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Financing agricultural water:
What status, directions and modalities?
Guillaume GRUERE
Senior Policy Analyst
OECD Trade an...
• Substantial policy and financing efforts are
needed for agriculture to use water
sustainably and to improve food and wat...
1. Status of agriculture and water financing
Increasing trend in agriculture water support, mostly for irrigation
0
10000
...
Declining support in OECD countries, mostly for hydrological infrastructure
0
2000
4000
6000
8000
10000
12000
14000
16000
...
Development assistance is stable but limited
2014 2015 2016 2017 2018
Total ODA 1 097 1 099 970 1 061 1 084
From DAC count...
2. What priorities for investment?
• Balancing increased demand for food and
dietary changes with water availability
• 275...
3. What modalities for investments?
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
2009 2019
General recommendations (ch. 2)
Mana...
• Scaling up water financing is needed for agriculture to
meet changing food demand and to respond to societal
objectives ...
Thank you for your attention!
9
https://www.shutterstock.com/video/clip-150877-walking-on-rice-field-rain https://ec.europ...
• CFS (2014), Principles for Responsible Investment in Agriculture and Food Systems, Committee on World Food Security
(CFS...
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Presentation - Seventh Roundtable on Financing Agricultural Water - Guillaume Gruère

Presentation - Seventh Roundtable on Financing Agricultural Water - Guillaume GRUÈRE, Senior Economist, Trade and Agriculture Directorate, OECD

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Presentation - Seventh Roundtable on Financing Agricultural Water - Guillaume Gruère

