Policy Options for a World Facing Water‐Scarcity/Food Security Issues: Global Perspectives Mark W. Rosegrant Environment and Production Technology Division 2013 AAEA & CAES Joint Annual Meeting Session 2025: Will Water Become a More Limiting Resource for Food Production? Marriott Wardman Park, August 4‐6, 2013
Policy Options for a World Facing Water‐Scarcity/Food Security Issues: Global Perspectives
Dec 18, 2014
Presentation by Mark W. Rosegrant at the event, “2013 AAEA & CAES Joint Annual Meeting” which took place on August 4-6, 2013 in Washington, DC. It offers AAEA members, CAES members, and other applied economists a chance to interact and learn over the course of the three day meeting.
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Policy Options for a World Facing Water‐Scarcity/Food Security Issues:
Global Perspectives
Mark W. RosegrantEnvironment and Production Technology Division
2013 AAEA & CAES Joint Annual Meeting Session 2025: Will Water Become a More Limiting Resource for Food Production?
Marriott Wardman Park, August 4‐6, 2013
Outline Challenges for Water Policy
Alternative Water Scenarios to 2050
Crop Water Productivity Improvement
Increased Investment in Irrigation
Agricultural Trade and Subsidy Policy
Efficient Water Allocation
Challenges for Water Policy Increasing costs of developing new water and delivering developed water; need for efficient use of developed water and efforts to reduce losses and leaks
Depletion of groundwater, water pollution, declining water quality, and degradation of water‐related ecosystems
Wasteful use of already developed supplies encouraged by subsidies and distorted incentives that influence water use
Climate change, biofuels and rising energy prices Future role of hydropower and multipurpose damsneed for increased storage and supply of surface water?
Alternative Water Scenarios
Today, 36% of population, 39% of grain production, and 22% of global GDP are at risk due to water stress
How many people live in water short areas (%)?
How much GDP is generated in water scarce regions (%)?
> 50
< 2020 - 3030 - 4040 - 50
No data
> 40%
20 - 40%
0 - 20%
2010
36
18
46
> 40%
0 - 20%
1922
2010
20 - 40%
59
2010
2.5 Bnpeople
9.4 trillion USD2
Water stress, percent of total renewable water withdrawn
Source: Veolia Water & IFPRI 2011
Under BAU, 52% of the population, 49% of cereal production, and 45% of GDP will be at risk due to water stress by 2050
> 40%
20 - 40%
0 - 20%
2050
52
1632
2010
36
18
46
> 40%20 - 40%
0 - 20%
2050
45
25
30
2010
2219
59
Business as usual, 2050 How many people live in water short areas?
How much GDP is generated in water scarce regions?
▪ 4.7 Bnpeople ▪ Increase
by 90% compared to 2010
▪ 63 trillion USD▪ Increase
by 570% compared to 2010
Water stress, percent of total renewable water withdrawn
> 50
30 - 4040 - 50< 20
20 - 30
No data
Source: Veolia Water & IFPRI 2011
With significant water productivity investments, ~1 bnpeople and 17 trillion USD2 GDP can be moved into areas of
lower water scarcity1“Blue" high-productivity scenario medium growth, 2050Water stress, percent of total renewable water withdrawn
> 40%
20 - 40%0 - 20%
2050-Blue
38
2050-BAU
41
211632
52
38
2050-BAU
33
2050-Blue
45
25
30
28> 40%
20 - 40%
0 - 20%
How much GDP is generated in water scarce regions?
▪Decrease of 11% to BAU▪ 1 Bn
people in less scarce regions
▪Decrease 12% com-pared to 2010▪ 17,000 Bn
USD2 in less scarce regions
How many people live in water short areas?
