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Policy Options for a World Facing Water‐Scarcity/Food Security Issues: Global Perspectives

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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 …

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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  • 1. 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
  • 2. 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
  • 3. 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 dams need for increased storage and supply of surface water?
  • 4. Alternative Water Scenarios
  • 5. 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 < 20 20 - 30 30 - 40 40 - 50 No data > 40% 20 - 40% 0 - 20% 2010 36 18 46 > 40% 0 - 20% 19 22 2010 20 - 40% 59 2010 2.5 Bn people 9.4 trillion USD2 Water stress, percent of total renewable water withdrawn Source: Veolia Water & IFPRI 2011
  • 6. 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 16 32 2010 36 18 46 > 40% 20 - 40% 0 - 20% 2050 45 25 30 2010 22 19 59 Business as usual, 2050 How many people live in water short areas? How much GDP is generated in water scarce regions? ▪ 4.7 Bn people ▪ 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 - 40 40 - 50< 20 20 - 30 No data Source: Veolia Water & IFPRI 2011
  • 7. With significant water productivity investments, ~1 bn people and 17 trillion USD2 GDP can be moved into areas of  lower water scarcity1 “Blue" high-productivity scenario medium growth, 2050 Water stress, percent of total renewable water withdrawn > 40% 20 - 40% 0 - 20% 2050- Blue 38 2050- BAU 41 21 16 32 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 < 20 20 - 30 30 - 40 40 - 50 No data 1 >40% water stress 2 Based on year 2000 prices Source: Veolia Water & IFPRI 2011
  • 8. Even highly industrialized countries like US will face critical water scarcity without investing in water productivity 20 30 40 50 US Water stress in Percent GDP per capita in 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
  • 9. Crop Water Productivity  Improvement
  • 10. 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 that i. capture more of the water supply for use in transpiration ii. exchange transpired water for CO2 more effectively in  producing biomass iii. convert more of the biomass into grain
  • 11. 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
  • 12. 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
  • 13. 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)
  • 14. Increased Investment in  Irrigation
  • 15. Source: IFPRI 2010 Potential increase in gross revenue per  hectare from small‐scale irrigation 
  • 16. Source: IFPRI 2010 Potential large‐scale and small‐scale based  irrigated areas, alternative IRR levels 
  • 17. 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 16,251,744 Source: IFPRI 2010
  • 18. 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 9.00 321,727 Source: IFPRI 2010
  • 19. Message 3: Need to keep investment  costs low to improve viability Large scale Source: IFPRI (2010) 0 2 4 6 8 10 12 14 16 18 20 10,000 8,000 6,000 3,000 1,000 Unit cost per ha ($/ha)  Irrigated area increase (million ha) Irrigated area increase (million ha) Unit cost per ha ($/ha)
  • 20. Message 3: Need to keep investment  costs low to improve viability Small scale Source: IFPRI (2010) 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 600 2000 5000 Unit cost per ha ($/ha)  Irrigated area increase ('000 ha)Irrigated area increase (million ha) Unit cost per ha ($/ha)
  • 21. Agricultural Trade and  Subsidy Policies
  • 22. 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.
  • 23.  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
  • 24.  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
  • 25. Efficient Water Allocation:  Water Rights and Water  Markets 
  • 26. 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
  • 27.  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 
  • 28.  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 
  • 29. 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