Water footprint virtual water abstract booklet (a4) pegasys (final)

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  • 1. “Water and Food Security through Trade”Water Footprint, VirtualWater & The Nile Basin
  • 2. Project BackgroundNELSAPThe Nile Equatorial Lakes Subsidiary Action Program (NELSAP) is a subsidiary action program of TheNile Basin Initiative (NBI). NBI, through NELSAP, seeks to promote regional agricultural trade as ameans to improve the efficiency of water use for productive agriculture. The NBI and NELSAP haveidentified a key dimension in improving the efficiency of water use for production is through the useof water footprint and virtual water trade to inform trade policy and strategy.The water footprint of a product is the volume of water used to produce it. When talking aboutwater footprints, we often differentiate between blue water (surface water) and green water(rain water) consumption. The virtual water content of a good and the water footprint areoften used inter-changeably. Virtual water import and export is the volume of water associatedwith producing goods which are traded. We are able to imagine virtual flows of water from oneplace to another through traded goods. Countries or regions that are water abundant are betterable to produce and export more water-intensive crops. A country that is water scarce may seek toexport goods with lower virtual water content and import goods with higher virtual water content.Aims of the projectThis project had two components that will support a current and continued understanding of thevirtual water/ footprint of goods in the Nile Basin countries:1. A training program to build an understanding of how to estimate and how to use the virtual water/water footprint concept.2. A water footprint analysis of 11 commodities produced and traded in the Nile Basin Riparian Countries (NBR)The approach was not a comprehensive water footprint of the Basin, nor an attempt to investigatethe political economy of production and trade. The purpose of the analysis was to raise questionsrather than to dictate outcomes.We applied the methodology developed by the Water Footprint Network. The 11 commoditiesselected are set out below. 1
  • 3. Commodities selected for water footprint analysis in the NBRs (2005-2009) Cereals Cash Crops Fruit & Veg Beef Bananas Mangos Flowers Coffee Wheat Maize Beans Sugar Beef Rice Tea Burundi DRC Ethiopia Kenya Rwanda Tanzania Uganda Sudan Egypt Note: Where a water footprint was not calculated, this was because that commodity is not produced in that country in significant quantities. For information on commodity water footprints in trading partners outside the Basin, or for global average water footprints, we used Water Footprint Network data (available here: http://www.waterfootprint.org/?page=files/WaterStat). We have limited our analysis to the nine countries who are members of the Nile Basin Initiative (Tanzania, DRC, Burundi, Rwanda, Kenya, Uganda, Ethiopia, Sudan and Egypt. Eritrea, while a riparian, is an observer member to the NBI.) At the start of this project (May 2011), the partition of Sudan and South Sudan had not been effected and separate data for these two countries was unavailable. We therefore treated Sudan and South Sudan as one country, namely Sudan.2
  • 4. Water & Comparative Advantage in the Nile BasinThe Nile Basin states have a comparative advantage in water resources compared to many othercountries in the world (see the figures below showing rainfall and ‘water towers’). The Nile Basinstates have not yet fully leveraged their comparative advantage in water, particularly in regard toagricultural production. As water becomes more scarce globally, there will be an increased demandfor areas with water resources. This provides opportunities for the Nile Basin states.Average Annual Rainfall (Source: African Water Atlas, UNEP) Africa’s Water Towers (Source: African Water Atlas, UNEP)Water Footprint is one tool to help decision makers think about:• Trade in agricultural products• Comparative advantage and food productionVirtual water ‘trade’ has an implication for water security and, by extension, for production andfood security. When a water scarce state ‘imports’ virtual water in the form of crops and livestock, itfrees itself from its own climate. Water that would otherwise be used for agriculture is freed up forother important uses, such as industrial and economic development.A water abundant country has a valuable resource that enables cultivation of water intensiveagricultural products for export to water scarce countries. A country’s water abundance may beassociated with rainfall, runoff or groundwater. This comparative advantage may be leveraged tocontribute to economic development.Trade and virtual water:Water footprint allows us to map trade in virtual water around the world (map over leaf). Nile Basinstates, despite having large water resources, are not significant players in virtual water trade. TheDRC, for example, has high levels of rain fall and surface water and yet is depicted as a net waterimporter. 3