  1. 1. Financing agricultural water: What status, directions and modalities? Guillaume GRUERE Senior Policy Analyst OECD Trade and Agriculture Directorate Based on a background paper co-authored with Colette ASHLEY OECD-FAO Roundtable on Financing Agriculture Water January 27 2021
  2. 2. • Substantial policy and financing efforts are needed for agriculture to use water sustainably and to improve food and water security under growing water risks. • Where and how to invest on water in agriculture? 3 questions: 1. What are the current financing flows? 2. What are the drivers of future investment? 3. What modalities are needed to ensure financing efforts lead to effectively sustainable outcomes? Sustainable water use in agriculture for food and water security: Whither financing?
  3. 3. 1. Status of agriculture and water financing Increasing trend in agriculture water support, mostly for irrigation 0 10000 20000 30000 40000 50000 60000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Total other Total hydrological infrastructure Total conservation Total risk management Total irrigation Total irrigation 70% Total risk management 5% Total conservation 6% Total hydrological infrastructure 18% Total other 1% 0 5000 10000 15000 20000 25000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2019 USD millions Indonesia Viet Nam Ukraine South Africa Russia Philippines Kazakhstan India Costa Rica Colombia China Brazil Argentina United States Turkey New Zealand Mexico Korea Japan Israël EU Canada Chile Australia OECD Non- OECD (emerging) India China Total agriculture support for water in 54 OECD+ emerging countries (USD millions) Irrigation-related producer support estimate (PSE) by country Note: Amounts may not include all implicit water price subsidies. Source: Authors based on OECD (2020). Note:Amounts may not include all implicit water price subsidies. Source: Authors based on OECD (2020). • Water related agricultural support grew by 60% in 20 years to USD 41 billion in 2019 and remains mostly dedicated to irrigation. • India and China’s irrigation PSE accounts for 40% of total support.
  4. 4. Declining support in OECD countries, mostly for hydrological infrastructure 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Total other Total hydrological infrastructure Total conservation Total risk management Total irrigation Total irrigation 19% Total risk management 13% Total conservation 4% Total hydrological infrastructure 62% Total other 2% 0 500 1000 1500 2000 2500 3000 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2019 USD millions United States Turkey New Zealand Mexico Korea Japan Israel EU Canada Chile Australia Note: Amounts may not include all implicit water price subsidies. Source: Authors based on OECD (2020). Note: Amounts may not include all implicit water price subsidies. Source: Authors based on OECD (2020). • Water related agricultural support in OECD declined by 48% in 20 years to USD 5.7 billion in 2019 and is mostly dedicated to hydrological infrastructure. • OECD PSE for irrigation declined by 63% from 2000-19. Irrigation-related producer support estimate (PSE) by country Total agriculture support for water in OECD countries (USD millions)
  5. 5. Development assistance is stable but limited 2014 2015 2016 2017 2018 Total ODA 1 097 1 099 970 1 061 1 084 From DAC countries 434 435 376 322 349 From Non-DAC countries 52 96 30 72 136 From Multilateral agencies 611 568 564 667 599 Other official flows 406 303 408 452 368 0 100 200 300 400 500 600 700 800 900 1000 Africa Asia South America Other Total ODA Other official flows  About USD 1.4 billion of development assistance is spent every year, 60% on Asia. In aggregate all the above estimates suggest that a minimum USD 43 billion/yr is supporting agriculture water use globally. Development assistance for agriculture water resources (USD millions) Notes: ODA: official development assistance; DAC: OECS Development Assistance Committee Source: OECD QWIDS database. https://stats.oecd.org/qwids Source: OECD QWIDS database. https://stats.oecd.org/qwids Average development assistance for agriculture water resources, 2014-18 (USD millions)
  6. 6. 2. What priorities for investment? • Balancing increased demand for food and dietary changes with water availability • 275 m hectares of irrigated cropland require improved water management (FAO, 2020) • Regional differences in needs: • Asia: mostly modernization and improved management • MENA: improved management, efficiency and alternative water uses • Sub Saharan Africa: irrigation expansion in particular regions Source: OECD/FAO (2020) Projected global demand for agriculture commodities 2019-2029
  7. 7. 3. What modalities for investments? 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 2009 2019 General recommendations (ch. 2) Managing water quantity (ch.3) Improving water quality (ch.4) Managing water risks and disasters (ch.5) Ensuring sustainable pricing for water and water services (ch. 8) • Improved policies are needed for financing to be sustainable • Ensure government agriculture-water policy coherence, by: • Reforming potentially water harmful support • Encouraging irrigation cost-recovery • Bolstering agriculture innovation • Robust water monitoring (based on consumption) and water allocation system should precede any irrigation investment • Private investments should be responsible • Investments need to be transparent, inclusive and sustainable, following international guidelines for responsible agriculture investment (CFS, 2014), e.g., by applying the OECD-FAO Guidance for Responsible Agricultural Supply Chains (OECD/FAO, 2016). Relative alignment of agriculture and water policies in OECD countries with the OECD Council Recommendation on Water Source: Gruere, Shigemitsu and Crawford (2020)
  8. 8. • Scaling up water financing is needed for agriculture to meet changing food demand and to respond to societal objectives in the context of growing water risks. • First estimates show that a minimum USD 43 billion/yr is spent by governments on agriculture and water, however not all of that amount is aligned with these objectives • Investments should target gaps, avoid pitfalls and be coupled with improved policies to ensure that they lead to responsible and sustainable outcomes. Conclusions Source: OECD (2017)
  9. 9. Thank you for your attention! 9 https://www.shutterstock.com/video/clip-150877-walking-on-rice-field-rain https://ec.europa.eu/jrc/en/news/minimum-quality-requirements-water-reuse-agriculture https://www.videoblocks.com/video/cattle-in-the-meadow-drinking-water-from-the-trough-hqbz1sezgivaj7dyi Email: Guillaume.Gruere@oecd.org Web: https://oe.cd/watagr || https://www.oecd.org/water/
  10. 10. • CFS (2014), Principles for Responsible Investment in Agriculture and Food Systems, Committee on World Food Security (CFS), Rome, http://www.fao.org/3/a-au866e.pdf. • FAO (2020), The State of Food and Agriculture 2020: Overcoming water challenges in agriculture, Food and Agriculture Organizations of the United Nations (FAO), Rome, http://dx.doi.org/10.4060/cb1447en. • Gruère, G., M. Shigemitsu and S. Crawford (2020), "Agriculture and water policy changes: Stocktaking and alignment with OECD and G20 recommendations", OECD Food, Agriculture and Fisheries Papers, No. 144, OECD Publishing, Paris, https://doi.org/10.1787/f35e64af-en. • OECD (2017), Water Risk Hotspots for Agriculture, OECD Publishing, Paris. https://doi.org/10.1787/9789264279551-en. • OECD (2020), "Agricultural support estimates (Edition 2020)", OECD Agriculture Statistics (database), https://doi.org/10.1787/466c3b98-en . • OECD/FAO (2016), OECD-FAO Guidance for Responsible Agricultural Supply Chains, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264251052-en. • OECD/FAO (2020), OECD-FAO Agricultural Outlook 2020-2029, OECD Publishing, Paris/Food and Agriculture Organization of the United Nations, Rome, https://dx.doi.org/10.1787/1112c23b-en. References

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