1. Increasing water accessibility: Strategic
investment and policy priorities in
agricultural water
By: Woldeab Teshome (PhD)
SESSION 4: Panel session on Public Policy and Investment
Tuesday 23, November 2010

2. Outline of the presentation
1. Introduction
2. Investment areas of agricultural water management and the pay-
offs and trade-offs
3. Operational feasibility of the investments in current political
context; resources required and the role of private sector
4. Policy context in the ACP region; policy changes needed to
accompany proposed investment
5. Linked investments needed in complementary sub-sectors to
realize the benefits of increased investment
6. Key drivers that will impact future water availability and use for
agriculture; adaptive measures and strategies

3. 1. Introduction...
• More than 947 million people live in ACP countries
• An estimated seventy percent of the population depends on
agriculture for full-time employment and many others rely on
agriculture for part of their household income in Africa
• Two hundred million Africans live with food insecurity
• Caribbean economies share many of the characteristics of
small States, with open and vulnerable economies, limited
diversity in production, exports concentrated on a few
products, thin markets, and high transportation costs.

4. 1. Introduction...
• Agricultural water management is at the crossroads between
four areas of public policy for sustainable growth:
– water resource management
– agriculture
– rural development
– and the environment
• Agricultural water management also interacts closely with
broader aspects of macroeconomic policy for growth (World
Bank, 2006)

5. 1. Introduction...
• Key challenges facing agricultural water management
include:
– the policy and institutional challenge,
– the economic and financial challenge,
– the problem of declining investment,
– the challenge of technology and water resources to
supply growing demand,
– the poverty and rural incomes challenge, and
– environmental dimensions and the sustainability
imperative.(World Bank 2005: 4)

6. 2. Investment areas of AWM in ACP countries
and the payoffs and tradeoffs
2.1 Irrigation (World Bank)
• The future stresses and risks caused by rising food demand
and intensification of irrigated agriculture:
– The strong demographic push to food demand is expected
to continue.
– Intensified irrigated agriculture will provide more than half
of the extra food.
– However, over 40 percent of the extra food will have to
come from intensified rainfed farming in coming years, for
which improved water management is essential.

7. 2. Investment areas of AWM... (irrigation)
• There is some potential for expansion of the irrigated area.
FAO estimates that the irrigated area in developing countries
could increase by almost 20 percent (40 million ha) in the
period 1997–9 to 2030
• Unfortunately, in Africa, only 7 percent of arable land is
irrigated, with an even lower 4 percent in sub-Saharan Africa,
compared to 38 percent in Asia. The continent only uses 4
percent of its water reserves (less than 3 percent in sub-
Saharan Africa), against 20 percent in Asia

8. 2. Investment areas of AWM... (irrigation)
• That means that on 93 percent of Africa’s agricultural land,
the population has to rely on rainfall to live or rather to
survive; and rain is becoming increasingly unpredictable on
account of climate change
• (World Bank 2004b) gives prominence to irrigation as the key
producer of food and source of livelihood for the world’s poor,
and as the largest user of water
• The bank emphasizes two imperatives: to expand investment
in irrigation and to change the way irrigation is managed
• Calling for “principled and pragmatic reforms,” the strategy
stresses the need to return to basic economic principles that
incentives should reflect both the financial cost of supplying
services and the opportunity cost of water

9. 2. Investment areas of AWM... (irrigation)
• Stephen N.Ngigi emphasises smallholder agricultural water
management for a number of reasons.
– The performance of large public irrigation schemes in
Africa is associated with poor governance
– insecure land tenure,
– leading to low farmer investment and
– exploitation by government agencies
• A key policy change would be to support increased
investment in smallholder irrigation as opposed to large-
scale irrigation projects

10. 2. Investment areas of AWM... (irrigation)
• Apart from the obvious lower start-up cost and high economic
impact, smallholder irrigation systems often have strong local
community governance, are relatively free of political
intervention, and have lower operation and maintenance
costs
• Large surface irrigation systems will need to incorporate
improvements in water control and delivery, automation and
measurement, and training of staff to better respond to
farmers’ needs
• In regions that rely heavily on agriculture irrigation is likely to
remain important in rural poverty reduction strategies.