  • 5. Nett virtual water footprint 2 [Gm /yr] -95 – -75 -73 – -35 -35 – -15 -15 – -5 -5 – 0 0–5 5 – 10 10 – 15 15 – 50 50 – 115 No Data Virtual water trade: green indicates a net virtual water exporter and yellow-red a net virtual water importer, black arrows indicate intensity of trade (Water Footprint Network) Water Footprint of Production: Considering the water resources we know are available, irrigation water use (blue water) in production in the Nile Basin is lower than it could be (see map below, where there is low intensity in colour). Similarly, with their high rainfall patterns, rain fed (green water) production is also lower than it could be in the southern riparian states. Green Water footprint [mm/yr] 0 - 10 10 - 50 50 - 100 100 - 200 200 - 500 500 - 1,000 > 1000 Blue Water footprint [mm/yr] 0-1 1 - 10 10 - 50 50 - 100 100 - 200 200 - 500 > 5004 Global distribution of green and blue water use (Water Footprint Network)
  • 6. The Implication of Dry ClimatesThe Nile Basin countries as a whole are unique and interesting due to the wide range ofevapotranspiration rates between the riparians. Average annual reference The downstream riparians experience very high evapotranspiration evapotranspiration rates (2600-3000mm). By contrast, parts of the supstream riparians experience relatively low evapotranspiration (1200-1400mm). Interestingly the average annual temperature is relatively similar throughout the basin. Rates of evapotranspiration have a strong influence upon water footprints; in hotter, dryer places with higher evaporation, the water Evapotranspiration in mm 1000 - 1200 footprint of the same crop is higher. Thus water footprint highlights differences in climatological comparative advantage, beyond rainfall. 1201 - 1400 1401 - 1600 1601 - 1800 1801 - 2000 2001 - 2200 2201 - 2400 2401 - 2600 On the other hand, water footprints are reduced by higher crop yields. 2601 - 3000 Part of the analysis highlights the impact of evapotranspiration on(Source: AQUASTAT) water footprints by comparing the same crop produced upstream anddownstream. In the dryer downstream parts of the basin, yields need to be very high in order toachieve comparable water footprints to the wetter upstream countries. The figure below presentsthe average water footprint and average yield for maize in the Nile Basin countries (using data from2005 to 2009).It is necessary for Egypt to achieve yields above 8 ton/ha to realise a water footprint of maize roughlyequal to Uganda which realises yields of 1.49 ton/ha. If Uganda increased its yields even slightly, itswater footprint would reduce further. While there is a clear relationship between water footprintand yield, it is obvious that other climate factors also influence the water footprint of production ina country. This climate comparative advantage explains the difference in water footprint ofproduction between Kenya and Uganda, despite having similar average yields.4 000 9.00 8.063 500 X 8.00 7.003 000 6.002 500 5.002 000 4.001 500 2.19 3.00 1.561 000 X 1.57 1.49 2.00 1.20 X 1.06 0.78 X 1.10 X 500 X X X 1.00 X -1 0.00 Burundi DRC Ethiopia Kenya Rwanda Tanzania Uganda Sudan Egypt Avg Green WF Avg Blue WF Avg Total WF X Yields (ton/ha)Average water footprints and yields of maize for each country in the NBR (m3/ton) 2005-2009 5
  • 7. Opportunities in Green Water To date, most virtual water or water footprint analyses have focussed on the contribution of virtual water trade to water savings, especially in water scarce regions. Very little has been highlighted about the opportunity cost of the associated water use. Yet green water usually has a lower opportunity cost and lower environmental externalities than blue water use. An important contribution of water footprint analysis is to establish whether the water used in production depends upon rainfall (green water) or water resources (blue water). Traditionally, there has been a focus on the importance of irrigation systems (blue water use) when thinking about agricultural development and food security. But it has become increasingly important to highlight opportunities for rain fed agriculture (green water use), particularly when thinking about efficient production and food security at a global level. Green and blue water have different characteristics and this leads to different opportunity costs. Green water generally has a lower opportunity cost than blue water. However, green water may have lower reliability than blue water, particularly where blue water is enhanced by surface storage or groundwater use. The table below summarizes some of the features of green and blue water. From the viewpoint of opportunity