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Impact of globalization on water and food security
 

Impact of globalization on water and food security

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The presentation lays out the benefits and threats of globalization for food security

The presentation lays out the benefits and threats of globalization for food security

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    Impact of globalization on water and food security Impact of globalization on water and food security Presentation Transcript

    • IFPRI Theme 5 Globalization – What’s in it for the Poor in Terms of Water and Food Security? EWRI, Anchorage 2005 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
    • GLOBALIZATION, WATER & FOOD IFPRI  Forces outside of the water sector are changing water management rapidly today and into the future – they include globalization, trade, and climate change Theme 5
    • OUTLINE IFPRI  Changes in Global Water & Food Demand  Globalization - Food Security  The Role of Trade • Example of Indonesia • Virtual Water • MFA • International Agreements and FDI  Some Conclusions Theme 5
    • IFPRI CHANGE IN GLOBAL WATER AND FOOD DEMAND Theme 5
    • CEREAL DEMAND 1995 and 2025 BASELINE IFPRI million metric tons 1995 2025 2,000 1,804 1,500 1,092 1,000 803 684 500 0 Developing countries Developed countries Theme 5 Source: Rosegrant et al. 2002. World Water and Food to 2025: Dealing with Scarcity
    • MEAT DEMAND 1995 and 2025 BASELINE IFPRI 1995 2025 million metric tons 250 220.5 200 150 115.5 101.6 96.4 100 50 0 Developing countries Developed countries Source: Rosegrant et al. 2002. World Water and Food to 2025: Dealing Theme 5 with Scarcity
    • AQUACULTURE % IN FISH PRODUCTION 1997 AND INCREASE 1997-2020 IFPRI Aqua- culture Capture 31% 32% Aqua- Capture culture 69% 68% Fish production 1997 Increase in fish production, 1997-2020 Theme 5
    • INCREASE IN WATER CONSUMPTION BETWEEN 1995 AND 2025 IFPRI Developing Countries World 120 100 percentage change 80 60 40 20 0 Household Industrial Livestock Irrigation Source: Theme 5 Rosegrant et al. 2002. World Water and Food to 2025: Dealing with Scarcity
    • IRRIGATED CEREAL HARVESTED AREA, 1995 AND 2025 IFPRI US 4% Rest Deving China 33% 29% Rest India Deved 18% 16% From 213 Mio in 1995 ha to 237 Mio ha by 2025 Theme 5 Source: Rosegrant et al. 2002. World Water and Food to 2025: Dealing with Scarcity
    • SHARE OF IRRIGATION AND RAINFED IN CEREAL PRODUCTION INCREASE, 1995-2025 IFPRI Irrigated Rainfed Developed countries Developed countries 11% 20% Irrigated Rainfed Developing countries Developing countries 39% 30% Source: Rosegrant et al. 2002. World Water and Food to 2025: Theme 5 Dealing with Scarcity
    • ANNUAL CEREAL YIELD GROWTH RATES, 1982-92, 1992-2002, 2002-2025 IFPRI 1982-1992 1992-2002 2002-2025 percent growth rate per year 2.5 2.0 1.5 1.0 0.5 0.0 Developing Developed World Countries Countries Sources: FAOStat Agriculture 2004. Statistical database; Rosegrant et al. 2002. World Water and Food to 2025: Theme 5 Dealing with Scarcity
    • LOSS OF GRAIN PRODUCTION DUE TO WATER SCARCITY, DEVELOPING COUNTRIES IFPRI 2025 2025 1995 Business as 2025 Sustainable Usual Water Crisis Water Use 0 -100 million mt -200 -300 -400 -500 Source: Rosegrant et al. 2002. World Water and Food to 2025: Dealing Theme 5 with Scarcity
    • REGIONAL CEREAL NET TRADE, 1995 and 2025 BASELINE IFPRI million metric tons 1995 2025 S Asia India (w/o 10 India) 4 WANA LAC China SSA SEA 0 -10 -6 -4 -10 -7 -20 -17 -20 -17 -19 -30 -21 -40 -35 -38 -50 -42 -60 -70 -80 -90 -83 Source: Rosegrant et al. 2002. World Water and Food to 2025: Theme 5 Dealing with Scarcity
    • NUMBER OF MALNOURISHED CHILDREN BY REGION, 1997 and 2025 BASELINE IFPRI million children 1997 2025 100 85 80 60 60 38 40 33 19 18 20 13 7 6 4 5 2 0 South Asia SSA South East China WANA Latin Asia America Source: Rosegrant et al. 2005. Looking Ahead: Long-Term Theme 5 Prospects for Africa’s Food and Nutrition Security
