The São Francisco River Basin:Trends, Current Situation, and Policy Options for Reducing Rural Poverty

The São Francisco River Basin:The São Francisco River Basin: Trends, Current Situation, and Policy O ti f R d i R l P tOptions for Reducing Rural Poverty

Steve Vosti&

SFRB Team

UCD/EmbrapaFebruary 2008

Presentation Overview• Trends and Driving Forces

– Population, Poverty, Agriculture, Market StructureP bl• Problems– Persistent poverty– ‘Local’ water conflicts

Environmental flows– Environmental flows– Deviations from ‘average’

• Role for Public Policy Action– Managing agriculture– Managing agriculture– Reducing persistent poverty– ‘What If’ Scenarios

• Water pricingp g• Water use restrictions

• Data Sources, Hydro-Economic Models, Value Added to CP• Knowledge Pathways and Impact Pathways

UCD/Embrapa

Policy Instruments that Can Affect Productivity and Profitability

• Assets and Asset Quality

Productivity and Profitability

Assets and Asset Quality– Land, water, financial capital, market access,

knowledgeknowledge• Relative Prices

I t– Inputs• water

Products– Products

UCD/Embrapa

Three Worlds of the WDR 2008

UCD/EmbrapaSource: World Development Report 2008

Changing Market Structure

UCD/Embrapa

Soil Types and Distance to Market

UCD/Embrapa

Population Change in theChange in the

SFRBTotal Population 1991 2000 Change

1991-2000% change

Total for SFRB 14,059,006 15,723,771 1,664,765 11.84%

Alagoas 668,980 705,851 36,871 5.51%

Bahía 2,712,391 2,897,898 185,507 6.84%

Distrito Federal 1,601,094 2,051,146 450,052 28.11%

Goiás 147,656 173,079 25,423 17.22%

Minas Gerais 6,971,994 7,885,366 913,372 13.10%

Pernambuco 1,568,446 1,591,141 22,695 1.45%

Sergipe 229,819 260,180 30,361 13.21%

RuralPopulation

1991 2000 Change 1991-2000

% change

Total for SFRB 4,445,920 3,691,016 -754,904 -16.98%

Alagoas 409,421 400,418 -9,003 -2.20%g , , ,

Bahía 1,579,751 1,442,275 -137,476 -8.70%

Distrito Federal 85,205 89,647 4,442 5.21%

Goiás 50,576 37,650 -12.926 -25.56%

UCD/Embrapa

Minas Gerais 1,256,533 809,764 -446,769 -35.56%

Pernambuco 842,515 700,970 -141,545 -16.80%

Sergipe 124,703 131,202 6,499 5.21%

Aging of the Rural SFRB Population

12 00

Shifting Demographic Profile

10.00

12.00

ipio

s

6.00

8.00

ion

of M

unic

i

2.00

4.00

Prop

orti

0.00

10%

11%

12%

13%

14%

15%

16%

17%

18%

19%

20%

21%

22%

23%

24%

25%

26%

27%

28%

29%

30%

31%

32%

33%

34%

35%

55+ Dependency Ratio 1991 55+ Dependency Ratio 2000

UCD/Embrapa

55+ Dependency Ratio -- 1991 55+ Dependency Ratio -- 2000

Agriculture in the SFRB -- 1991

UCD/Embrapa

Agriculture in the SFRB -- 2004Harvested Specialty Crops, 2004

São Francisco River BasinHarvested Grains2004

Petrolina

2004

Harvested Area (ha)Harvested Area (ha) Harvested Area (ha)at Município Level

None

1 - 2,500

2,501 - 10,000

10,001 - 50,000

Montes Claros

Harvested Area (ha)at Município Level

None

1 - 2,000

2,001 - 5,000

5,001 - 10,000 10,001 50,000

50,001 - 200,000

200,001 - 401,980

BetimDivinopolis

Sete Lagoas

Belo HorizonteRibeirao das Neves

5,001 10,000

10,001 - 20,000

20,001 - 431,441

Lambert Azimuthal Equal Area

1:9,000,000Scale0 100 200 30050

Kilometers

UCD/Embrapa

Map by J A Young, 12 September 2007

Lambert Azimuthal Equal Area Projection, WGS-84.