cost related to the use of scarce water resources, using green water in production can be more efficient than using blue water, holding other factors constant. It is therefore important to head off a purely water-centric interpretation of water footprint analysis which does not take into account the wider consideration of the context of production and trade. In the absence of appropriate context, the inferences of water footprint analyses can be unhelpful or misleading. With regard to the Nile Basin, the results of water footprint analysis highlights comparative water use in production upstream and downstream in several cases. This indicates the benefits not only of climate (and evapotranspiration) but also on green versus blue water use in production and the relative opportunity costs of water use. The results of the analysis can be used to inform discussions about the impact of production on the Basin and the impact on other Riparians of the Basin. At a global level, it has been observed that virtual-water trade can reduce irrigation water demand globally and play a role in ensuring water and water dependent food security in water scarce parts of the world. At present, however, this method of global water saving is not fully exploited due, in part, to the absence of a more water friendly international trade regime with equal access to global markets, which takes into account both water productivity and blue/green water ratio in products. In the context of water scarcity and demand in the future, green water production will become increasingly important. Rain-fed agriculture holds great underexploited potential for increasing water productivity through better water management practices – gaining more yield and value from water. Blue Water Green Water Sources Rivers, lakes, reservoirs, dams, Rain water (stored in the unsaturated ponds, aquifers etc. soil and can be taken up by the plant roots.) Mobility Highly mobile Highly immobile Substitution of sources Possible Impossible Competitive uses Many, leading to trade-offs in water use. Few, the main being natural vegetation. Storage & conveyance Required Not required (except in rain water harvesting) infrastructure Cost of use High Low Impact of use High (excessive irrigation can cause severe Low6 salinization, water logging and soil degradation)
  • 8. Wheat, Imports and Cereal Production Wheat is imported in large quantities by several Nile Basin countries, where local production is insufficient to feed demand. The table below shows production relative to imports and the associated virtual water imports. In most cases, imports are more than 100% of production. Correspondingly, the Nile Basin Riparians (NBRs) are importing large volumes of virtual water in the form of wheat imports. Wheat imports represent a foreign currency burden on several countries. Burundi DRC Ethiopia Kenya Rwanda Tanzania Uganda Sudan Egypt Production 8 9 2 569 107 41 96 18 623 8 059 (‘000 tons) Imports 7 334 965 631 9 641 357 1 479 5 960 (‘000 tons) Volume of 9 447 1 161 1 101 16 621 1 493 3 445 13 882 Virtual Water imports (mm3) Average wheat production, wheat imports in the NBRs (2005-2009)The graph below shows the average water footprint of wheat in each NBR as well as the standarddeviation (indicating the variation in water footprints within the country), against the globalaverage water footprint of wheat.The average NBR country has a water footprint of wheat production that is lower than the globalaverage. The lowest water footprint of wheat is in Tanzania, driven by the high yields and lowerlevels of evapotranspiration in the areas where wheat is grown. Furthermore, most countries(except for Sudan and Egypt) grow rain fed wheat, which has a water footprint similar to the naturalvegetation that the cultivation replaced. The implication is the impact of rain-fed wheat productionon the water resources of the Nile Basin countries is negligible and thus the water-relatedopportunity cost of wheat cultivation in these countries is small. 3 500 3 000 2 500 2 000 1 500 1 000 500 -1 di C pi a ya da ni a da an pt ru n DR hi o Ke n an a ga n Su d Eg y Rw nz Bu Et Ta U Average Green WF Average Blue WF Average Total WF Global Average Total WF 7Average water footprints of wheat in the NBR states, 2005-2009, including the std deviation and the globalaverage water footprint (m3/ton)
