OF THE UNITED NATIONS
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| FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS |
ISLAMIC DEVELOPMENT BANK | |||||
High-Level Technical Workshop
"Regional Programmes for Food Security in the Near East: Towards Sustainable Food Security and Poverty Alleviation"
Jeddah, 8-9 October 2003
Table of contents
2 Water and agricultural economy
3. Main issues in water and food security
3.4 Decline of investment in irrigated agriculture
3.5 Potential regional conflicts
3.6 Water, trade and food security: The issue of virtual water
4. Growing food gap in the Near East
5. Strategic options for improving food security under water scarcity
5.1 Enhancing water conservation and productive efficiency
5.2 Improving allocation efficiency
5.3 Virtual water as policy option
Annex 1: Water Resources in the Near East Region
The Near East region is facing a huge challenge with around 65% of its population being food insecure. Population of the 30 countries exceeds 652 million and is expected to increase to 1.5 billion over the next 30 years. The region is characterized by an acute and unequalled deficit in water resources, to the extent that 16 countries have less than the scarcity threshold of 500 m3/capita/yr. This situation is aggravated by the dry climate which prevails in the region and which makes stability of agricultural production and food security dependent on irrigation. When adding the fact that the economy of countries of the region, excluding the major oil producers, is based primarily on agriculture, the importance of water resources for economic and social development of the region becomes more evident.
The demand for water does not stop and continues to grow with the increase of population and the improvement of the standards of living. In the coming 30 years, 70 to 80 percent of the increase in food demand would need to be provided by irrigated agriculture. To overcome this situation, countries of the region resorted, during the last decades, to a massive mobilization of their water resources, which required big investment efforts. At present, not only almost all renewable resources are already put into use, but also many countries have resorted to their non-renewable resources and to the use of non-conventional resources such as treated waste and low-quality water.
Thus, the option of continuing to increase the usable quantities of water is no longer possible in most countries, as only limited quantities remain available for mobilization and given the prohibitive costs required for their mobilization. At the same time, the share of resources allocated to agriculture, now being close to or even exceeding 90 percent, is subject to decrease because of competition and the priority given to other sectors. Therefore, countries are shifting from supply driven management to demand management policy.
In addition to the efforts exerted by individual countries, the region has an important potential for addressing the complex and multiple issues related to water shortage, through regional cooperation. This will contribute to spurring agriculture production and reducing food insecurity.
The Near East Region is the most water scarce in the world. It covers 14% of the total area of the world and contains 10% of its population, but is endowed with only about 2.2% of its renewable water resources. The issue of water scarcity is further exacerbated by a high dependence on water resources that originate outside of the region. Growing population and its needs for food and drinking water, coupled with a short vision on regional water planning and management, have resulted in an unbalance between water supply and demand. Pollution, climate change and frequent severe droughts are making the problem more serious and the future uncertain. Water resource scarcity and unbalance between supply and demand are leading to high competition for water and, consequently, to greater risks of food insecurity in the region.
Agricultural land represents only 8-10% of the total area and its production remains tributary of irrigation for the most part. However, only 32% of the agricultural land is irrigated and contribute more than 50% of the total agricultural production. Agriculture accounts for 90% of the mobilized water resources with the latter representing over 60% of the total potential water resources of the region .
The importance of agriculture in the economy is indicated by its significant contribution to the gross domestic product of the region (from 5% in Cyprus to over 40% in Sudan, with an average for the region of 25%) and the provision of job opportunities to 37% of the labour force. It also accounts for the total export earnings of the region (4%) and allows other socio-economic and environmental benefits.
Irrigation increases cropping intensity and contributes to expansion in cropped areas. It increases yields, stabilizes output, enables crop diversification, reduces risk and increases farm incomes and employment. Through its influence on agricultural incomes, irrigation has a multiplier effect on non-farm incomes. It contributes to food security and poverty alleviation. By improving agricultural productivity, irrigation contributes significantly to overall growth and development. Perhaps the greatest benefit of irrigation has been in keeping food affordable to the poor. Between the 1960s and the 1990s real grain prices fell by approximately 50 percent as production growth continued to exceed population growth. Although subsidization of food grain production by developed countries played a part, the Green Revolution was largely responsible for this decline.
When considering all forms of irrigation including spate and non perennial irrigation, the irrigated area has increased from 9 million ha in 1950 to about 58 million ha in 2000. This increase over 50 years was a major factor in increasing agricultural productivity and productions. Presently, the total water use for the agriculture sector in the region is around 560 billion m3. The increase in production was mainly due to increase in water availability from both surface and groundwater sources. Water contributed more than any other input factor to the food security.