Changes in Yields60

Frequency Distribution of Corn Production

(in tons/ha)

g40

ount

20

Co

1 2 3 4

Unweighted Yields in 1991

0

Frequency Distribution of Corn Production

(in tons/ha)

60

20

40

Cou

nt

UCD/Embrapa0 2 4 6

Unweighted Yields in 2004

0

Water Availability

UCD/Embrapa

Water Productivity in Corny

UCD/Embrapa

Water Productivity

UCD/Embrapa

Water Conflicts in the SFRB

UCD/EmbrapaSource: ANA 2007

Poverty in the SFRB

UCD/Embrapa

Extreme Poverty in the SFRB

2003 Rural Extreme Poverty2003 RuralPoverty Rural Poverty

Extreme Poverty-Rural

Absolute

% of Rural Pop Absolute

% of Rural Pop

Total for SFRB 1,012,095 28% 345,677 9%

Alagoas 163,307 41% 70,400 2.6%

Bahía 328,313 23% 139,941 9.7%

Goiás 7 792 21% 2 846 7 5%Goiás 7,792 21% 2,846 7.5%

Minas Gerais 178,006 22% 43,214 5.3%

Pernambuco 258,004 37% 53,484 7.6%

Sergipe 48,635 37% 19,603 14.9%

UCD/Embrapa

Spatial Distribution of Rural PovertyRural Poverty

UCD/Embrapa

Spatial Clusters of Rural Poverty in the SFRB

Cluster 1Cluster 3

Not Significant

Cluster 2

High-High

Low - Low

High-Low

UCD/Embrapa

Low-High

Water-Poverty Links: A Visual Inspection

UCD/Embrapa

Possible Water-Poverty Linksy

UCD/Embrapa

Next Steps for Small-Scale Farmers?

• Scale Economies Loom Large• Shifting Product Mix Will Likely Be Required• Such Shifts Will Require Private Investments

UCD/Embrapa

• Such Shifts Will Require Private Investments• Capital, knowledge, market development

Some Types of Variability

MatterMatter GreatlyPrice VariationYield Variation

UCD/Embrapa

Effects of Alternative Policy Options –A Quick Look Using LUS AnalysisQ g y

UCD/Embrapa

A Basin-Wide View of the Effects of Agric lt ral E pansionAgricultural Expansion

Petrolina

Barreiras

Paracatu

Rio Paranaiba

UCD/Embrapa

Rio Paranaiba

A Basin-Wide View of the Effects of Agricultural Expansion, cont.

Value of Total Output (2006 R$)

Total Increase in Employment (person-months/year)

Barreiras R$ 36,523,637 2,347Petrolina R$ 192,853,884 14,302

$

g p ,

Paracatu R$ 41,988,915 7,401Rio Paranaiba R$ 3,675,946 192

Barreiras

P li

Paracatu

Petrolina

Rio Paranaiba

UCD/Embrapa

Baseline

A Basin-Wide View of the Effects of Agricultural Expansion, cont.

2000400060008000

ge (m

3 s-

1)

.

Baselineg p ,

01 2 3 4 5 6 7 8 9 10 11 12

Dis

char

g

Month

B li

2000400060008000

e (m

3 s-

1)

.

Baseline

01 2 3 4 5 6 7 8 9 10 11 12

Dis

char

g

Month

UCD/Embrapa

What Happens If Policymakers Say ‘No’ to Increased IrrigationIncreased Irrigation

P ercen t C h an g e in Irrig a ted L an d fro m a 10% R ed u ctio n in W ater Ava ilab ility