  • 9. The comparative advantage in wheat production in the NBRs is driven by different factors within the upstream and downstream riparians. In the upstream riparians, wheat is rain fed and evapotranspiration rates are lower because, upstream, there are lower temperatures. This leads to more efficient water use because there is less effective water loss to evapotranspiration and the opportunity cost of green water is much lower than blue water. In the downstream riparians, evapotranspiration rates are much higher and it is also necessary to irrigate where there is insufficient rainfall. As a result, there is greater water loss to evapotranspiration and there is a greater opportunity cost associated with blue water use. Importantly, the use of multi-year yield information captures the variation in annual yields associated with inter-year variation in rainfall patterns. For wheat production to be relatively efficient in the downstream riparians, it is necessary for these countries to realise higher yields in order achieve comparable water footprints. Furthermore, the water footprint estimates do not include the evaporative losses in the river, storage and distribution system required to provide reliable water for irrigation. It is possible to examine the value per cubic meter of water of each commodity at the average global price (2005-2009) for the maize, wheat and rice, noting that these prices are quite volatile but typically move together. It is therefore possible to make comparisons of the value per cubic meter of water use both between countries and between commodities. Value of a cubic meter of water at the average international trade price, 2005-2009 (USD/m3) Burundi DRC Ethiopia Kenya Rwanda Tanzania Uganda Sudan Egypt Maize 0.05 0.04 0.13 0.08 0.06 0.07 0.17 0.05 0.17 Rice 0.12 0.06 0.10 0.18 0.21 0.17 0.07 0.13 0.42 Wheat 0.17 0.24 0.11 0.24 0.18 0.37 0.15 0.11 0.17 The values in this table are the average global price of this commodity (USD/ton) divided by the country water footprint (m3/ton) At a commodity level, the value of a cubic meter of water in wheat production is higher than rice and maize production in Burundi, DRC, Kenya and Tanzania; at least at the international price of these commodities. This is significant when one considers wheat is a rain fed crop (ie it is green water use) in these countries. The production of rice, by comparison, is water intensive and more successful with irrigation (blue water) and has economies of scale and a need for management capacity.8
  • 10. Cultivation and Consumption of Basic Food Crops This water footprint analysis covered certain subsistence crops which the NBRs produce to consume rather than trade. These crops are invariably rain fed. Those included in this analysis are beans and bananas. Although these crops were produced in relatively significant volumes, they have low yields which lead to larger water footprints. However, because these crops are produced with rain water, Women transporting bananas (Rwanda, 2011) the impact of the associated water footprint is low.The water footprint of beef from beef cattle has been reviewed elsewhere by Chapagain &Hoekstra (2003) and once again by Mekonnen & Hoesktra (2012). In this analysis, we examinedbeef cattle farmed primarily for their meat and slaughtered at 3 years (as opposed to animals keptby rural, subsistence households for milk and ploughing purposes that may be slaughtered for theirmeat at the end of their useful lifespan.) Beef cattle in the Nile Basin are generally farmed onrangeland pastures with a small amount of supplementary food made up of crop by-products.The focus of other studies has been fairly Eurocentric, concentrating on rising global meatconsumption, the intensification of animal production systems, and the pressure on freshwaterresources. The studies highlight that animal products have a large green and blue water footprintand it is more water-efficient to produce crop rather than animal products for food.In a developing country context such as the NBR, it is important to consider beef cattle are grazed onrain fed pasture (ie have a green water footprint). Farm land, especially irrigated farm land, isgenerally not dedicated to cattle food stuffs. Furthermore, within the Nile Basin, there is also animportant differentiation to be made between beef from cattle grazed on marginal, low valuearable land and beef from cattle grazed on pastures which could arguably be used for cropproduction instead. In low-value arable land, there are lower yields and higher risks associated withcrop production (especially if rainfall isvery variable). The opportunity cost ofrain fed pasture for cattle is very low andthe value of water in productionbecomes much higher if it is used toproduce feed for beef cattle. The impactof the water footprint of beef cattlefarmed in developing countries istherefore much lower than in developedcountries with industrialised animalproduction systems. Cattle on the shore of Lake Tanganyika (Burundi, 2011) 9
