The São Francisco River Basin:
Trends, Current Situation, and Policy
Options for Reducing Rural Poverty
O ti f R d i R lP t
Steve Vosti
&
SFRB Team
February 2008 UCD/Embrapa

Presentation Overview
• Trends and Driving Forces
– Population, Poverty, Agriculture, Market Structure
• P bl
Problems
– Persistent poverty
– ‘Local’ water conflicts
– Environmental flows
– Deviations from ‘average’
• Role for Public Policy Action
– Managing agriculture
– Reducing persistent poverty
– ‘What If’ Scenarios
• Water pricing
p g
• Water use restrictions
• Data Sources, Hydro-Economic Models, Value Added to CP
• Knowledge Pathways and Impact Pathways
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Policy Instruments that Can Affect
Productivity and Profitability
• Assets and Asset Quality
– Land, water, financial capital, market access,
knowledge
• Relative Prices
–I
Inputs
t
• water
– Products
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Three Worlds of the WDR 2008
Source: World Development Report 2008 UCD/Embrapa

Changing Market Structure
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Soil Types and Distance to Market
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Population
Total Population 1991 2000 Change % change
Change in the
1991-2000
Total for SFRB 14,059,006 15,723,771 1,664,765 11.84% SFRB
Alagoas 668,980 705,851 36,871 5.51%
Bahía 2,712,391 2,897,898 185,507 6.84%
Distrito Federal 1,601,094 2,051,146 450,052 28.11%
Goiás 147,656 173,079 25,423 17.22%
Minas Gerais 6,971,994 7,885,366 913,372 13.10%
Pernambuco 1,568,446 1,591,141 22,695 1.45%
Sergipe 229,819 260,180 30,361 13.21%
Rural 1991 2000 Change % change
Population 1991-2000
Total for SFRB 4,445,920 3,691,016 -754,904 -16.98%
Alagoas
g 409,421
, 400,418
, -9,003
, -2.20%
Bahía 1,579,751 1,442,275 -137,476 -8.70%
Distrito Federal 85,205 89,647 4,442 5.21%
Goiás 50,576 37,650 -12.926 -25.56%
Minas Gerais 1,256,533 809,764 -446,769 -35.56%
Pernambuco 842,515 700,970 -141,545 -16.80%
Sergipe 124,703 131,202 6,499 5.21%
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Aging of the Rural SFRB Population
Shifting Demographic Profile
12.00
12 00
10.00
ipios
Proporti of Munici
8.00
6.00
ion
4.00
2.00
0.00
10%
11%
12%
13%
14%
15%
16%
17%
18%
19%
20%
21%
22%
23%
24%
25%
26%
27%
28%
29%
30%
31%
32%
33%
34%
35%
55+ Dependency Ratio -- 1991 55+ Dependency Ratio -- 2000
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Agriculture in the SFRB -- 1991
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Agriculture in the SFRB -- 2004
São Francisco River Basin Harvested Specialty
Harvested Grains Crops, 2004
2004
Petrolina
Harvested Area (ha) Harvested Area (ha)
at Município Level at Município Level
None None
1 - 2,000 1 - 2,500
Montes Claros 2,001 - 5,000 2,501 - 10,000
5,001 - 10,000 10,001 - 50,000
10,001 - 20,000 50,001 - 200,000
20,001 - 431,441 200,001 - 401,980
Sete Lagoas Scale 1:9,000,000
Ribeirao das Neves 0 50 100 200 300
Belo Horizonte
Betim Kilometers
Divinopolis
Lambert Azimuthal Equal Area
Projection, WGS-84.