10% Reduction 20% Reduction

-3

-2

-1

01

B onfinopo lis de M inasU na iC abece iras

-6

-4

-2

01

B on finopo lis de M inasU na iC abece iras

-7

-6

-5

-4 C ris ta linaF orm osaB ras ilia

-12

-10

-8

6C ris ta linaF o rm osaB ras ilia


01


01

30% Reduction 40% Reduction

-10

-8

-6

-4

-21

B on finopo lis de M inasU na iC abece irasC ris ta linaF o rm osa -12

-10

-8

-6

-4

-2 1

B on finopo lis de M inasU na iC abece irasC ris ta linaF orm osa

UCD/Embrapa

-16

-14

-12 B ras ilia

-18

-16

-14

12B ras ilia

Changes in Crop Allocation Associated with a 10% Reduction in Water Availability (%)

c it ru s C r is ta lin ait

a 10% Reduction in Water Availability (%)

B o n fin o p o lis d e M in a s

0 .5

1

1 .5

c it ru sc o f fe ec o rnc o t to nd r ie d b e a n sg ra in sh o rt ic u ltu re

i 1

0

1

2

3

1

c it ru sc o f fe ec o rnc o t to nd r ie d b e a n sg ra in sh o r t ic u ltu re

i

-2 .5

-2

-1 .5

-1

-0 .5

01

m a n io co rc h a rd f ru itso th e r te m p o ra ryo th e r p e rm a n e n tr ic es o y b e a n ss u g a r

t b l-6

-5

-4

-3

-2

-1 m a n io co rc h a rd f ru itso th e r te m p o ra ryo th e r p e rm a n e n tr ic es o y b e a n ss u g a r

t b lv e g e ta b le s

U n a i

2

3

c it ru sc o f fe ec o rnc o t to n

v e g e ta b le s

F o rm o s a

1 0

c it ru sc o f fe ec o rnc o t to n

-2

-1

0

1

2

1

c o t to nd r ie d b e a n sg ra in sh o r t ic u ltu rem a n io co rc h a rd f ru itso th e r te m p o ra ryo th e r p e rm a n e n t 4 0

-3 0

-2 0

-1 0

01

c o t to nd r ie d b e a n sg ra in sh o r t ic u ltu rem a n io co rc h a rd f ru itso th e r te m p o ra ry

th t

UCD/Embrapa

-5

-4

-3 o th e r p e rm a n e n tr ic es o y b e a n ss u g a rv e g e ta b le s

C

-6 0

-5 0

-4 0 o th e r p e rm a n e n tr ic es o y b e a n ss u g a rv e g e ta b le s

Changes in Water Use Associated with a 10% R d ti i W t A il bilit (10%)10% Reduction in Water Availability (10%)

B o n fin o p o l is d e M in a s

-4

-2

01

c it ru sc o f fe ec o rnc o t to nd r ie d b e a n sg ra in sh o r t ic u ltu re

C r is ta l in a

-1 5

-1 0

-5

01

c it ru sc o ffe ec o rnc o tto nd r ie d b e a n sg ra in sh o r t ic u ltu re

1 4

-1 2

-1 0

-8

-6o t c u tu e

m a n io co rc h a rd f ru itso th e r te m p o ra ryo th e r p e rm a n e n tr ic es o y b e a n ss u g a r 4 0

-3 5

-3 0

-2 5

-2 0

1 5 o t c u tu em a n io co rc h a rd f ru itso th e r te m p o ra ryo th e r p e rm a n e n tr ic es o y b e a n ss u g a r-1 4 s u g a r

v e g e ta b le s

U n a i

01

c it ru sc o ffe ec o rn

-4 0 s u g a rv e g e ta b le s

F o r m o s a

3

c it ru sc o f fe ec o rn

-2 5

-2 0

-1 5

-1 0

-51

c o tto nd r ie d b e a n sg ra in sh o r t ic u ltu rem a n io co rc h a rd f ru itso th e r te m p o ra ry

1

0

1

2

1

c o t to nd r ie d b e a n sg ra in sh o rt ic u ltu rem a n io co rc h a rd f ru itso th e r te m p o ra ry

UCD/Embrapa-4 0

-3 5

-3 0 o th e r p e rm a n e n tr ic es o y b e a n ss u g a rv e g e ta b le s

-3

-2

-1 p yo th e r p e rm a n e n tr ic es o y b e a n ss u g a rv e g e ta b le s

What Happens If Policymakers Charge for Water? (20% Increase in Water Prices)