> 50
< 2020 - 3030 - 4040 - 50
No data
1 >40% water stress2 Based on year 2000 prices
Source: Veolia Water & IFPRI 2011
Even highly industrialized countries like US will face critical water scarcity without investing in water productivity
20
30
40
50
US Water stressin Percent
GDP per capitain USD
80,00060,00040,00020,000
27%
43%
36%
27%
Size of bubble reflects size of population
Blue (med)
Grey (med)
BAU (med)
Water scarcity
2010 2050 2050
If no investments are made, US becomes water scarce in 2050
Even under business as usual, water scarcity increases until 2050
Productivity gains in blue scenario enable the US to remain at the same water stress level as in 2010
Water stress 2050 over GDP per capita – Medium growth
Crop Water Productivity Improvement
Water Productivity: Passioura Formula When water is limiting, grain yield is a function of
i. amount of water used through plant transpiration and soil evaporation
ii. how efficiently the crop uses this water for biomass growth (water‐use efficiency as above‐ground biomass/water use)
iii. the harvest index (proportion of grain yield to above‐ground biomass)
Improvement in any one of these components results in increase in crop yield
Challenge is producing cultivars thati. capture more of the water supply for use in transpirationii. exchange transpired water for CO2 more effectively in
producing biomassiii. convert more of the biomass into grain
Improving Crop Productivity and Water Use Efficiency
Do further yield gains require increased water use? Breeding can influence biomass/unit of water through transpiration rates and efficiency of biomass per unit of transpiration• Use of biotechnology and marker‐assisted selection is a
necessity for significant progress in the longer term• Many interlinked processes and factors underlie plant water
needs; additional progress depends on combination of disciplines
• Incorporating physiological and agronomic expertise into the design of transgenic experiments is crucial in realizing improvements in water productivity
Genetic Approaches to Crop Water Productivity Improvement
Increased transpiration per unit of water through rapid leaf growth to improve ground cover (to reduce losses from soil evaporation) and deeper rooting to recover more water from the soil profile
Increased harvest index and grain yield through increased carbohydrate supply
Reduced soil evaporation through changing crop duration to periods with less evaporation
Increased resistance to water transport to slow water use and ensure availability during flowering and grain filling
Reduced flowering‐silking interval to reduce chances of drought stress during vital stage of development
Management Practices for More Efficient Water Use
Enhanced water infiltration: mulching; deep tillage; contour farming; special terraces (e.g., flat‐channel)
Decrease soil water evaporation: conservation tillage (e.g., no‐till or minimum till)
Deficit irrigation: apply predetermined percentage of calculated potential plant water
• Mild soil drying results in restricted shoot and leaf growth, reducing competition within the plant for reproductive development, increasing the harvest index and crop yield
Advanced irrigation technology (drip, micro‐sprinkler, real‐time management)
Increased Investment in Irrigation
Source: IFPRI 2010
Potential increase in gross revenue per hectare from small‐scale irrigation
Source: IFPRI 2010
Potential large‐scale and small‐scale based irrigated areas, alternative IRR levels
Message 1: Location‐bound large‐scale potential
Dam type Investment expenditure
Internal rate of return
Increase in irrigated area
(US$ million) (%) (hectares)
Operational 16,299 7.16 8,351,423
Rehabilitated 1,954 11.32 1,000,944
Planned 13,465 5.27 6,899,376
Total 31,718 6.61 16,251,744Source: IFPRI 2010
Message 2: Small‐scale irrigation: widespread, more profitable, but sensitive to cost
Cost type Investment expenditure
Internal rate of return
Increase in irrigated area
(US$ million) (%) (hectares)
Low 24,315 104.00 15,785,617
Medium 21,835 27.00 7,340,964
High 1,969 9.00 321,727Source: IFPRI 2010
Message 3: Need to keep investment costs low to improve viability
Large scaleSource: IFPRI (2010)
02468101214161820
10,000 8,000 6,000 3,000 1,000Unit cost per ha ($/ha)
Irrigated area increase (million ha)
Irrigated
area increase (m
illion ha
)
Unit cost per ha ($/ha)
Message 3: Need to keep investment costs low to improve viability
Small scaleSource: IFPRI (2010)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
600 2000 5000Unit cost per ha ($/ha)
Irrigated
area
increase ('000 ha)
Irrigated
area increase (m
illion ha
)
Unit cost per ha ($/ha)
Agricultural Trade and Subsidy Policies
Global Water Savings (>5.0 Gm3/yr) Associated with International Trade of Agricultural
Products, period 1997‐2001
Source: A.K. Chapagain, Hoekstra A.Y. and H.H.G. Savenije, UNESCO-IHE Institute for Water Education.
Support policies to enhance open international trade in agriculture (and water)
Reduce subsidies that distort production decisions and encourage water use beyond economically appropriate levels• Fertilizer, energy, water subsidies• Savings invested in activities that boost farm
output and income
Key Policies
Potential Policy Responses• Establish regional or international emergency food stocks• Coordinated effort among countries, international
organizations and others to compile useful, real‐time information for policymakers ‐ Examine the current availability of key resources food,
water, oil, land ‐ Analyze trends in vulnerability to scarcity among poor
people and regions affected by violence and food insecurity
‐ Provide effective early warning systems on food and agriculture to monitor food insecurity and potential conflict
Reestablish Confidence in Trade under Food Price Volatility
Efficient Water Allocation: Water Rights and Water
Markets
Challenges Rapid economic and technological, and climate change requires increased flexibility of water and food systems and adaptability to stress
Increase water productivity in agriculture to allow crop production and farm income to be maintained or increased while reallocating water to higher‐value uses
Create the institutional, incentive, and policy changes to promote more efficient allocation and use of water resources among and within sectors
Water Rights and Markets: Advantages• Empowerment of water user by requiring consent and compensation for water transfers
• Markets in tradable water rights induce users to consider the full opportunity cost of water, providing incentives to conserve and gain additional income through the sale of saved water
• Incentives for water users to internalize the external costs imposed by their water use, reducing the pressure to degrade resources
Water Rights, Water Pricing and Water Markets
Challenges • Requires legal and institutional capacity for definition and registration of rights, protection against third party effects, conflict resolution, protection of stream flow and environmental flows
• May require improved infrastructure• Risk of speculative water rights purchases• Potentially high transaction costs
Water Rights, Water Pricing and Water Markets
www.ifpri.org
Establish economic incentives• Establish water rights for users
• Direct price increases for households and industry, with subsidies targeted to the poor
• Irrigation water price increase can be punitive to farmers
• Design water market or market‐like mechanisms to pay irrigators to use less water
Economic Incentives for Efficient Water Use
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