Presentation - Seventh Roundtable on Financing Agricultural Water - Guillaume GRUÈRE, Senior Economist, Trade and Agriculture Directorate, OECD

1. Financing agricultural water:
What status, directions and modalities?
Guillaume GRUERE
Senior Policy Analyst
OECD Trade and Agriculture Directorate
Based on a background paper co-authored with Colette ASHLEY
OECD-FAO Roundtable on Financing Agriculture Water
January 27 2021

2. • Substantial policy and financing efforts are
needed for agriculture to use water
sustainably and to improve food and water
security under growing water risks.
• Where and how to invest on water in
agriculture? 3 questions:
1. What are the current financing flows?
2. What are the drivers of future investment?
3. What modalities are needed to ensure financing
efforts lead to effectively sustainable outcomes?
Sustainable water use in agriculture for food and
water security: Whither financing?

3. 1. Status of agriculture and water financing
Increasing trend in agriculture water support, mostly for irrigation
0
10000
20000
30000
40000
50000
60000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Total other
Total hydrological
infrastructure
Total conservation
Total risk
management
Total irrigation
Total irrigation
70%
Total risk
management
5%
Total
conservation
6%
Total
hydrological
infrastructure
18%
Total other
1%
0
5000
10000
15000
20000
25000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2019
USD
millions
Indonesia
Viet Nam
Ukraine
South Africa
Russia
Philippines
Kazakhstan
India
Costa Rica
Colombia
China
Brazil
Argentina
United States
Turkey
New Zealand
Mexico
Korea
Japan
Israël
EU
Canada
Chile
Australia
OECD
Non- OECD
(emerging)
India
China
Total agriculture support for water in 54 OECD+ emerging countries (USD millions)
Irrigation-related producer support estimate (PSE) by country
Note: Amounts may not include all implicit water price subsidies. Source: Authors based on OECD (2020).
Note:Amounts may not include all implicit water price subsidies. Source: Authors based on OECD (2020).
• Water related agricultural support grew by 60% in 20 years to USD
41 billion in 2019 and remains mostly dedicated to irrigation.
• India and China’s irrigation PSE accounts for 40% of total support.

4. Declining support in OECD countries, mostly for hydrological infrastructure
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Total other
Total hydrological infrastructure
Total conservation
Total risk management
Total irrigation
Total
irrigation
19%
Total risk
management
13%
Total
conservation
4%
Total
hydrological
infrastructure
62%
Total other
2%
0
500
1000
1500
2000
2500
3000
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
2019
USD
millions
United
States
Turkey
New
Zealand
Mexico
Korea
Japan
Israel
EU
Canada
Chile
Australia
Note: Amounts may not include all implicit water price subsidies. Source: Authors based on OECD (2020).
Note: Amounts may not include all implicit water price subsidies. Source: Authors based on OECD (2020).
• Water related agricultural support in OECD declined by 48% in
20 years to USD 5.7 billion in 2019 and is mostly dedicated to
hydrological infrastructure.
• OECD PSE for irrigation declined by 63% from 2000-19.
Irrigation-related producer support estimate (PSE) by country
Total agriculture support for water in OECD countries (USD millions)

5. Development assistance is stable but limited
2014 2015 2016 2017 2018
Total ODA 1 097 1 099 970 1 061 1 084
From DAC countries 434 435 376 322 349
From Non-DAC countries 52 96 30 72 136
From Multilateral agencies 611 568 564 667 599
Other official flows 406 303 408 452 368
0
100
200
300
400
500
600
700
800
900
1000
Africa Asia South America Other
Total ODA Other official flows
 About USD 1.4 billion of development assistance is spent every year, 60% on Asia.
In aggregate all the above estimates suggest that a minimum USD 43 billion/yr is supporting
agriculture water use globally.
Development assistance for agriculture water resources (USD millions)
Notes: ODA: official development assistance; DAC: OECS Development Assistance Committee
Source: OECD QWIDS database. https://stats.oecd.org/qwids
Source: OECD QWIDS database. https://stats.oecd.org/qwids
Average development assistance for agriculture water resources, 2014-18 (USD millions)

