Water, Food, Energy and Institutions: Inextricably Linked

Uma Lele

Keynote Address

Consulting Partners Meeting

Global Water Partnership, Stockholm

August 18, 2011

Dr Uma Lele

Food Price Rise and Volatility?

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FAO Real Food Price Index(Annual)

(1990-2011)

Food Price Index

Source: www.fao.org/worldfoodsituation/wfs-home/foodpricesindex/en/-

2002

-200

4=10

0

?

Dr Uma Lele

Trends in world hunger Undernourishment in 2010, by Region (mill.)

Largest Number of the world’s hungry in South Asia

Under Five Malnourishment Challenge: South Asia and SSA off track

East A

sia a

nd P

acific

Europ

e C

entra

l Asia

Latin

Am

erica

& C

aribb

ean

Midd

le Eas

t and

Nor

th A

frica

South

Asia

Sub-S

ahar

an A

frica

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Child malnutrition rates re-main high in South Asia and

Sub-Saharan Africa2000 2009

Source: United Nations Children's Fund, World Heath Organization and WDI, World Bank

Pro

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f ch

ild

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un

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e (%

)

Dr Uma Lele

Progress on access to an improved water source

Progress on access to improved sanitation

By 2050 World Would Need to Feed 9 Billion+ PeopleFAO Projects:

– Almost all population and income growth will arise in developing countries, particularly in Asia and SSA

– Cereal Production (Net of Biofuels) would need to increase by 70%– Meat production by 220%, – Cereal Imports of Developing countries will increase by 220%

Dr Uma Lele

Will Food Supply Keep up With Growing Demand?Sources of Demand are Well Understood•Population Growth:

• All in LDCs•Income Growth •Mostly in LDCs•Urbanization:

• Up from 50% to 70%•Shift in Food Preferences:

• Rice, Wheat, Maize, Soybeans for Feed:

•Biofuels: maize, oilseeds•Processed Foods

Increased Risk and Uncertainty on the Supply Side•Climate Change•Limits to Land, Water, Soils, Biodiversity, Forests, Fisheries •Energy shortages and subsidies,•Last Frontiers?

• Brazil, SSA?•Increased Risks and Uncertainty (from climates, global market integration)•Slowing Productivity Growth•Stagnant Investment levels in R and D•Interlinked International Markets

Agricultural productivity growth is slowing(source Fuglie 2011)

Source: World Bank Development Report 2008 (figure refers to developing countries only)

WHERE IS LAND?

Where Is Water for Food?

72% of Irrigation in Asia

Dr Uma Lele

Two Likely Future Scenarios of Growth in Food Production

Further Intensification of Agriculture Will be required in Asia

•80% to 90% of increase in production will have to come from agricultural intensification

• Increased yields per ha• Changing cropping patters• Multiple cropping on unit of

land

Area Expansion: and Intensification in SSA> three times the cerrados in Brazil?

Dr Uma Lele

More Crop Per Drop?Regional Productivity Growth in Parts of China has been higher than anywhere elsewhere on a a scaled up basis”Top Ten Provinces

The top ten provinces in TFP growth for the 1985-2007 period. Six of them are on the east coast

1 Jiangxi 8.17%2 Guangdong* 8.11%3 Hebei* 7.95%4 Fujian* 7.89%5 Shandong* 7.37%6 Hubei 7.34%7 Inner Mongolia 7.26%8 Zhejiang* 7.19%9 Sichuan 7.18%10 Liaoning* 6.83%

Wang, Tuan, Gale, Somwaru, and Hanson. AAEA 2011

RAJASTHAN

ORISSAMAHARASHTRA

GUJARAT MADHYA PRADESH

BIHAR

KARNATAKA

ANDHRA PRADESH

UTTAR PRADESH

JAMMU & KASHMIR

TAMIL NADU

ASSAM

CHHATTISGARH

JHARKHAND

PUNJAB

WEST BENGAL

KERALA

HARYANA ARUNACHAL PRADESH

UTTARANCHAL

HIMACHAL PRADESH

MANIPUR

MIZORAM

MEGHALAYANAGALAND

TRIPURA

SIKKIM

GOA

DELHI

DADRA & NAGAR HAVELI

PONDICHERRYPONDICHERRY

DISTRIBUTION OF TFP GROWTH INDEX VALUES BY STATES IN INDIA: 1975-2005

TFP Growth Score ClassN.ABelow 60 [Low]60.00 - 70.00 [Moderate] (Major State Average=70.1)70.01 - 90.00 (High)Above 90 [Very High]

Note: (1999-2009)

(Red circle) Agricultural Growth Rates > 4% (Black circle) Agricultural Growth Rates 2% to 4% (while circle) Agricultural Growth Rates <2 %

Source: Based on Total Factor Productivity and Contribution of Research Investment to Agricultural Growth in India: Ramesh Chand et al. NCAP 2011

Improved Water Management in East and South East Asia and Scope for Knowledge Transfers/ South – South Learning: China and Vietnam and South Asia