Map by J A Young, 12 September 2007
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Frequency Distribution of Corn Production
(in tons/ha)
60
Changes in Yields
g
40
ount
Co
20
0
1 2 3 4
Unweighted Yields in 1991
Frequency Distribution of Corn Production
(in tons/ha)
60
Count
40
20
0
0 2 4 6
Unweighted Yields in 2004
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Water Availability
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Water Productivity in Corn
y
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Water Productivity
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Water Conflicts in the SFRB
Source: ANA 2007
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Poverty in the SFRB
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Extreme Poverty in the SFRB
2003 Rural Extreme Poverty-
Poverty
Poverty Rural Poverty Rural
% of % of
Rural Rural
Absolute Pop Absolute Pop
Total for SFRB 1,012,095 28% 345,677 9%
Alagoas 163,307 41% 70,400 2.6%
Bahía 328,313 23% 139,941 9.7%
Goiás 7,792
7 792 21% 2,846
2 846 7.5%
7 5%
Minas Gerais 178,006 22% 43,214 5.3%
Pernambuco 258,004 37% 53,484 7.6%
Sergipe 48,635 37% 19,603 14.9%
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Spatial
Distribution of
Rural Poverty
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Spatial Clusters of Rural Poverty in the SFRB
Cluster 1
Cluster 3
Cluster 2
Not Significant
Low - Low
High-High
High-Low
Low-High
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Water-Poverty Links: A Visual Inspection
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Possible Water-Poverty Links
y
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Next Steps for Small-Scale
Farmers?
• Scale Economies Loom Large
• Shifting Product Mix Will Likely Be Required
• Such Shifts Will Require Private Investments
• Capital, knowledge, market development
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Some Types
of Variability
Matter
Greatly
Yield Variation Price Variation
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Effects of Alternative Policy Options –
A Quick Look Using LUS Analysis
Q g y
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A Basin-Wide View of the Effects of
Agricultural E pansion
Agric lt ral Expansion
Petrolina
Barreiras
Paracatu
Rio Paranaiba
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A Basin-Wide View of the Effects of
Agricultural Expansion, cont.
g p ,
Value of Total Output Total Increase in Employment
(2006 R$) (person-months/year)
Barreiras R$ 36,523,637 2,347
Petrolina R$ 192,853,884 14,302
Paracatu R$ 41,988,915
$ 7,401
Rio Paranaiba R$ 3,675,946 192
Barreiras
Petrolina
P li
Paracatu
Rio Paranaiba
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A Basin-Wide View of the Effects of
Baseline
Agricultural Expansion, cont.
g p ,
8000
.
6000
Discharg (m3 s-1)
4000
2000
ge
0
1 2 3 4 5 6 7 8 9 10 11 12
Month
Baseline
B li
8000
.
6000
Discharge (m3 s-1)
4000
2000
0
1 2 3 4 5 6 7 8 9 10 11 12
Month
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What Happens If Policymakers Say ‘No’ to
Increased Irrigation
10% Reduction 20% Reduction
P e rc e n t C h a n g e in Ir rig a te d L a n d fro m a 1 0 % R e d u c tio n in P e r c e n t C h a n g e in Irrig a te d L a n d fro m a 2 0 % R e d u c tio n in