According to FAO estimates, all Near East sub-regions would have relatively large food deficits by the year 2010, with the exception of Turkey which has large agricultural resources. The region's food gap compared with that of 1995 would increase by around 54 percent, reflecting an annual growth rate of 2.9 percent.
The key question for the Near East countries is whether the current policy frameworks for water and land use will lead to the achievement of the region's food security objectives. Food security will be achieved by enhancing economic growth, sustainability in land and water resources management on which agriculture production depends, and managing population growth to reduce the pressures on limited resources. The current policy frameworks in the sub-region fail to promote more efficient measures for managing scarce water and agricultural land in a sustainable manner. The main issues facing water sector that affect agriculture and food security pertain to its growing scarcity, its deteriorating quality, the rising cost of irrigation development, and the low efficiency of irrigation (both productive and allocative). Within the food security context, there is an urgent need to assess how the growing food deficit can be met under water constraints and what role virtual water can play in narrowing the gap.
Water resources in the region are limited and variable, with an average representing less than 2.2% of the total water resources of the world. This share becomes only around 1.2% when considering only internal renewable water resources. Moreover, several countries are located downstream of major river basin catchments and over 40% of the renewable water resources flow from outside the region. This situation is likely to create potential conflicts that need to be solved through regional cooperation.
The demand for water in the Near East continues to grow due to population growth and the push for economic development. Per capita water resources have fallen from 3,500 m3 in 1960 to 1,500 m3 in 1990; moreover, five countries are now below 200 m3 per capita per year and eleven others below 500 m3. By the year 2025, the average for the whole region is expected to reach less than 670 m3. The water situation in the region is a serious concern equally for economic growth and food security as food production, demand, trade and cost will be affected by this declining water availability in the region.
Groundwater continues to be one of the dominant sources of bulk water in the Near East region. Its use has been essential for meeting water demands and household food security. In addition to being a regular source of water under normal climatic conditions, it plays a critical role in food supply and livelihood security during dry the frequent periods. Shortages of groundwater in areas of excessive abstraction and groundwater pollution by various sources are now common in the region and emphasize the importance of correct estimates and proper development, regulation and protection of supplies, in order to ensure the continued availability of this key natural resource. However, the management of groundwater has not always met the required standards and there are clear indications of major problems with over-abstraction and its consequences in many parts of the region. The available information clearly indicates that groundwater over-abstraction and quality degradation are among the major emerging problems in the Near East.
The extent of groundwater depletion in the region and its consequences are impacting many rural and urban populations but are not well known. The available data on groundwater in the region is limited and does not allow a comprehensive and accurate regional assessment of the groundwater resource status. Consequently, continuing efforts are needed in order to assess groundwater availability and use at the national and regional scales, with a focus on trans-boundary aquifers whose characterization requires joint efforts and close coordination between the concerned countries.
Countries with limited quantities of surface and ground-water resources, not sufficient to meet the water requirements of their socio-economic development plans and population growth, have invested in augmenting their supplies through desalination of seawater. This is mainly the case of the oil producing countries which adopted the process to produce water for domestic and industrial uses and to spare most of the available conventional water resources for agriculture. The increasing need for water is pushing more and more countries of the region to resort to this solution despite its high cost. The use of desalinated water for food production is cost prohibitive, but advances in the desalination technology may render it possible. However, additional research and regional cooperation on desalination processes and the use of saline water in agriculture is still needed.
Wastewater in most countries of the Near East Region (NER) is being more and more recognized as of vital importance to be treated and made safe for reuse. It contributes considerably to the water budget in several countries, particularly those suffering from water scarcity. Treated wastewater is used directly in irrigation of farms or landscape green areas. Limited indirect use includes recharge of groundwater aquifers to control over-draft and salt intrusion in coastal areas. A large share of wastewater is still not treated and part of it is used in an uncontrolled manner, including for the production of uncooked food crops the consumption of which poses health risks. Expansion of treated wastewater reuse in the region is linked to a number of issues and constraints. The high cost of treatment and management of reclaimed wastewater is one of the major limitations facing the week economy of most countries. Unclear polices, institutional conflicts and lack of regulatory frameworks constitute other important constraints that hinder implementation and proper operation of wastewater reuse projects. The manpower capacity is at varying levels between countries, but additional training and capacity strengthening are generally needed throughout the region.