1. In China and Viet Nam, agriculture water withdrawal as a percentage of total national water withdrawal has declined from 92.5 and 88.2 in 1990 to 68.1 and 67.7 in 2000 (FAO) and to 60% according to latest data (Khalid Mohtadullah)

2. Incentivized Irrigation Bureaucrats in China have helped improved water management ( Tushaar Shah)

3. Successful innovations in Gujarat in India

Dr Uma Lele

Water Management Challenges in India Irrigation Investment & Irrigated Area in India

Source: Amerasinghe et alDr Uma Lele

1960

-61

1963

-64

1966

-67

1969

-70

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-73

1975

-76

1978

-79

1981

-82

1984

-85

1987

-88

1990

-91

1993

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-00

2002

-03

2005

-06

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Crops Livestocks

Fisheries Soil and Water conservation

Government Investment in Total Ag Research, On Soil and Water (incl. Education) in

Agriculture by Sub-sectors in India: 1960-1961 to 2007-08 (in million Rs at current prices)

Source: Total Factor Productivity and Contribution of Research Investment to Agricultural Growth in India: Ramesh Chand et al. NCAP 2011

China Stands out in Public Agricultural R and D Spending Relative to SSA, Brazil and India

Source: ASTI as reported in Beintema and Stads (2011)Dr Uma Lele

Average ag TFP growth, 1970-2006 (% per year)

> 2%1-2%< 1%

Average annualTFP growth

Caribbean

Sub-Saharan Africa

Developing Oceania

Former USSR

Circled regions show persistently low TFP growth

Source: Keith Fuglie, Technology Capital, The Price of Admission to the Growth Club

Rainfed Agriculture Yields Are Converging Average Grain yields in Sub-Saharan Africa (37%) of Average Yields in Other Regions

Source: Food Security Assessment, 2010-20 / GFA-21; Economic Research Service/USDA

Dr Uma Lele

Source: Food Aid Flows Report 2009 by WFP and www.wfp.org/fais

Dr Uma Lele

INTERNATIONAL COOPERATION IN WATER AND FOOD

Goal 8

Dr Uma Lele

Fragmented Aid Architecture

DAC-Bilateral (2007): 73….of which:

USA 18.9Germany 7.9France 6.2Japan 5.8UK 5.6

Multilateral (2007): 28….of which:

EC 11.3IDA 7.5UN 3.5Global Fund 1.6

Private sources (2007): 60….of which:

USA 37UK 4.1France 1

NON-DAC (2007): 10….of which:

China 3Arab countries 2.6India 1Korea 0.8

(Source: OECD DAC database)

(Source: OECD DAC database)

(Source: Hudson Institute, Global Index of Philanthropy, 2009)

(Source: Homi Kharas, 2009*)

* Brookings Institute: Kharas, H., “Development Assistance in the 21st Century”, Contribution to the VIII Salamanca Forum, The Fight Against Hunger and Poverty, July 2009

Estimates of total aid (all sectors) in 2007(Source: Kharas, 2009)

Declining ODA to Agriculture (1979 – 2007)

External Investment in Irrigation and Drainage

Dr Uma Lele

Increased Opportunities for GWPDecline in Technical Capacity at the World Bank

Dr Uma Lele

Note: The above figure shows FAO’s regular program budget is funded by its members, through contributions, adjusted to the Euro/US dollar exchange rate fixed by the FAO Conference. This budget covers core technical work, cooperation and partnerships including the Technical Cooperation Program, knowledge exchange, policy and advocacy, direction and administration, governance and security.The FAO’s regular budget for the biennium 2010-2011 has been increased by 7.6% to US$ 1000.5 million from the biennium 2008–2009 US$ 929.8 million, adjusted to the Euro/US dollar exchange rate fixed by the FAO Conference. Member states froze FAO's budget from 1994 through 2001 at US$650 million per biennium. The budget was raised slightly to US$651.8 million for 2002–03 and jumped to US$749 million for 2004–05, but this nominal increase was seen as a decline in real terms. In November 2005, the FAO governing Conference voted for a two-year budget appropriation of US$765.7 million for 2006–2007; once again, the increase only partially offset rising costs due to inflation.

Total Biennial Resources Available (1994-2007)

This figure shows FAO’s biennial resources in terms of US K$ at 1994 constant prices.

Source: FAO: The Challenge of Renewal: Report of the Independent External Evaluation of the FAO: September

2007 (figure 7.1)

Implications for GWP and Partners

1. GWP’s mission is worthy

2. But development challenges have become more complex

3. Generating and disseminating Relevant Knowledge is a costly business

4. It is easier to explain differences in performance among regions and countries than to explain why or how and transferability of experience.

5. Donor resources have become limited and fragmented

6. More are being made available through Trust Funds

7. Donor expectations about demonstrating impact has increased

8. But donor time horizon has become shorter

9. Leadership, institutions, capacity and demand for knowledge in developing countries are key for success

10.GWP needs to mobilize the best of technical expertise. Quality of relations, trust and confidence with developing countries will be critical necessary conditions.

Dr Uma Lele

THANK YOU!

Dr Uma Lele