W a te r A v a ila b ility W a te r A v a ila b ility
0 0
1 1
-1 -2
-2 B o n fin o p o lis d e M in a s B o n fin o p o lis d e M in a s
U nai -4
Unai
-3 C a b e c e ira s C a b e c e ira s
-6
6
-4 C ris ta lin a C ris ta lin a
F o rm o s a F o rm o s a
-8
-5 B ra s ilia B ra s ilia
-6 -1 0
-7 -1 2
30% Reduction 40% Reduction
P e rc e n t C h a n g e in Irrig a te d L a n d fr o m a 3 0 % R e d u c tio n in P e rc e n t C h a n g e in Ir rig a te d L a n d fro m a 4 0 % R e d u c tio n in
W a te r A v a ila b ility W a te r A v a ila b ility
0 0
1 1
-2 -2
-4 -4
B o n fin o p o lis d e M in a s B o n fin o p o lis d e M in a s
Unai -6
-6 U nai
C a b e c e ira s -8 C a b e c e ira s
-8
C ris ta lin a -1 0 C ris ta lin a
-1 0 F o rm o s a F o rm o s a
-1 2
1
-1 2 B ra s ilia B ra s ilia
-1 4
-1 4 -1 6
-1 6 -1 8
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Changes in Crop Allocation Associated with
a 10% Reduction in Water Availability (%)
C r i s t a li n a
B o n f i n o p o li s d e M i n a s c it r u s c it r u s
c o ffe e c o ffe e
3
c o rn c o rn
c o tto n 2 c o tto n
1 .5 d r ie d b e a n s d r ie d b e a n s
1
1 g r a in s g r a in s
0
0 .5 h o r t ic u lt u r e h o r t ic u lt u r e
1
m ani c
io -1 m ani c
io
0
o r c h a r d f r u it s -2 o r c h a r d f r u it s
-0 .5 1
o th e r te m p o ra ry o th e r te m p o ra ry
-3
-1 o th e r p e rm a n e n t o th e r p e rm a n e n t
-1 .5 r ic e -4 r ic e
-2 soybeans -5 soybeans
sugar sugar
-2 .5 -6
v e g e t a b le s
l v e g e t a b le s
l
Unai F o rm o s a
c it r u s c it r u s
c o ffe e c o ffe e
3 10
c o rn c o rn
2 c o tto n c o tto n
0
d r ie d b e a n s 1 d r ie d b e a n s
1
g r a in s -1 0 g r a in s
0 h o r t ic u lt u r e h o r t ic u lt u r e
1 -2 0
m a n io c m a n io c
-1
o r c h a r d f r u it s o r c h a r d f r u it s
-3 0
-2 o th e r te m p o ra ry o th e r te m p o ra ry
o th e r p e rm a n e n t -4 0 o th e r p e rm a n e n t
-3
r ic e r ic e
-4 soybeans -5 0
soybeans
-5 sugar sugar
-6 0
v e g e t a b le s v e g e t a b le s
UCD/Embrapa
C

Changes in Water Use Associated with a
10% R d ti i W t A il bilit (10%)
Reduction in Water Availability
B o n fin o p o lis d e M in a s C r is ta lin a
c it r u s c it r u s
c o ffe e c o ffe e
0 0
c o rn c o rn
1 1
-2 c o tto n -5 c o tto n
d r ie d b e a n s d r ie d b e a n s
-1 0
-4 g r a in s g r a in s
h o r t ic u lt u r e
c t -1 5 h o r t ic u lt u r e
c t
-6
m a n io c m a n io c
-2 0
-8 o r c h a r d f r u it s o r c h a r d f r u it s
o th e r te m p o ra ry -2 5 o th e r te m p o ra ry
-1 0 o th e r p e rm a n e n t o th e r p e rm a n e n t
-3 0
r ic e r ic e
-1 2 -3 5
soybeans soybeans
-1 4 sugar -4 0 sugar
v e g e t a b le s v e g e t a b le s
U nai F o rm o s a
c it r u s c it r u s
c o ffe e c o ffe e
0 3
c o rn c o rn
1
-5 c o tto n c o tto n
2
d r ie d b e a n s d r ie d b e a n s
-1 0
g r a in s g r a in s
1
-1 5 h o r t ic u lt u r e h o r t ic u lt u r e
m a n io c m a n io c
-2 0 0
o r c h a r d f r u it s o r c h a r d f r u it s
1
-2 5 o th e r te m p o ra ry o th e r te m p o ra ry
-1
o th e r p e rm a n e n t o th e r p e rm a n e n t
-3 0
r ic e r ic e
-2
-3 5 soybeans soybeans
-4 0 sugar sugar
-3
v e g e t a b le s v e g e t a b le s
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What Happens If Policymakers Charge for Water?
