.
Egypt and Ethiopia must find a way to agree on Nile flows
Egypt's president, Mohammed Morsi, spoke bluntly: "If a single drop of the Nile is lost, our blood will be the alternative." He was talking, this month, about Ethiopia's $4.7 billion (Dh17.3 billion) Grand Renaissance Dam, now under construction on the Blue Nile.
That river, which drains much of the Ethiopian highlands, contributes about 86 per cent of the water that feeds into the Nile entering Egypt. The Nile is a strategic resource without which Egypt cannot survive; it is almost Egypt's only source of fresh water.
Egypt fears that the dam will reduce the Nile's flow, especially during the several years it will take to fill the vast reservoir behind the structure. Ethiopians, however, consider the water theirs and say construction is not negotiable.
High-level talks have so far settled little. There are various possible solutions to the crisis but all of them require compromise that does not yet seem forthcoming.
One possible solution is to apply the 1997 UN Convention on non-navigational uses of international watercourses. It says an upstream state is free to use a water system that originates within its territory, so long as there is no "significant harm" to a downstream state.
This convention is a guide to good conduct but is ambiguous. It does not specify what "significant harm" means.
It does imply that upstream states should exercise due diligence not to overuse or withhold more than their entitlement.
But today, under a 1929 agreement between Egypt and "Anglo-Egyptian Sudan" signed under the auspices of Britain, then the colonial power, only Egypt and Sudan were allowed Nile water; Ethiopia has no legal share of the Nile.
Still, the UN convention option has been applied with some success in other international water systems including the Colorado River in North America, the Mekong in Asia and the Danube in Europe.
If this route is to be followed, Ethiopia's project should continue, but what is meant by "significant harm" would have to be determined by experts.
Fortunately, Egypt has previous experience with the Owen Falls Dam in Uganda, where it stationed engineers to monitor the amount of water that flows into the White Nile. This approach would certainly be preferable, for Egypt, to going to war or engaging in diatribes.
The second option is to finalise the contentious Nile Basin Cooperative Framework Agreement that stalled in mid-2011 after Egypt and Sudan refused to sign.
Six upstream states had apparently reached preliminarily agreement, before the talks broke down, on sharing the Nile's water "in an equitable and reasonable manner". The agreement says this should consider geographic and climatic factors, the social and economic needs of the states concerned, the population dependent on the water resources; existing and potential uses; and other factors.
These criteria resonate with the Helsinki Rules of the Uses of the Waters of International Rivers passed by the UN in 1996. If applied, this option would mean Egypt's historic share would be reduced, giving some of the water to other states.
As experience shows, any redistribution of a public good is a recipe for conflict. But if the criteria are applied to the letter, I believe Egypt stands to benefit relative to upstream states that get more rain.
Also the current use pattern and population figures work in Egypt's favour. And other than Ethiopia, Tanzania and probably Uganda, other countries upstream have no substantive need for more of the Nile system's water.
Given that the stakes for Egypt are higher than those for Ethiopia, it seems rational that Egypt should take the lead to ensure that the draft framework is finalised.
The upstream states are presently in agreement about their right to use the water; six (Ethiopia, Tanzania, Uganda, Rwanda, Burundi and Kenya) have already signed the agreement, and South Sudan is expected to sign before the end of this month.
Their demands are not likely to simply disappear within the next few years. With its location at the end of the pipe, Egypt must cajole rather than threaten.
A third option is an economic or market approach. The Nile Basin states could consider instituting a semipublic corporation to manage the usage of the water. This company would have to sell water rights to each state, based on need and ability to pay. If a state did not use its share within a specified period, it could sell the balance to another that needs it.
The last option would be to stick to the "benefit sharing" approach that is presently being implemented under the auspices of the existing Nile Basin Initiative (NBI), supervised by the World Bank.
Ethiopia's decision to go ahead and build the dam, despite the fact that a number of regional projects are already anticipated under the NBI, is an indication that all may not be well with the sharing strategy. Perhaps Ethiopia is beginning to question whether its share will be commensurate with its contribution to the Nile water flow.
To tame the rising tension about the future flows of the Nile, the two parties to the dispute, Egypt and Ethiopia, must clarify and assess the potential level of significant harm that the dam could do to Egyptian interests and then find ways to minimise that damage.
In my view, the dam's construction will continue but arbitration may be necessary - and preferably now rather than later.
Dr Simon H Okoth is a specialist on international water rights whose research focuses on the Nile. He is an assistant professor at Zayed University in Abu Dhabi