Trade can help poor countries cope with water shortages and food security

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But global food security will remain a massive challenge, and water provides us with a useful lens through which to view the problem.

An analysis of the water challenges suggests that the real obstacles to greater food security are the uneven distribution of land, people, productive capital – and water. Bridging the gaps that arise because of this uneven distribution will remain the primary challenge. And trade policies must help not hinder this process.

Why this conclusion? In a recent report “Water and Trade”, we sought to understand how water contributes to, and is affected by, trade rules and practices. Specifically, we asked whether trade policy could help to resolve local water problems. Water is a very bulky low value commodity which cannot be easily distributed. So local differences in water availability highlight the larger distributional challenges.

We did not think that proposals to restrict trade in goods from water-scarce countries would be effective or fair.

Environmental advocates have suggested that countries should meet externally imposed water efficiency standards if they want to export their produce. The most extreme proposal is to regulate the amount of water that a country can use to produce goods and services, so-called “virtual water”, and enforce such limits through trade regulations. We suggest that attempts to solve water problems through such trade processes would be unhelpful and unworkable.

Cities taking up more water

So what should be done? While there is no global water shortage, there are many local challenges. Many places will have to limit their use of water for food production so that they can supply the needs of cities and industries and protect the natural environment.

China is the most obvious example. Its economic growth has been accompanied by massive migration from countryside to cities and urban water demand for domestic and economic uses is soaring. Greater prosperity also drives demand for more and different foodstuffs, which in turn need more water. A choice has to be made between people in cities, farmers and the environment. Many other countries face similar challenges, albeit at a smaller scale.

Modelling work has shown that food production in the dry north of China will fall as water is diverted to cities and industries. Some people will lose their livelihoods. Given its still rapidly growing economy, and low population growth, China will be able to offer them alternatives. This is not so easy in other countries with less diverse and dynamic economies.

If water shortages mean that food cannot be produced locally and there are no alternative sources of income, the logical response is for people to migrate elsewhere. It has already been suggested that current waves of migration from the Middle East, Syria in particular, were driven by conflict that was originally triggered by a long drought.

Dealing with shortfalls

Trade could help to solve this problem. Globally there is enough under-used land and water to produce more than enough food to meet the world’s needs. For a start, farmers in places like Argentina, Brazil, Canada and the US would be happy to produce and sell far more food than they do today. So the food needs of places with water (or land) stress could be met through trade.

This approach is attractive for countries that want to protect and expand their current agricultural markets. But it does not address the over-arching challenge which is to ensure that people in poorer countries can earn enough to afford the food (and other things) that they need.

How will farmers who have to give up their water to the cities make a living? What will happen in countries that need to import food but where many people are too poor to buy it? And critically, will countries trust the world’s trade system to provide reliable supplies in times of political stress and climatic unpredictability?

We concluded that trade has helped maintain food security in countries where water availability limits domestic production. This is exactly how the oil-rich countries of the Middle East have managed to overcome their natural resource constraints. Closer to home, the experience of South Africa and other Southern African Development Community (SADC) countries is that we import gains when drought cuts local production.

This shows that trade and investment in agriculture can help countries buffer the impact of climate variability and shocks, such as floods and droughts. It can also provide an important mechanism to offset climate change-induced production decreases and improve access to food.

But in some cases trade will make only a limited contribution to addressing water shortages. Countries with very large populations such as India and China will be concerned about the ability of global food trade to supply the huge quantities needed by their massive populations.

For poorer countries, including many in Africa, our other conclusion is that trade policies should help and not hinder people to improve their livelihoods from agriculture. Trade policy should encourage agricultural support mechanisms that help to achieve efficient and sustainable water use and offer livelihoods to poor people. Too often, they do the opposite. For example, subsidies to help Indian farmers improve their irrigation efficiency are technically illegal in terms of WTO rules.

Trade policy should also support the long-term efforts by African governments to attract investment aimed at increasing productivity of domestic agriculture, including greater water use efficiencies. Foreign investment in African agriculture is sometimes characterised as “land grabbing”, prompting concerns that it will place additional stress on local water resources.

But in many cases, external investment can enable under-utilised resources to be productively mobilised. This kind of investment has helped Kenya and Ethiopia become major exporters of cut flowers and fresh vegetables, reducing rural poverty.

So water and food security in poor countries will only be assured if overall trade policy supports people to use their land and water resources productively, efficiently and sustainbly. As we are already witnessing, if this does not happen, the world will continue to experience waves of desperate migration as well as environmental degradation.