  • 11. The Producer Perspective for Cash Crops Increasing global attention has been paid to the water footprint of cash crops in the NBRs, such as tea, coffee and cut flowers. These crops are certainly water intensive and have water impacts, but it is also true that they are produced in the NBRs because of climatic comparative advantage; particularly, high levels of rain fall and lower temperatures/higher humidity leading to lower evapotranspiration rates. Cash crops are important income generators for the agrarian upstream Nile Basin countries. This production earns valuable foreign exchange and is a contributor to economic development and alleviation of poverty in the area in which the crops are produced. A strong focus of water footprint research has been to examine the impacts of consumption, particularly from the Coffee cherry sorting (Kenya, 2011) perspective of consumers in Europe and North America. Some of the products examined in these studies are produced extensively by the Nile Basin Riparians. An example recent water footprint analyses which feature NBRs is the Water Footprint of Tea and Coffee Consumption in the Netherlands (Chapagain & Hoekstra 2007). The map below shows virtual water imports to the Netherlands as they relate to coffee imports, the greener the area, the more the import. It can be seen that coffee produced in Tanzania and Uganda and exported to the Netherlands is associated with 4% of the total virtual water import to the Netherlands. Virtual Water imports to the Netherlands related to coffee imports (Chapagain & Hoekstra 2007)10
  • 12. The very effective imagery used by the authors to demonstrate the virtual water flows is shown inthe Figure over leaf. This is an example of how virtual water flows out of the Nile Basin to other partsof the world in the form of cash crop exports.As awareness of water use and water impacts of trade gains traction globally, it is important thatthe NBRs contribute to and participate in these discussions to ensure a balanced perspective ispresented, because virtual water trade is one driver of economic growth and development in theNBRs. . 40000 For example, the water 35000 footprint of coffee in the 30000 NBRs is on average lower 25000 than the water footprint of 20000 coffee in the main coffee producers in other parts of 15000 the world. Figure left details 10000 this graphically; (the NBRs 5000 are separated from their 0 competitors with the dotted am o e ire mbia a emala India nesia agua zuela pia a da da ania Peru uras pines DRC ndi r Brazil red line.) This is an lvado erag a Ric Keny Mexic d’Ivo Rwan Ugan Ethio Vietn Buru Tanz Hond important message for Colo Nicar Indo Vene Philli al av Cost Guat El Sa Cote consumers around water Glob Green Blue Total use efficiency and coffee production. The NBRs haveVirtual water content of green coffee in Nile Basin compared to GlobalCompetitors (m3/ton) The comparison above is made between Mekonnen a climatic comparative& Hoekstras (2010) estimate for 1996-2005 for the global competitors advantage which enablesand we are examining our updated data (2005-2009). them to use water more efficiently when growingcoffee. This should also be linked to the message that the water-related opportunity cost of rainfedcoffee production is relatively small, while the foreign exchange value from this export is relativelyhigh.The table below sets out the value per cubic meter of water for each cash crop. It is possible to makecomparisons between countries for one commodity and it is also possible to make comparisonsbetween commodities in each country.Value of a cubic meter of water at the average international trade price, 2005-2009 (USD/m3) Burundi DRC Ethiopia Kenya Rwanda Tanzania Uganda Sudan EgyptSugar 0.24 0.19 0.32 0.24 0.13 0.48 0.21 0.11 0.18Tea 0.29 0.11 0.28 0.82 0.60 0.52 0.60Coffee 0.20 0.07 0.14 0.06 0.12 0.11 0.10Flowers 21.00 22.00 6.00 24.00 12.00*The values in this table are the average global price of this commodity (USD/ton) divided by the country water footprint (m3/ton)Kenya, for example, realises a very high value per cubic meter of water for tea production followedclosely by Rwanda and Uganda. Tea production on average realises a higher value per cubic meterof water than either coffee or sugar for Burundi, Kenya, Rwanda, Tanzania and Uganda. Burundirealises the highest value per cubic meter of water for coffee production, followed by Ethiopia.The clear and quite significant outlier in regard to value per cubic meter, however, is cut flowers.This indicates a commercial opportunity for the NBRs to capitalise on the climatic comparativeadvantage and access to water resources for cut flower production. 11