Bonfinopolis de Minas it Brasilia itp

0 2

0

0.2

0.4

0.6

0.8

R1

citruscoffeecorncottondried beansgrainshorticulturemanioc -0.5

0

0.5

1

1

citruscoffeecorncottondried beansgrainshorticulturemanioc Crop Allocation

-1.2

-1

-0.8

-0.6

-0.4

-0.2orchard fruitsother temporaryother permanentricesoybeanssugarvegetables

-2.5

-2

-1.5

-1 orchard fruitsother temporaryother permanentricesoybeanssugarvegetables

Crop Allocation

Bonfinopolis de Minas

4

-3

-2

-1

0

citruscoffeecorncottondried beansgrainshorticulturemanioc

Brasilia

8

-6

-4

-2

0

citruscoffeecorncottondried beansgrainshorticulturemanioc Water Use

-8

-7

-6

-5

-4orchard fruitsother temporaryother permanentricesoybeanssugarvegetables

-16

-14

-12

-10

-8orchard fruitsother temporaryother permanentricesoybeanssugarvegetables

Bonfinopolis de Minas

-0.5

0

0.5

citruscoffeecorncottondried beansgrainshorticulturemanioc

Brasilia

-4

-2

0

2

citruscoffeecorncottondried beansgrainshorticulturemanioc Emplo ment

UCD/Embrapa-2.5

-2

-1.5

-1maniocorchard fruitsother temporaryother permanentricesoybeanssugarvegetables

-12

-10

-8

-6

maniocorchard fruitsother temporaryother permanentricesoybeanssugarvegetables

Employment

What If It Doesn’t Rain? (40% Reduction in Rainfall)

f1= large, div+f2= large, div-f3= medium, div(40% Reduction in Rainfall)

80pasture corn dried beans soybeans limes vegetables orchards wheat sorghum

% Changes in Land Allocation

,f4= small, div

-200

20406080

f1

f2

f3

-120-100

-80-60-40 f3

f4

-5

0corn dried beans limes vegetables orchards wheat

30

-25

-20

-15

-10f1

f2

f3

f4

% Changes in Total Water Use

UCD/Embrapa

-40

-35

-30


f1= large, div+f2= large, div-f3= medium, div

Changes in Applied Water, by Sourcef1 f2 f3 f4

(40% Reduction in Rainfall) ,f4= small, div

40000-20000

0200004000060000

sw

-140000-120000-100000-80000-60000-40000

gw

-10

0f1 f2 f3 f4

50

-40

-30

-20

10

% Changes in

UCD/Embrapa-70

-60

-50% Changes in Farm Profits


f1= large, div+f2= large, div-f3= medium, div

Changes in Use of Hired Labor , by Crop(40% Reduction in Rainfall) ,

f4= small, div

dried

020406080

pasture corn beans soybeans limes vegetables orchards wheat sorghum

f1

f2

-120-100

-80-60-40-20

f2

f3

f4

-10

0

10f1 f2 f3 f4

% Changes in Hired Labor -60

-50

-40

-30

-20

-10

UCD/Embrapa

% Changes in Hired Labor Use, by Farm Type

-90

-80

-70

Knowledge Pathways and Impact Pathways

Policy Policy ‘Pl h ld ’

Policy

Agents of ChangeEmbrapa

Research CentersANACPWF

BFP CentralEmbrapa Water Mgmt.

OECD

Min. of Ag.

y‘Placeholders’ ‘Placeholders’

y‘Placeholders’

Policy ‘Placeholders’

Policy ‘Placeholders’ IEB -- NGOs

gOECD

Core Team•Research•Training


Placeholders


Embrapa HQ

IPEAg

•Outreach

Research Collaborators

BrazilianUniversities

• Brasilia

Embrapa Research Centers

• Savannah

NGOs• Cooperatives

Farmers International Research

Community

UCD/Embrapa

Brasilia• Petrolina• Minas Gerais• Ceara

•Coastal zone•Corn and sorghum•Semi-arid

y

Muito Obrigado!

UCD/Embrapa

Education

The São Francisco River Basin:Trends, Current Situation, and Policy Options for Reducing Rural Poverty