    • GLOBALIZATION – FOOD/WATER SECURITY
    • GLOBALIZATION, INCREASING INTERNATIONAL FLOWS IN… IFPRI  Goods and services – water & food  Capital  Labor  Information  Technology  Disease-causing agents  Weapons, terrorism, war  Insecurity Theme 5
    • FOOD SECURITY & THE POOR IFPRI  Food security: • National level - supply & trade • HH level – access to food [requires (farm) income] • Individual level – nutrition security, sufficient calories of sufficient quality  Caloric availability has gone up 30% since 60s  No. malnourished children from 46% to 31% in developing countries (from 1970 to 97)  Food prices ½ or less compared to 60s/70s [bad for producers, good for consumer, majority]  Globalization played a major role [technology transfer/information/trade] – picture less clear for Theme 5 water security & the poor [ltd technology & inv]
    • FOOD SECURITY & THE POOR IFPRI  Countries with worsening indicators  21 countries less calories and proteins per capita than 1960s (26 less calories; 33 less proteins)  Number and incidence of malnourished children up in SSA by 17 million  Number of hungry people still high, mostly in SSA and South Asia  World not on path to achieving international targets to reduce hunger [MDG – given up on total eradication] Theme 5
    • THE ROLE OF TRADE IFPRI + INDONESIA EXAMPLE Theme 5
    • TRADE SITUATION IFPRI  World agriculture [crops/livestock] trade: increase by a factor of 15 over 40 years [T&A: 30, Manufacturing: 55] from $32 billion in early 1960s to about $500 billion today  In fisheries, global supply shifts from developed to developing countries. Developing country exports rose 8%/yr 1976–2002, half of all fish exports now originate from these countries (~$60 billion)  Large FDI investments, f.ex. manufacturing industries relying on water supplies [impact water & food indirectly]; privatization of water Theme 5 supplies
    • VALUE OF WORLD AGRICULTURAL EXPORTS (crops & livestock) IFPRI 1981-1990 1991-2000 500 476 400 310 US$ billion 300 273 200 166 161 112 100 0 primary processed total  Developing country share in processed declined Theme 5 from 27% to 25% in these two periods
    • TRADE LIBERALIZATION INCLUDES IFPRI  Reduction in trade barriers, including tariffs and quotas  Reduction in output price protection and input subsidies  Privatization of agricultural marketing and trade  Increased reliance on markets rather than planning and the public sector  … < 20% of food imported, but can help  … but high subsidies in OECD countries Theme 5
    • SUPPORT TO AGRICULTURE IFPRI EUR Billions 400 343 347 350 Others Others 300 275 250 Others Japan Japan 200 Japan USA USA 150 USA 100 50 EU EU EU 0 1986-1988 1999-2001 2001 Theme 5 Source: OECD (2002)
    • PRODUCER SUPPORT AS A SHARE OF TOTAL FARM RECEIPTS IFPRI Switzerland 69 Norway 67 Korea 64 Japan 59 EU 35 OECD 35 USA 21 Czech Republic 17 Hungary 12 Slovak Republic 11 Poland 10 Australia 4 New Zealand 1 0 10 20 30 40 50 60 70 80 Theme 5 Source: OECD (2002) Percent
    • ALTERNATIVE TRADE SCENARIOS IFPRI  Trade Scenarios [DEDLIB, DINGLIB, FLIB] model a removal vs. increase of wedges (PSE and CSE) between domestic and international prices for agricultural commodities - Reductions are phased between 2005 and 2006 – results 2020  Net benefits to producers + net benefits to consumers + tax savings due to removal of subsidies under the Full Trade Liberalization Scenario, compared to the Baseline Scenario Theme 5
    • PRICES INCREASE AS A RESULT OF REMOVING TRADE DISTORTIONS IFPRI DEDLIB DINGLIB FLIB 35 32 31 30 percent change in 2020 25 20 20 18 19 16 15 13 14 13 11 9 10 7 6 4 5 2 0 Milk Sugarcane Rice Maize Beef Theme 5
    • EXAMPLE INDONESIA – IMPACT ON CEREAL PRODUCTION & DEMAND IFPRI 2020 cereal prod/cap 2020 cereal dem/cap 300 259 258 265 246 245 250 222 222 232 240 215 215 211 200 kg/cap 150 100 50 0 BASE DEDLIB DINGLIB FLIB IIPR ILIB Theme 5