11. 2. Investment areas of AWM... (irrigation)
• Ethiopia: The irrigated area in Ethiopia is only about 5% of the
country’s irrigation potential.
• About 73.6 million hectares of the country’s land is potentially
suitable for agricultural production.
• The surface water resource is about 122 billion cubic meter; ground
water about 2.6 billion cubic meter.
• There is strong interest and commitment by the government of
Ethiopia, donors, and NGOs for the development of and
management of the irrigation sector.
• PASDEP (Plan for Accelerated and sustained Development to End
Poverty) recognizes the importance of the development of small
and medium scale irrigation.

12. 2. Investment areas of AWM...(Rainfed agriculture )
2.2 Rainfed Agriculture
• Facing the food and poverty crises in developing countries will require
a new emphasis on small scale water management in rainfed
agriculture
• Investments in rainfed agriculture have large payoffs in yield
improvements and poverty alleviation through income generation and
environmental sustainability
• IWMI’s Comprehensive Assessment of AWM shows that the potential
for improving water productivity is particularly high in smallholder
rainfed agriculture, with water savings of 15%–20% already possible
over the coming decade
• The key challenge is to reduce water-related risks posed by high
rainfall variability rather than coping with an absolute lack of water

13. 2. Investment areas of AWM...(groundwater)
2.3 Groundwater
• Intensive groundwater use in agriculture has become a
dominant, yet under perceived aspect of contemporary water
use
• Groundwater has contributed significantly to growth in global
irrigated areas since the 1970s
• Given the existing trends, intensive use of groundwater
cannot be sustained unless accompanied by far more
intensive regimes of resource management than are currently
deployed. (Algeria 60% and Libya 95 % depend)

14. 2. Investment areas of AWM...(groundwater)
• The dynamic impacts of intensive groundwater use are best understood by
recognizing four types of groundwater- in-agriculture systems:
- Arid agricultural systems, Industrial agricultural systems, smallholder farming
systems and Groundwater-supported extensive pastoralism
• This intensive—but essentially unplanned—groundwater use faces several
challenges
• Pumping costs are rising, and irrigation-supporting subsidies are
compromising the viability of rural energy providers
• The long-term sustainability of groundwater systems is not easily
determined. In the face of such growing concerns, groundwater use in
agriculture is showing no sign of ebbing

15. 2. Investment areas of AWM... (waste water)
2.4 Waste Water (Marginal Quality Water)
• Millions of small-scale farmers around the world irrigate with marginal-
quality water, often because they have no alternative
• Wastewater often contains a variety of pollutants: salts, metals,
metalloids, pathogens, residual drugs, organic compounds, endocrine
disruptor compounds, and active residues of personal care products
• Public agencies in several countries already implement policies on
marginal-quality water. Egypt plans to increase its official reuse of
marginal-quality water from 10% in 2000 to about 17% by 2017 (Egypt
MWRI 2004)
• In Tunisia in 2003 about 43% of wastewater was used after treatment
• Wastewater use will increase in India, as the proportion of freshwater in
agricultural deliveries declines from 85% today to 77% by 2025, reflecting
rising demand for freshwater in cities (India CWC 2002).

16. 3. Operational feasibility of the investments in
current political contexts
• In 2003, the New Partnership for Africa’s Development
(NEPAD) and its Comprehensive Africa Agriculture
Development Program (CAADP), were launched to accelerate
agricultural growth in the region
• Also in 2003, African governments signed the Maputo
Declaration committing to a minimum allocation of 10% of
their national annual budgets to agriculture
• Recent political context confirmed the urgent need to secure
and increase basic food staples (Sirte Conference on Water for
Agriculture and Energy - December 2008)

17. 3. Operational feasibility of the investments...
• AU Summit (July 2009) on Investing in Agriculture for Economic Growth
and Food Security
• Further, in July 2009 the G8 to pledge USD 20 billion over the next three
years to increased food production and China has pledged USD10 billion in
public-private-partnerships in agriculture to help attain the NEPAD-CAADP
objectives
• The CAADP framework, which is already being implemented in most
countries, will enable more efficient investments
• The CAADP has moved from strategy to implementation at the country
level through the process of country roundtables and compacts.