It is therefore clear from the above that the era of meeting growing demand by developing new supplies has only limited potential. The most viable option that can complement supply enhancement efforts is through the adoption of demand management policies.
Water quantity problems are exacerbated by water quality ones. These are becoming increasingly serious as the region tries to meet its water demands through water recycling. While water has been instrumental in enhancing food security in the region, its mismanagement has resulted in overuse and the resulting quality degradation. Water quality degradation puts an additional burden by reducing the available quantity of freshwater and impacting the environment. All sources of water quality deterioration are present in the region and require urgent action.
The water quality issue is of both local, or national, and regional dimensions. Water pollution and quality problems encompass borders and often threaten more than one country at a time. This issue is valid for both surface water and groundwater and can be addressed appropriately only if national efforts are supplemented with regional cooperation. Much can be leant through the exchange of experience between countries of the region.
Between the late 50s and up to the 80s, most countries invested heavily in irrigation development, especially infrastructure such as dams, water conveyance and distribution schemes and irrigation networks. The irrigated area expanded by an average of 1 percent per year during the early 1960s, reaching a maximum annual rate of 2.3 percent per year from 1972 to 1975. The trends slowed down later on. The financial crises in the second half of the 1990s adversely affected private financial flows and their recovery has continued to lag output and trade growth.
Evaluation of several irrigation projects indicates that when irrigation projects are designed, implemented and operated properly, they result in high economic returns that are competitive with other sectors. This indicates that it would not be rational to avoid investing in irrigation projects on the grounds of low investment returns. Low productivity results from weak investment in productivity-enhancing factors such as management, fertilizers and other inputs. Continued inadequate attention to agriculture and the rural economy will have severe consequences for the region, particularly low and medium-income countries.
With the collapse of income growth, growing water scarcity, broader policy reforms and new and changing global trade policies, the old paradigm of food security policy is being replaced with the concepts of self-reliance and competitiveness. Since the early 70s, the region has been importing large quantities of food - or what is called virtual water - to meet its needs. In a survey of irrigation and water resources in the Near East, FAO (1994) estimated that 86.5 billion m3 of water would be needed to grow the food equivalent to net food imports to the region. The underlying assumption of virtual water is to diversify production based on the comparative advantage of a country or a region and to earn foreign exchange to buy food imports instead of growing low-value, high water consuming crops. The conditions for relying on virtual water to ensure food security still remain to be clarified and agreed upon.
FAO projections indicate that water shortage will remain a major constraint for the expansion of irrigated land in the Near East, as only a modest increase of 5 percent (2 million hectares) is expected between 2000 and 2010, provided that adequate capital is available. Under these circumstances, the question is what can be done to enhance food production under water constraint and whether virtual water is a policy option for countries facing budgetary and marketing constraints and expected rise in world costs of grains.
The region needs to chart a new irrigation strategy, marked by departure from previous approaches, and to address the underlying causes of the problems. Water demand management refers to improving both productive and allocative efficiency of water use. It calls for an integrated use of conservation practices and pricing to influence water use. The mix comprises: 1) Improving productive efficiency under irrigated area and rainfed agriculture with focus on food security crops; 2) Removing policy constraints by improving allocative efficiency; and 3) Assessing virtual water as an option to complement the above two options
Improvement of water productivity, through adequate water demand management, should constitute the basis of any integrated regional strategy aimed at improving living standards of the populations, poverty alleviation and ensuring a certain level of food security in the region. The regional water demand management strategy would be based on the following domains or axes of intervention:
Countries of the region have invested in irrigation over the past half century, with varying levels between countries. Where land and water are available, large irrigation schemes have been established requiring heavy investments. However, recent assessments show that performance of irrigation in terms of water productivity and irrigation efficiency is low, as a result of bad irrigation water management. Full or partial control surface irrigation is by far the most widespread type of water management, covering 93% of the area. Modern irrigation methods have been timidly introduced, but their efficiency is generally low in comparison with the potential because of bad on-farm management. The overall irrigation efficiency in the region is estimated at 45-50%, inferring to the loss of nearly 50% of the amounts of water used for irrigation.
It is estimated that the amount of water saved by achieving an irrigation effectiveness of 70 percent in total gross irrigated area by 2025 could meet about one-half of the increased demand for additional water supplies in the 1990-2025 period.
