Identifying Water-Poverty Links at plot level

Identifying Water Poverty LinksIdentifying Water-Poverty Links At Plot Level

iLisa BennettStephen VostiSFRB Team

Center for Natural Resources Policy

UCD/EmbrapaSeptember 2008

Resources Policy Analysis -- CNRPA

Presentation Overview• Quick Overview of the SFRB• Application of Land Use Systems Analysis• Usefulness for Research• Usefulness for Policy Guidance

UCD/Embrapa

Water Availability

UCD/Embrapa

Spatial Distribution of Rural PovertyRural Poverty

UCD/Embrapa

Key Objectives of Hydro-Economic Models

• Understand Farmer Behavior and Outcomes– Cropping patterns, input mix, water use– Income– Surface water and groundwater availability

• Predict the Effects of Proposed Policy and other Changes on Farmer Behavior/OutcomesChanges on Farmer Behavior/Outcomes

• Inform Policy• Modeling at Three Spatial ExtentsModeling at Three Spatial Extents

– Plot-Level LUS Models– Buriti Vermelho Models

UCD/Embrapa

– Basin-Wide Models

One Tool -- LUS Analysisy• Focus on Land Use Systems (LUS)

– Multi-year duration – Different intermediate and end uses

• Estimate Economic Performance– Discounted streams of input costs and product revenuesDiscounted streams of input costs and product revenues

• Technical coefficients and input/output prices– Calculate economic returns to key factors of production

• Land, labor,

• Estimate the Environmental Effects– E.g., carbon stocks, water use

• Estimate the Sociocultural Effects• Estimate the Sociocultural Effects– E.g., food security, labor requirements

• Highlight Institutional Impediments to LUS Adoption

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• Compare Across LUS – Trade-Offs/Synergies

Land Use System Analysis

• Spatial Resolution, Time Steps, and Temporal Extent– Single parcel of land, specific series of cropping activities,

specific production and water use technologies specific endspecific production and water use technologies, specific end date

– Annual time stepsMulti year duration– Multi-year duration

– Different intermediate and end usesField #1Field #1Year 1

Field #1Year 2 Field #1

Y 3Year 3 Field #1Year 4 Field #1

Year 10 Field #1

UCD/Embrapa

Year 15

Agriculture in the SFRB -- 1991

UCD/Embrapa

Agriculture in the SFRB -- 2004Harvested Specialty Crops, 2004

São Francisco River BasinHarvested Grains2004

Petrolina

2004

Harvested Area (ha)Harvested Area (ha) Harvested Area (ha)at Município Level

None

1 - 2,500

2,501 - 10,000

10,001 - 50,000

Montes Claros

Harvested Area (ha)at Município Level

None

1 - 2,000

2,001 - 5,000

5,001 - 10,000 10,001 50,000

50,001 - 200,000

200,001 - 401,980

BetimDivinopolis

Sete Lagoas

Belo HorizonteRibeirao das Neves

5,001 10,000

10,001 - 20,000

20,001 - 431,441

Lambert Azimuthal Equal Area

1:9,000,000Scale0 100 200 30050

Kilometers

UCD/Embrapa

Map by J A Young, 12 September 2007

Lambert Azimuthal Equal Area Projection, WGS-84.

LUS Under Evaluation in Petrolina

S ll S l G t/Sh P d ti• Small-Scale Goat/Sheep Production– 46 hectares, rainfed, low-tech, some fodder

• Mango Production – Flood Irrigation– 4 hectares, two years annual crop production

• Mango Production – Micro-sprinkler Irrigationg– 4 hectares, two years annual crop production

UCD/Embrapa

Assessment of Small-Scale Goat/Sheep LUSGoat/Sheep LUS

Economic PerformanceLabor Requirements

Total Family

NPV of the LUS

NPV of the LUS per hectare

Excess Returns to

Family Labor

Returns to Land

Rate paid to Family Labor that sets NPV

to Zero

Ratio of Wage that Sets NPV

to Zero to Wage for Day

Labor$R/

Establish-ment

Operational Phase

yLabor Used

(both Establishment

and Operational

Ph )$R $R/ha

$R/ person-day $R/ha/year

$R/ person-day

-12 0 0 0 16.99 1.00

Phase)

person-days/ha

person-days/ha/

yearperson-days/

ha/year70 6.3 7.8

Water for Irrigation

Cost of Cost of Water Water EmploymentEstablishing

Irrigation System on

the Property

Establishing Irrigation

System on the LUS Plot

Operational Costs Water Use

Water Productivity

(NPV/ 1000m³)

Productivity

(kg produced/ 1000m³)

EmploymentOperational Phase(Contracted Labor)

person-days/ha/year0

UCD/Embrapa

$R $R/ha $R/ha/year1000M3/ ha/year $R/ 1000m³ kg/ 1000m³

0 0 5.5 4 0.00 14.20

0

Assessment of Small-Scale Irrigated Mango LUS Flood IrrigationMango LUS – Flood Irrigation