18. 3. Operational feasibility of the investments...
• This process culminates in a CAADP Compact which guides
country policy and investment responses to meet the 6% growth
target and 10% budget allocation to agriculture
• Guided by the African Water Vision (AWV) 2025 and CAADP-
Pillar I (Sustainable Land and Water Management), and in line
with the African Food Crisis Response (AFCR - July 2008), the
Bank has developed a Water Business Plan (BP) that aims to
develop an area of up to 500,000 hectares
• The Bank will, therefore, channel its support to the following
areas, (i) agricultural water development, (ii) increased water
storage capacity, and (iii) institutional support and project
preparation activities

19. 3. Operational feasibility of the investments...
• The Bank also aims to increase water storage capacity in
Africa by at least 1 percent (additional storage of 8.5 billion
cubic meters for multi-purpose uses, including irrigation
domestic use, livestock watering, and fisheries)
• Recent estimates of financing for the agriculture sector in
Africa foresee the need for US$8.1 billion or an additional
US$4.9 billion annually
• An indicative pipeline of projects and programs amount to UA
3.4 billion over the period 2010- 2014

20. 3. Operational feasibility of the investments...
Broadly speaking the implementation challenges for African
countries has three principal areas:
a) continuing to put in place water resources infrastructure for
basic services and economic development through existing
and new initiatives
b) strengthening the institutional capacity and operational
mechanisms in areas where low implementation capacity is a
bottleneck to progress
c) refining strategies and policies where these are needed

21. 4. Policy context in the ACP region and policy changes
needed to accompany proposed investment
The policy context:
• The African Union (AU) dedicated its June 2008 Summit in Sharm El-
Sheik to water and sanitation where African Heads of State made
important commitments for accelerating the achievement of the goals
in Africa
• The MDGs, particularly the goals of eradicating extreme poverty and
hunger and ensuring environmental sustainability, are central to the
NEPAD program for African agriculture
• Comprehensive Africa Agriculture Development Program (CAADP)
supported by the Africa Union (AU) and New Partnership for Africa’s
Development (NEPAD) provide a framework for accelerating
agricultural growth in Africa
• The African Water Vision (AWV) 2025

22. 4. Policy context in the ACP region...
Policy changes
• Developing and integrating sector policies for AWM
• At the sectoral level, policies for water resources
management, agriculture, rural development, and the
environment need to mesh to support sustainable, market-
driven growth in rural incomes based on improved AWM
• Policy for agricultural water management is vital: it must deal
with managing scarcity, with water allocation, with food
security, with poverty reduction, and with environmental
risks

23. 4. Policy context in the ACP region...
The policy reform agenda for agricultural water
management is a difficult one, which includes:
– setting the legislative and regulatory framework
– establishing an incentive regime consistent with poverty
reduction, rural development, and agricultural goals and
with trade and macroeconomic policies
– matching investment and incentive policies in agricultural
water management with broader agricultural policies on
both the input and the output sides
– ensuring that agricultural water fits within an integrated,
intersectoral water management framework

24. 4. Policy context in the ACP region...
– designing institutional models to separate bulk water
delivery from distribution and to provide efficient least-
cost water service;
– redefining the role of public and private sectors and of
markets; and ensuring an enabling environment for private
investment.
The Trade-offs
• Although policies cannot be uniform, successful reforms
generally limit the role of government, decentralize
responsibility to local authorities and agencies, and to water
users, promote market-based solutions and private
investment, and emphasize market-led growth policies with
domestic and global trade reform.

25. 4. Policy context in the ACP region...
• Tradeoffs between food self-sufficiency goals and efficiency
goals will be increasingly on the policy agenda
• Many water management reforms have high political
transaction costs. These can be absorbed at least in part by
investing in participatory processes of ownership building.
Adjustment lending may also help
• Typically, reform is likely to take a long time, requiring stamina
and consistency both from the nation and from external
partners such as the Bank. Understanding the political
economy of reform is essential
• Irrigation with wastewater is risky. Public agencies should
consider wastewater and saline or sodic water when
evaluating national water management strategies to optimize
the use of limited water resources.