    • EXAMPLE INDONESIA – IMPACT ON NET CEREAL IMPORTS IFPRI 0 IIPR DEDLIB BASE FLIB DINGLIB ILIB -2000 -2184 -4000 thousand metric tons -6000 -6033 -6359 -8000 -10000 -12000 -11182 -11501 -14000 -14274 -16000 Theme 5
    • EXAMPLE INDONESIA – IMPACT ON No. MALNOURISHED CHILDREN IFPRI 5,800 5,565 5,600 thousand children 5,400 5,213 5,172 5,200 4,967 4,927 5,000 4,756 4,800 4,600 4,400 4,200 IIPR DEDLIB BASE FLIB DINGLIB ILIB Theme 5
    • INDONESIA – FULL LIBERALIZATION IFPRI Under FLIB, direction & magnitude of responds depends on degree of protection of farmers / taxation of consumers compared to other countries, and on the respective supply/demand elasticities In the case of Indonesia, full worldwide trade liberalization does lead to a relative decline in local production and a relative increase in domestic demand, which shows that without liberalization, the country is protecting local farmers while hurting domestic consumers Theme 5
    • FULL LIBERALIZATION - BENEFITS IFPRI Annual Economic Benefits 2025 (billion US dollars) West Asia/ North Africa 1.9 Latin America 3.7 Sub-Saharan Africa 3.3 East Asia 3.0 South Asia 2.0 Southeast Asia 0.4 Developing Countries 14.4 Developed Countries 10.0 World 24.4 (2000GDP China 1080 Billion US$, India 457 Billion US$, Ag Value Theme 5 added China 172 Billion US$, India 103 Billion US$[WDI 2002)
    • FULL LIBERALIZATION - BENEFITS IFPRI  Current trade distortions displace $40 billion of developing country exports  If trade distortions were removed, estimates range from 40 [Anderson] -500 [Cline] million people [out of about 2500 million] being lifted out of poverty within 15 years or so  Poverty would increase in some countries, but decline in others [f.ex. Decline in poverty by 3.5% in Indonesia]  Trade alone is not sufficient to lift them out of poverty Theme 5  Comparative advantage argument -
    • VIRTUAL WATER TRADE
    • TRADE IN VIRTUAL WATER IFPRI  Virtual water = the amount of water used in the production of agricultural commodities—and in other sectors  Food importing countries indirectly purchase water resources from exporting countries , thereby saving water they would have used  Global water savings occur when exporters are more water efficient than importers  Global irrigation water savings occur when exporters produce under rainfed conditions, while importers would have used irrigation otherwise Theme 5
    • VIRTUAL WATER FLOWS (1995) measured in crop ET, cereals IFPRI INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE EU (15) excluding intra-trade Source: DeFraiture et al. 2002
    • VIRTUAL WATER FLOWS (2025) measured in crop ET, cereals IFPRI Theme 5 Source: DeFraiture et al. 2002
    • TRADE IN VIRTUAL WATER IFPRI  In 1995, 7% of total crop evaporation and 5% of irrigation water depletion was used to produce cereal crops for export  In 2025 this will rise to 8% and 5%, respectively  Trade saves limited (irrigation) water: cereal water use would only be 6% higher without virtual water trade & ca. 20% of cereal trade may be water related – thus water scarcity currently plays a modest role in trade pattern - expected to rise to 38% by 2025 for cereals  Instead other factors, like subsidies, and trade arrangements determine trade outcomes Theme 5
    • TRADE IN VIRTUAL WATER IFPRI Estimated Cereal ET total: - 2622 km3 (1995) - 2758 km3 (2025) Savings due to trade: - 190 km3 (1995) - 355 km3 (2025) Savings due to water productivity (IE) improvement over the period 1995-2025: - 1215 km3  Water productivity improvements are more important than trade Theme 5 Source: DeFraiture et al. 2002
    • MULTI-FIBER ARRANGEMENT