  • 13. Rice, Water Footprint and Trade in the Nile Basin Analysis of the water footprint of rice differentiates between rain fed and irrigated rice production in the NBRs. This was in an attempt to compare rice production which relies entirely on rainfall, and where possible rain water harvesting, for rice production, and comparing this to rice produced under irrigation. Rain fed rice fields (Burundi, 2011) Rain fed rice accounts 67% of rice production in the NBR countries. The table below shows the average rice production in the NBRs as well as average yields for rain fed and irrigated rice. Average Rice Production in the NBRs and average yields for rain fed and irrigated rice (2005- 2009) Burundi DRC Ethiopia Kenya Rwanda Tanzania Uganda Sudan Egypt Tonnes 72 316 53 48 71 1 285 171 24 6 506 (‘000) Rain fed 2.0 0.8 1.9 2.3 2.1 1.7 ton/ha Irrigated 3.4 2.9 4.7 4.9 5.8 2.0 3.7 9.8 ton/ha The average water footprint of rice in the NBRs is indicated below, distinguishing between irrigated cropping systems and rain fed systems. On average, rain fed rice has a larger water footprint than irrigated rice. Although rain fed rice receives less water per hectare, the yields are lower, so the efficiency of water use per unit of product per hectare is lower. 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 -.. i ia ya da ia da an t i C pia ya nia da nd iop Ken wan nzan gan Sud yp nd DR thio Ken nza gan ur u Eg ur u B Eth R Ta U B E Ta U Irrigated Rain fed Average Green WF Average Blue WF Average Total WF12 Average water footprint of rice in the NBR countries (m3/ton)
  • 14. In the absence of yields for irrigated rice in DRC (and because production was so small) we have only calculated the water footprint of rain fed rice. We also queried whether the low yield reported in DRC (calculated as total tonnes produced given hectares cultivated in-country) is due to incomplete or unrecorded data. This is because rice production volumes in the DRC suggest this is an important crop. A higher yield would realise a lower water footprint in the DRC. It is not useful to extrapolate from this analysis that rain fed rice production has a higher water footprint per ton and is therefore bad. There are other considerations in agricultural production apart from water. These include land use, the costs of irrigation infrastructure, and the importance of rain fed production with limited capital, infrastructure and management requirement to smallholder livelihoods. From a water use perspective, where rainfall is relatively abundant and if sufficient rain water is available to achieve a water footprint close to that of irrigated rice, it is unhelpful to make an unfavourable comparison between the two. This small difference between production methods can be observed in Tanzania. However, where the gap is larger between rain fed and irrigated rice a more compelling argument is available in order to motivate for investment in irrigated rice production over rain fed rice production from a water efficiency perspective. Alternatively, questions may be raised about the possible productivity gains that may be achieved through improved cultivation and management practices for rain fed rice. Where the water footprint of rain fed rice is the same or lower than the water footprint of irrigated rice – as can be observed in Uganda, Ethiopia and Burundi – this highlights potentially inefficient blue water management. Blue water use carries with it higher financial and opportunity costs than green water use and this example motivates for better management of irrigated rice production to achieve higher yields. Trade in Rice The NBR states, except for Egypt, are net rice importers ranging from Kenya which imports 80% of rice supply, to Tanzania which imports less than 1%. Rice trade within the Basin is so small as to be almost negligible; the majority of trade is outside the Basin. Large volumes of virtual water are imported by upstream Nile Basin countries from countries outside the Basin. Egypt exports some of its rice (10%). A portion of Egypts virtual water trade in rice is being transported upstream to Sudan and to Kenya, but the majority is to trading partners outside of the Nile Basin.Virtual Water Trade flows in Rice, Egypt (2005-2009) Virtual Water exports from Egypt Virtual Water imports to EgyptOnly significant VW flows are shown, relative size of arrow shows relative flow 13
  • 15. Opportunities for Regionalisation through Water Footprint Regionalisation is a common buzz word in international relations debates, including the Nile Basin. Water resources are often regional by their very nature; the majority of the globe’s rivers are trans- boundary, making upstream and downstream riparians states irrevocably interdependent. The way in which water is managed is therefore very important to regional development. One of the aims of this study is to contribute an analysis of agricultural commodities produced in the Nile Basin countries and examine whether there are any insights for regionalisation. The Nile Basin countries share a common water resource, each with a varying proportion of land area located within Basin. Water footprint analysis highlights climatological comparative advantage. Trade theory argues that facilitating trade based on comparative advantage is the most efficient way of generating economic growth and therefore development. The concept of virtual water combines these