26. 5. Linked investments needed in complementary sub-
sectors to realize the benefits of increased investment
• Government’s role is best undertaken in partnership with the private
sector
• In addition, strategic investment to promote markets and create
market and transport infrastructure can be critical to the development
of irrigated agriculture
• Development of markets and roads in the Nigerian fadama combined
with access to groundwater boosted profitability by three times and
more
• In Ethiopia, access to all-weather road decreased poverty by 6.9% and
increased food consumption by nearly 17%
• Mobile phone and ICT technology have reduced the cost of
information provision on markets and prices.
(World Development Report, 2008)

27. 6. Key drivers that will impact future water availability and
use for agriculture; adaptive measures and strategies
Three areas of agricultural policy are of critical importance for AWM:
• Market development policies: Development of internal and export
markets is the most important driver of farm profitability
• Food policy: Food policy has driven much public investment in irrigation,
successfully supplying cheap food but often keeping irrigators poor and
reducing investment returns
• Policy for technology development and transfer is vital to obtaining
productivity improvements in AWM
• Technical research priorities should focus increasingly on water
productivity and on AWM for rainfed farming

28. 6. Key drivers that will impact future water
availability...
– Research institutions and governments should forge
partnerships with the private sector, which is already very
active in development and dissemination of irrigation
technology
AWM in the global context:
• At the global level, two major issues will affect AWM: trade reform,
climate change agenda
• Trade reform policies will strongly influence water productivity and
profitability in agriculture by opening up external markets. The impacts of
trade reform on irrigated agriculture should be carefully assessed before
reforms are undertaken.

29. 6. Key drivers that will impact future water
availability...
• Climate change creates greater risks and uncertainties, which
should be dealt with by a risk management approach
• Despite their best efforts, governments of Caribbean SIDS face
considerable challenges exacerbated by a series of external shocks,
including the global financial crisis, energy price shocks, fluctuating
commodity prices, the rising cost of external credit and the
dismantling of preferential market arrangements for traditional
agricultural commodities
• The growing debt burden of many Caribbean countries is also
generating considerable concern
• Seven Caribbean countries are included among the ten most
indebted countries in the world.

30. 6. Key drivers that will impact future water
availability...
• Caribbean countries must also contend with declining FDI and ODA.
Between 2006 and 2008, FDI inflows had decreased considerably in
all the countries except Cuba, the Dominican Republic, and Trinidad
and Tobago
• The economic growth prospects of the Caribbean region are
also constrained by a variety of natural factors, including
adverse physiographic conditions in many countries
• Despite the progress in Caribbean functional cooperation,
integration, and trading arrangements, there remain many
challenges
• Economic disparity is often cited as one of the impediments
to deeper regional integration, especially of CARICOM
member States.

31. Sources of information
• IWMI (2007 ) Water for food water for life. A Comprehensive Assessment of
Water Management in Agriculture Edited by David Molden.
• World Bank (2005) Shaping the Future of Water for Agriculture A Sourcebook
for Investment in Agricultural Water Management
• Stephen N. Ngigi (2009) Climate Change Adaptation Strategies Options for
Smallholder Farmers in SSA
• Reengaging in Agricultural Water Management Challenges and Options (World
Bank, 2006)
• ADB (2010)Agriculture Sector Strategy 2010 – 2014)
• AFRICA REGIONAL PAPER African Development Bank Group (2009) Africa
Regional Paper. Bridging Divides in Africa’s Water Security: An Agenda to
Implement Existing Political Commitments
• Confronting the realities of wastewater use in agriculture. Water Policy
Briefings, Issue 9)

32. Sources of information...
• ECA (2007)Africa Review Report on Agriculture and Rural Development
(summary)
• REPORT OF THE SEVENTH ORDINARY SESSION OF THE AFRICAN
MINISTERS’ COUNCIL ON WATER (AMCOW) JOHANNESBURG, REPUBLIC
OF SOUTH AFRICA 13 NOVEMBER 2009
• CARIBBEAN REGIONAL REPORT FOR THE FIVE-YEAR REVIEW OF THE
MAURITIUS STRATEGY FOR THE FURTHER IMPLEMENTATION OF THE
BARBADOS PROGRAMME OF ACTION FOR THE SUSTAINABLE
DEVELOPMENT OF SMALL ISLAND DEVELOPING STATES, 2010
• Investment in Agricultural Water for Poverty Reduction and Economic
Growth in Sub-Saharan Africa SYNTHESIS REPORT, 2007