(20% Increase in Water Prices)
Bonfinopolis de Minas
p Brasilia
citrus
it citrus
it
coffee coffee
0.8 1
corn corn
0.6 cotton cotton
0.5
0.4 dried beans dried beans
0.2 grains 0 grains
horticulture 1 horticulture
0
-0.5
-0.2
02
-0.4
R1 manioc
orchard fruits -1
manioc
orchard fruits Crop Allocation
other temporary other temporary
-0.6 other permanent -1.5 other permanent
-0.8 rice rice
-2
-1 soybeans soybeans
-1.2 sugar -2.5 sugar
vegetables vegetables
Bonfinopolis de Minas Brasilia
citrus citrus
coffee coffee
0 0
corn corn
-1 cotton -2 cotton
dried beans dried beans
-2 -4
grains grains
-3
-4
4
horticulture
manioc
-6
-8
8
horticulture
manioc Water Use
orchard fruits orchard fruits
-5 other temporary -10 other temporary
other permanent other permanent
-6 -12
rice rice
-7 soybeans -14 soybeans
-8 sugar -16 sugar
vegetables vegetables
Bonfinopolis de Minas Brasilia
citrus citrus
coffee coffee
0.5 2
corn corn
cotton cotton
0 0
dried beans dried beans
grains -2 grains
-0.5
horticulture horticulture
-4
-1
manioc
orchard fruits
other temporary
-6
manioc
orchard fruits Employment
Emplo ment
other temporary
-1.5
other permanent -8 other permanent
rice rice
-2
soybeans -10
soybeans
-2.5 sugar sugar
-12
vegetables vegetables UCD/Embrapa

What If It Doesn’t Rain? f1= large, div+
f2= large, div-
(40% Reduction in Rainfall) f3= medium, div
,
f4= small, div
% Changes in Land Allocation
pasture corn dried beans soybeans limes vegetables orchards wheat sorghum
80
60
40
20 f1
0
f2
-20
f3
-40
-60 f4
-80
-100
-120
corn dried beans limes vegetables orchards wheat
0
-5
% Changes in -10
f1
-15
Total Water Use f2
-20
f3
-25
f4
-30
30
-35
-40
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What If It Doesn’t Rain? f1= large, div+
f2= large, div-
(40% Reduction in Rainfall) f3= medium, div
,
f4= small, div
Changes in Applied Water, by Source
f1 f2 f3 f4
60000
40000
20000
0
-20000
sw
-40000
40000
gw
-60000
-80000
-100000
-120000
-140000
f1 f2 f3 f4
0
-10
10
-20
-30
-40
% Changes in -50
50
Farm Profits -60
-70
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What If It Doesn’t Rain? f1= large, div+
f2= large, div-
(40% Reduction in Rainfall) f3= medium, div
,
f4= small, div
Changes in Use of Hired Labor , by Crop
dried
pasture corn beans soybeans limes vegetables orchards wheat sorghum
80
60
40
20 f1
0
f2
-20
f3
-40
-60 f4
-80
-100
-120
f1 f2 f3 f4
10
0
-10
-20
-30
-40
-50
% Changes in Hired Labor -60
-70
Use, by Farm Type -80
-90
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Knowledge Pathways and Impact Pathways
Min. of Ag. Agents of Change
Embrapa CPWF
Embrapa
ANA Research Centers BFPPolicy
Central
Policy
y g
Water Mgmt. Policy
y
OECD ‘Placeholders’ ‘Placeholders’ ‘Placeholders’
‘Pl h ld ’
Policy
‘Placeholders’
IEB -- NGOs
Policy
‘Placeholders’
Placeholders
Embrapa HQ
Policy Core Team IPEA
‘Placeholders’ •Research Policy
•Training
g ‘Placeholders’
•Outreach
Research Collaborators
Brazilian Embrapa Research NGOs Farmers International
Universities Centers • Cooperatives Research
• Brasilia • Savannah Community y
• Petrolina •Coastal zone
• Minas Gerais •Corn and sorghum
• Ceara •Semi-arid
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Muito Obrigado!
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