Given the need to use irrigation water more efficiently on existing schemes, it follows that the bulk of new investment should focus on rehabilitation and upgrading rather than on new schemes. However, it is important to avoid misconstruing rehabilitation for deferred maintenance without correcting the problems causing unsustainable maintenance in the first place. If not, this could lead to repetitive funding of maintenance from external sources. In order to maximize returns, scheme improvement should incorporate lessons from previous irrigation developments and not simply rehabilitate projects to old standards. This is particularly relevant for complex, multi-dimensional irrigation schemes usually involving a number of interested parties. Another advantage of rehabilitation is that project unit costs are usually low, a fact which increases the likelihood of economic viability.
The need to fund rehabilitation from external sources reflects low economic returns from first generation projects. At the same time the large volumes of sunk costs in these schemes offers the opportunity to place them on a sound economic, social and environmental footing while assuring rates of return comparable to other investments.
Inadequate operation and management of irrigation schemes is often a major cause of poor project performance and weak sustainability. Many governments have found it increasingly difficult to finance the costs of irrigation operation and management as well as being effective providers of water services to large numbers of small farmers. These factors have led to infrastructure deterioration, shrinkage of area irrigated, maldistribution and wastage of water, and advancing waterlogging and salinity. To address this issue, many governments are now attempting to transfer management responsibility for irrigation systems from government agencies to farmers organized into water users associations (WUAs). Consensus is emerging that operation and management problems, scheme maintenance, irrigators' ownership of their systems and cost recovery are interrelated. Evidence is accumulating that comprehensive yet pragmatic approaches that include the above aspects can overcome organization and management problems. However, the region is still lagging behind in the transfer process, in comparison with the rest of the world.
Involvement of the private sector in irrigation development and management also opens avenues for addressing some of the problems. An important principle underlying the privatization of irrigation schemes is that of water as an economic good. The gradual and selective privatization of organization and management (and other aspects of irrigation) shows considerable promise as a way of improving scheme viability and sustainability. Investment in privatization measures has produced encouraging results in the Near East and elsewhere, but the pace of its involvement has been slow in the region.
About 70 per cent of the region's areas are arid or semi-arid where low and erratic rainfall severally restrict food crop productions and cause production instability. Rainfed lands, particularly in the 300 mm and above, offer considerable potential for increased wheat production. The production of wheat and other cereals in these regions is quite competitive, profitable and carries sizable comparative advantage under both semi-drought and favorable conditions.
In these les-favoured areas, farmers operate under low input/low output production conditions. Improving the production system and introducing water conservation techniques and supplementary irrigation can result in yields competitive with those under irrigation and at times more cost effective to farmers. Land improvement techniques and integrated watershed development have shown promising results. They should be a key component of development strategies in less-favoured rainfed areas in certain countries. Such investments can yield acceptable economic rates of return with direct benefits for participants. Where evaluation takes their social and environmental impacts fully into account their returns may exceed those of other agricultural investments.
Reducing the pollution loads of water used by farms, industries and urban areas would enable much more of it to be re-used in irrigation. There are enormous potential benefits to be gained from the use of wastewater for irrigation. As an example, a city with a population of 500,000 and a water consumption of 120 liters/day/person produces about 48 000 m3/day of wastewater, assuming 80 percent of the water used reaches the public sewerage system. If this treated wastewater were used in carefully-controlled irrigation at a rate of 5000 m3/ha/year, it could irrigate some 3 500 hectares.
Due to the different nature of this water (its load of mineral, organic and biological constituents), its reuse should be carefully administered and professionally monitored and managed to check its potential risks and threats to the soil, water, crops irrigated with it, as well as to the whole environment. Technology and management tools to eliminate all these risks and to allow safe re-use of the treated water are now available, but technical assistance and regional cooperation are still needed to transfer and adopt the technology in an appropriate manner.
Water scarcity related problems are often embedded in policy, institutional and market failures for the development and management of water resources. Policy failure is attributed to low cost recovery used in producing a commodity. The institutional failure is due to lack of well-defined property rights, improper regulatory frameworks and open access that encourage depletion of natural resources such as water for which the user does not pay the cost. Market failure refers to the existence of natural monopoly and other external cost placed on agriculture and water sector. The policy instruments to correct these policy and market failure range from outright area restriction to letting market signals dictate the supply response. The most commonly used economic and non economic tools include institutional instruments (property rights, research/information), command and control, economic instruments (costs, taxes, subsidies) and innovative instruments (tradable permits/rights/quotas, differential fees, offsets, environmental charges/rebates, performance bonds.)