two attributes into one model. If countries in a Basin concentrated resources on producing products for which they have a comparative advantage, virtual water trade within the Basin might contribute to allocation efficiency. Since the Nile Basin countries are largely agrarian economies, water is largely used for agricultural purposes. In practice, therefore, cooperation in production and trade in food deserves special treatment given mounting food needs. Virtual water trade in the Basin could be viewed as food trade. Overall this analysis has shown that - except in specific cases where a downstream country is achieving very high yields (eg Egypt’s maize and rice production) - the water footprints are lower upstream in the Nile Basin. This is strong evidence that evaporative loss would be reduced, and water within the Basin allocated and used more efficiently, if countries within the Basin reallocate some of their water from the production of crops for which they have a comparative disadvantage to that which they have a comparative advantage. Comparative advantages can be climatological (and here upstream is favoured over downstream) but have also been shown to be in yields (some countries have higher yields which positively impact water footprints). However, virtual water trade would only contribute to regional development in the region if there were a regional market. Without functioning local and regional markets, climatic opportunity costs or comparative advantages cannot be properly established. Current trade climates and conditions are not very supportive for enhancing virtual water trade within the Nile Basin. Although there are some moves toward economic integration through the East African Community (EAC), trade between upstream and downstream riparians is small as compared to trade with the riparians and the rest of the world. Finally, there is a collective action challenge in benefit sharing through virtual water trade which needs to be overcome. Virtual water trade has geopolitical implications as upstream and downstream interaction induces dependencies between countries. Inter-Basin trade would require cooperative measures from the countries and mutual trust that agreements would be kept in the future. There is a distance to go given historical relationships within the region. Despite the above, the water footprint, agriculture and trade discussion from this analysis takes on a particularly interesting regional perspective when distinguishing the broad types of agricultural production in the Nile Basin countries and the following observations can be made: • Cash crops (such as coffee, tea, flowers and sugar) are produced for both domestic consumption and export, with a global competitive advantage in production and brand for some of the Nile Basin countries. Advantage can be gained by taking a regional perspective in using country brands to export regional production (such as tea from Kenya see map below) and expanding the processing opportunities between countries along the supply chain, while proactively and coherently managing customer perceptions about the water impacts of these crops (such as around coffee and flowers).14
  • 16. • Cereals (such as maize, wheat and rice) are staples that vary in demand according to country consumer and cultural preferences, with a competitive advantage in production by individual Nile Basin countries. While many countries largely produce to consume rather than trade over the long term, there are regional opportunities to explore regional self-sufficiency and reduce import needs, by expanding production in those countries with comparative advantage (such as wheat in Tanzania or maize in Uganda), sharing technology and management capacity between countries (such as from Egypt) and promoting regional inter-country trade to overcome climate variability and drought.• Staple foods (such as beans, bananas and livestock) to supply domestic demands according to cultural preferences are produced in-country through rainfed cultivation in the southern countries. Regional opportunities to promote food security relate to sharing management expertise to improve production yields and promoting inter-country trade where there is comparative advantage to overcome climate variability and drought.Virtual Water Flows in tea trade in the Nile Basin, 2005-2009 15
  • 17. 16
  • 18. Project Contacts:Nile Basin InitiativeNELSAP/Regional Agricultural Trade and Productivity ProjectBujumbura - BURUNDIQuartier KIGOBE SUDKIGOBE Main RoadPlot No: 7532/CBox: 4949 Bujumbura, Burundi.Tel: Office: + (257)22275602 | 22275603Contacts:Innocent NtabanaEmail: intabana@nilebasin.orgHelen Ommeh-NatuEmail: hnatu@nilebasin.orgPegasys Strategy & Development142 Loop StreetCape TownSOUTH AFRICATel: +27 (0) 21 424 2236Contacts:Guy PegramEmail: guy@pegasys.co.zaKate LaingEmail: kate@pegasys.co.za