    • BACKGROUND ON MFA IFPRI  Established in 1974 to partially [~40%] protect the textile and apparel industries of developed countries from the low-cost competition of T&A (textiles and apparel [more]) from developing countries [originally Japan] in the form of quantitative restrictions  Trade shifted to Asian NICs  quota system, production  to India/China, Nepal/ Bangladesh /Mauritius [no concentration]  raised prices and depressed consumption  depressed fiber crop production (implicit tax Theme 5 of 20% vs. manmade fibers)
    • OTHER IMPORTANT FACTORS IFPRI • High tariffs: 10-20% for textiles; 20-40% for clothing (2nd after agriculture) • Other trade arrangements matter (NAFTA, EU-EE, Caribbean, etc.) • NTB (labeling, customs regulations..) • High income elasticity (~0.9), growth in domestic consumption developing countries • Few restrictions on cotton, share in fiber production continues to decline • Post-9/11 security measures, f.ex. C-TPAT (Customs-Trade Partnership Against Terrorism),  integration: China, India, Pakistan & USA Theme 5 • Labor, raw materials, supply reliability
    • SHIFTS IN TEXTILE AND APPAREL TRADE (in US$ billion) IFPRI -80 -60 -40 -20 0 20 40 60 80 USA EU HK Japan O Sasia Mexico Thailand 1992 Bangladesh 1997 O SEAsia 2002 Pakistan Indonesia Turkey S Korea Taiwan Theme 5 India China
    • IMPORTS DEPEND ON ESTABLISHED RELATIONS AND PROXIMITY (in US$ billion) IFPRI EU USA LAC EE 2001-02 FSU 1992-93 FSU 2001-02 Developed 1992-93 Africa & ME Asian NICs S Asia SE Asia SE Asia S Asia Developed China Asian NICs EE China Africa & ME LAC 0 5 10 15 20 0 5 10 15 20 Theme 5
    • IMPACT OF PHASING OUT OF MFA ON … WATER AND FOOD IFPRI T&A production Water availability cotton Cotton production Change in Location - competition with other crops yarn Industrial water use / pollution CI - competition with other uses fabric LI Industrial water use clothing - competition with other uses Theme 5
    • END OF MFA - ROLE OF CHINA IFPRI  Significant cotton producer (1) the YRB, incl. Henan & Shandong (vs. soybean/corn); (2) the Yangtze, incl. Jiangsu and Anhui (vs. rice); and (3) the Northwest (Xinjiang) (vs. corn);  With MFA phase-out: Global value of T&A 2.5% higher in 25 years; China: textile +9%, apparel +16%  Global cotton production +3.5%, China +9%, MENA +6%, US -1%  Cotton price +2%, Theme 5 Source: MacDonald, Somwaru, Meyer, and Diao 2001.
    • THUS, END OF MFA IFPRI  Greater concentration and vertical integration – cotton  China, India & Pakistan – small impacts on food/water;  Largest impact through direct incomes in T&A industries, thus indirectly on food and water through lack of purchasing power Theme 5
    • IFPRI CONCLUSIONS Theme 5
    • CONCLUSIONS IFPRI  Forces outside of the water sector are changing water management rapidly today and into the future – they include globalization, trade, and climate change  High subsidies to agriculture (& subsidies to water infrastructure) bring inefficiencies into trade, food production, and water use, thus lead to wastage, and contribute to water scarcity, poverty, and food insecurity  ‘Unproductive’ subsidies should be invested in ‘productive’ investments, such as Theme 5 infrastructure and technologies, R&D
    • CONCLUSIONS IFPRI  Water endowments currently have a limited explanatory power for food and other (indirect) water trade  Overall, trade, if not distorted, and globalization will help the poor increasing food and water availabilities  Need for complementary investment and social policies for poverty alleviation and food security Theme 5
    • INVESTMENTS NEEDED IN IFPRI  Additional water investment in developing countries, public supply / wastewater, & irrigation [including large dams]  Establish well-defined water rights, flexible enough to allow trading  Design water pricing mechanisms to pay irrigators to use less water  Eliminate power subsidies to groundwater pumping  Invest in crop breeding for drought, heat, and saline tolerance  Invest in research on water management, Theme 5 including low tillage, rainwater harvesting