Economic Performance Labor Requirements

NPV of the LUS

NPV of the LUS per hectare

Excess Returns to

Family Labor

Returns to Land

Rate paid to Family

Labor that sets NPV to Zero

Ratio of Wage that Sets NPV to Zero to Wage for

Da Labor

Establishment (Family Labor and Contracted

Labor)

Operational Phase (Family

Labor and Contracted

Labor)

Total Family Labor Used (Operational

Phase)Day Labor

$R $R/ha$R/ person-

day$R/ha /year

$R/ person-day

2,512 628 1 31 18.70 1.10 Person-days /haPerson-days

/ha/yearperson-days/

ha/ year35 138 45

Water for Irrigation Employment

OperationalCost of

Establishing Irrigation

System on the Property

Cost of Establishing

Irrigation System on the

Plot

Operational Costs Water Use

Water Productivity

(NPV/ 1000m³)

Water Productivity

(kg produced/ 1000m³)

Operational Phase

(Contracted Labor)

UCD/Embrapa$R $R/ ha $R/ha/ano

1000M3/ ha/year $R/ 1000m³ kg/ 1000m³

553 138 1,177 8.64 2.50 1,424

person-days/ha/ year93

Assessment of Small-Scale Irrigated Mango LUS Micro Sprinklers

Economic Performance

NPV of the ExcessRate paid to

Family

Ratio of Wage that

Mango LUS – Micro SprinklersLabor Requirements

EstablishmeOperational

NPV of the LUSNPV of the

LUS per hectare

Excess Returns to

Family Labor

Returns to Land

Family Labor that sets NPV to

Zero

gSets NPV to

Zero to Wage for Day Labor

Establishment (Family Labor and Contracted

Labor)

Phase (Family

Labor and Contracted

Labor)

Total Family Labor Used

(Operational Phase)

$R $R/ha$R/ person-

day $R/ha /year$R/ person-

day

2,897 724 1 36 19.10 1.21Person-days

/haPerson-days

/haperson-days/ ha/

year44 100 32

Water for Irrigation

Cost of Establishing

Cost of Establishing Operational

Water Productivity Water

Productivity

Employment

OperationalIrrigation System on

the Property

Irrigation System on

the Plot

Operational Costs Water Use

(NPV/ 1000m³)

Productivity(kg produced/

1000m³)

Operational Phase

(Contracted Labor)

UCD/Embrapa

$R $R/ ha $R/ha/ano 1000M3/ ha/year $R/ 1000m³ kg/ 1000m³4,212 1,053 973 6.3 6 1,811

person-days/ha/ year69

Cross-LUS Comparisons

LUS Economic Performance Labor Requirements Water for Irrigation Employment

NPV of the LUS

NPV of the

LUS per

hectare

Returns to Land

Zero-Profit

Wage to MarketWage

Establish-ment

Opera-tionalPhase

Establish-ment Costs

on Farm

Establish-ment Costs

on Plot

Opera-tionalCosts

Water Use

Water Productivity

Operational Phase

(Contracted Labor)

$R $R/ha$R/ha /year ratio

Person-days /ha

Person-days /ha $R $R/ ha

$R/ha/yr

1000M3/ ha/year

NPV (R$)/ 1000m³

person-days/ha/ year

Goats and Sheep -12 0 0 1 70 6.3 0 0 5.5 4 0 0Mangos --gflood irrigation 2,512 628 31 1.10 35 138 553 138 1,177 8.64 2.50 93Mangos --micro sprinkler 2,897 724 36 1.21 44 100 4,212 1,053 973 6.3 6 69

UCD/Embrapa

Effects of Uncertainty and RiskEff t f M t lit U t i tEffects of Mortality Uncertainty

on NPV per Year

Effect of uncertainty in output prices for mangoes on NPV per year

UCD/Embrapa

Conclusions and Policy Implications

• Irrigation-Led Intensification:Irrigation Led Intensification:– Can increase farm profits– Can increase water productivityCan increase water productivity– Requires investment capital– Can reduce on-farm employmentp y

• None of these LUS Can Lift a Family of 4 Out of Povertyy

• Asset Poverty– Financial capital

UCD/Embrapa

p– Family labor

Benefits to Researchers• Quick and Easy

F ilit t I t di i li I t ti• Facilitates Interdisciplinary Interaction• Help Non-Economists Speak ‘Policy’

P t i l bi h i l– Puts an economics overlay on biophysical processes– Provides quantitative estimates of key variables

• Allows for Introducing Uncertainty and• Allows for Introducing Uncertainty and Assessing Risk

• Help Assess the Effects of Policy Changes andHelp Assess the Effects of Policy Changes and Public Investments– Water price policy

UCD/Embrapa

p p y– Technological change

Muito Obrigado!

UCD/Embrapa