Water in agriculture: Improving resource management

OECD Trade and Agriculture Directorate

World agriculture faces an enormous challenge over the next 40 years: to produce almost 50% more food up to 2030 and double production by 2050. With pressure from increasing urbanisation, industrialisation and climate change also rising, proper water management will be vital.

Indeed, as OECD water use projections to 2050 show, the water supply to some 47% of the world’s population, mostly in developing countries, will be under severe stress, largely because of developments outside of agriculture.

But agriculture consumes about 70% of the world’s freshwater withdrawals (45% in OECD countries). With demand for food and water rising, farmers need to use water more efficiently and improve agricultural water management. In many cases, that means policymakers should use water charges to reduce wastage, and introduce supporting measures that encourage more innovation and better management.

This includes OECD countries, which are projected to continue to be major exporters of agricultural products onto world markets. By implication, OECD farmers will also need to improve their management of water. Technology and better management can help achieve this improvement. Support tools, for example, are being developed to enable greater efficiency in water management strategies, such as the computerised linking up of soil moisture monitors to drip irrigation systems.

But technology changes can bring risks too. For instance, greater use of modern irrigation technologies to save water and raise yields could cause pressures in fragile lands, such as increasing risks of flooding and soil erosion.

Anticipating changes in climate is also becoming important, as this is projected to alter the seasonal timing of rainfall and snow pack melt and lead to the higher incidence and severity of floods and droughts. Policymakers will need to adopt mitigation and adaptation measures to deal with this.

Whatever the technology and approach undertaken, water pricing must also convey the right signals to farmers if it is to influence behaviour. Supplying water to farms is a costly exercise even in developed countries. Yet, farmers frequently pay just the operation and maintenance costs of water supplied to them, with little recuperation of agriculture’s share of capital costs for water supply infrastructure (see table).

In countries where water charges to farmers have been raised, available evidence indicates that the increase has not led to reduced agricultural output.

Moreover, water charges for farmers rarely refl ect real scarcity or environmental costs and benefits. Sustainable use of groundwater by agriculture is usually achieved through licenses and other regulatory instruments. But frequently poor enforcement of these measures means unsustainable and illegal groundwater pumping continues anyway.

OECD government policies to support agricultural output often encourage production and lead to less efficient use of water, not to mention exacerbating off-farm pollution and flooding. But measuring the overall efficiency and effectiveness of farm support on water resources is difficult and demands further analysis.

Many OECD countries, however, have succeeded in lowering farm support levels and in decoupling their policy support from production volumes. The result has been more efficient water use, better adaptation to scarcity and less off-farm pollution.

The challenges of improving water management in agriculture are major but by taking some basic steps, they are not insurmountable. A recent OECD report, Sustainable Management of Water Resources in Agriculture, sets out some broad areas for policy action.

For a start, policymakers must recognise the complexity and diversity of water resource management in agriculture, including supply and demand dimensions at the national and regional levels. They should take steps to strengthen institutions and property rights to reinforce efficiency in water management in agriculture.

Policymakers should also work to ensure that water charges to agriculture better reflect full supply costs. And they should improve the coherence between agriculture, water, energy and environmental policies, to reinforce progress and prevent initiatives from cancelling each other out. Efforts to strengthen agriculture’s resilience to climate change, for instance, will also be important for water management (see article on climate change).

Last but not least, knowledge is vital for underpinning better management. Water is a global problem with local solutions. Policymakers must work together to fill information gaps, learn from one another and ensure that farmers and managers have access to the information they need.

Farmers in many situations are beginning to adopt practices and technologies that will lead to more efficient use of water. By adopting such measures as these, policymakers would help reinforce this trend.


References

OECD (2009), Managing Water for All: An OECD Perspective on Pricing and Financing, Paris.

OECD (2008), Environmental Performance of OECD Agriculture since 1990, Paris.

OECD (2006), Water and Agriculture: Sustainability, Markets and Policies, Paris.


©OECD Observer n°278, March 2010

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