6. 2. What priorities for investment?
• Balancing increased demand for food and
dietary changes with water availability
• 275 m hectares of irrigated cropland require
improved water management (FAO, 2020)
• Regional differences in needs:
• Asia: mostly modernization and
improved management
• MENA: improved management,
efficiency and alternative water uses
• Sub Saharan Africa: irrigation
expansion in particular regions
Source: OECD/FAO (2020)
Projected global demand for agriculture commodities 2019-2029

7. 3. What modalities for investments?
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
2009 2019
General recommendations (ch. 2)
Managing water quantity (ch.3)
Improving water quality (ch.4)
Managing water risks and disasters (ch.5)
Ensuring sustainable pricing for water and water services (ch. 8)
• Improved policies are needed for financing to be sustainable
• Ensure government agriculture-water policy coherence, by:
• Reforming potentially water harmful support
• Encouraging irrigation cost-recovery
• Bolstering agriculture innovation
• Robust water monitoring (based on consumption) and water
allocation system should precede any irrigation investment
• Private investments should be responsible
• Investments need to be transparent, inclusive and sustainable,
following international guidelines for responsible agriculture
investment (CFS, 2014), e.g., by applying the OECD-FAO
Guidance for Responsible Agricultural Supply Chains
(OECD/FAO, 2016).
Relative alignment of agriculture and water policies in OECD
countries with the OECD Council Recommendation on Water
Source: Gruere, Shigemitsu and Crawford (2020)

8. • Scaling up water financing is needed for agriculture to
meet changing food demand and to respond to societal
objectives in the context of growing water risks.
• First estimates show that a minimum USD 43 billion/yr is
spent by governments on agriculture and water, however
not all of that amount is aligned with these objectives
• Investments should target gaps, avoid pitfalls and be
coupled with improved policies to ensure that they lead
to responsible and sustainable outcomes.
Conclusions
Source: OECD (2017)

9. Thank you for your attention!
9
https://www.shutterstock.com/video/clip-150877-walking-on-rice-field-rain https://ec.europa.eu/jrc/en/news/minimum-quality-requirements-water-reuse-agriculture https://www.videoblocks.com/video/cattle-in-the-meadow-drinking-water-from-the-trough-hqbz1sezgivaj7dyi
Email: Guillaume.Gruere@oecd.org
Web: https://oe.cd/watagr || https://www.oecd.org/water/

10. • CFS (2014), Principles for Responsible Investment in Agriculture and Food Systems, Committee on World Food Security
(CFS), Rome, http://www.fao.org/3/a-au866e.pdf.
• FAO (2020), The State of Food and Agriculture 2020: Overcoming water challenges in agriculture, Food and Agriculture
Organizations of the United Nations (FAO), Rome, http://dx.doi.org/10.4060/cb1447en.
• Gruère, G., M. Shigemitsu and S. Crawford (2020), "Agriculture and water policy changes: Stocktaking and alignment with
OECD and G20 recommendations", OECD Food, Agriculture and Fisheries Papers, No. 144, OECD Publishing, Paris,
https://doi.org/10.1787/f35e64af-en.
• OECD (2017), Water Risk Hotspots for Agriculture, OECD Publishing, Paris. https://doi.org/10.1787/9789264279551-en.
• OECD (2020), "Agricultural support estimates (Edition 2020)", OECD Agriculture Statistics (database),
https://doi.org/10.1787/466c3b98-en .
• OECD/FAO (2016), OECD-FAO Guidance for Responsible Agricultural Supply Chains, OECD Publishing, Paris,
https://dx.doi.org/10.1787/9789264251052-en.
• OECD/FAO (2020), OECD-FAO Agricultural Outlook 2020-2029, OECD Publishing, Paris/Food and Agriculture Organization
of the United Nations, Rome, https://dx.doi.org/10.1787/1112c23b-en.
References