The simultaneous increase in water scarcity and water demand calls for improving the "allocative" efficiency of water use, includinf "Inter-sectoral allocative efficiency", achieved by allocating water away from an economic sector or activity that has a "low return to water"; and 2) "Intra-sectoral allocative efficiency", achieved by allocating water within a given economic sector, usually at the level of the production unit (farm of factory), away from a productive activity with a low "return to water", to production with a higher "return to water".
Maximizing water productivity means not only maximizing agricultural production per drop of water but also maximizing the number of rural jobs that can be created with limited water resources. Broadly speaking, the situation in most countries is that, while by far the largest share of available water is utilized by agriculture, the benefit/cost ratios are in the opposite direction. Non-agricultural users draw much higher benefits from water use and are more willing, and often capable, to pay much higher costs. Agricultural users draw fewer benefits and resist higher water charges. When transferable water rights exist, farmers can negotiate their transfer to other sectors with a compensation for their loss. The obstacles to applying these procedures on a wide scale include: 1) the lack of a clear definition of water rights and their marketability; 2) the lack of a widespread perception of the true value of water in the present circumstances of declining availability; and 3) the lack of clear policies on the long-term role of the private sector in supplying water to urban areas.
When water is used for crop production, low water costs may permit the cultivation of high water consuming crops, which cannot be economically grown if water commands a high cost. Thus the cost of water may be a factor which determines the cropping pattern of an irrigated area and farmers' capacity to produce certain crops, particularly popular food-crops. This is possible in countries where water tariffs are practiced and farmers are free to grow crops depending on the economic returns they get from them. In fact, as soon as water tariffs come in play or where farmers have to support pumping cost, crops which return do not allow for supporting water charges and generating a benefit start to be discarded from the cropping patterns.
The common feature of irrigation schemes throughout the world has been to subsidize the cost of water sold to farmers. This causes inadequate resources for system maintenance and excessive demand for water. When the cost recovery rate is raised, farmers adjust their cropping pattern and their technologies, so as to demand less water and/or accept fewer benefits from irrigation. This may however have adverse effects on the production of some crops of national interest. The shift from the traditional policies to those that promote better water allocation efficiency may seem simple, but it actually requires careful steps for which most countries of the region need considerable assistance. Exchange of experience and regional cooperation are also very likely to hasten the process.
As mentioned before, past food security policies were based on area expansion to support the objectives of self-sufficiency and to enhance exports. That era seems to have peaked out and future increase in agricultural production must come from the increased land and water productivity, both in terms of higher yields and cropping intensities for which scope still exists. This will lead to greater water savings by reducing water losses and achieving more efficient water use and better agronomic practices.
The second question with regard to macro-water link is whether the region should produce food grain domestically or is it cheaper to import it. The analysis for a number of Near East countries shows that it depends on how water is valued. The issue of virtual water is still very complex and cannot be fully analyzed at present to decide on what crops should be produced locally or imported. The prevailing incentive framework for agriculture in general has a strong anti-export bias. Any reform in water policy area, such as increasing the cost of water has to be evaluated in the context of economy wide and sectoral policies.
The second point is the distortion that exists in international costs. The cost transmitted to farmers is highly distorted with domestic support to the agriculture sector in the developing countries at two levels, the production subsidies and export subsidies; the end result is that the farmers' comparative advantage is distorted and they cannot compete with cheap imports and high transaction cost to export. In such a case, it is simply not possible to know the exact value of the so called "virtual water". It does not let developing countries to establish its natural comparative advantage to base its competitiveness.
Countries facing food insecurity and water stress need to be assured that they can have fair and secure trade with water-abundant nations. Secure basic food trade conditions for water-poor countries should become a priority for the World Trade Organization. Some countries that are not food self-sufficient, however, cannot export enough to earn the foreign exchange required to purchase the food imports they need. Similarly, individuals may not have the cash to purchase food for themselves and their families, even though food is available in the market. This highlights the continuing need for agriculturally-based rural development programmes in the region.
In short, the concept of virtual water is well founded, provided countries have more transparent picture of its comparative advantage and accordingly they can translate it into a competitive advantage. The second issue pertains to the level of the economic base. i.e. whether the economy of the country is well developed and diversified to take the decision of reallocating water from cereals, which provide subsistence living to large sections of rural population. The experience in the region, perhaps globally, is that a number of economic, political and social factors come into play when resource allocation for valuable input like water are made and hence on the issue of virtual water.
Regional cooperation on this subject is of paramount importance as it would allow countries of the region to assess and analyze the situation on a broader basis, taking into consideration common strategic issues.
