Regional Office for Asia and the Pacific

Hiroyuki Konuma

FAO Regional Representative for Asia-Pacific

KEYNOTE ADDRESS
 by 
HE CHANGCHUI
FAO Assistant Director-General and Regional Representative for Asia and the Pacific 
delivered to the

First South East Asia Water Forum

Empress Hotel Chiangmai, 17-19 November 2003




Ladies and gentlemen,
Dear participants,

It is an honor and a pleasure for me to open this Water and Food session, convened jointly by FAO and the International Water Management Institute.

After Kyoto, we welcome this Forum’s emphasis on putting policy into practice. For this, a regional and national focus is appropriate: our region presents unique characteristics but also considerable diversity: we will need to understand the challenges faced by the region but also to build on the strengths and capacity present in our political, scientific and professional community as well as our rural population, which has been managing water resources for its livelihood for thousands of years.

We thank governments, organizations and individuals that have prepared the case studies for this session. We trust that they will help us identify main issues and best practices, and formulate proposals for action and national and regional cooperation related to water and food.

Compared with other regions, Southeast Asia is relatively water-rich. It is also one of the most populated. It is still predominantly rural: only one third of the total population lives in cities, but urban population is expected to increase by about 3 percent annually. More than 90 percent of total freshwater withdrawals go to agriculture, while the rest go to household and industrial uses.

Meeting the growing needs of other sectors while protecting the environment, assisting the poor in lifting themselves out of poverty and maintaining or enhancing food security is an enormous challenge but we do not believe that the solution can only consist in diverting water away from farmers and allocating it to other sectors.

Agriculture contributes to the present water crisis, by the water it uses but also by the degradation of water quality induced by unsustainable agricultural practices: only by helping agriculture and farmers move away from those practices while fulfilling their aspirations to development will we be able to solve the present water crisis. Agriculture also needs to be part of the solution.

Conflicts between agriculture and other sectors, or between farmers and environmentalists, do exist. But solving them will require dialogue and genuine cooperation and partnerships.

Water and food security are intimately connected. Many of the 800 million people in the world who go to bed hungry live in water-scarce regions. 505 million of these poor live in Asia. Water is required to grow food and nature does not always supply water to the crops in the right amount and at the right time. Water development, management and conservation are critically important for food production and food security. Water eco-systems also significantly contribute to food security by the production of aquatic resources.

Water control is essential to produce food and alleviate poverty

In the last 40 years, agricultural production has increased at a higher pace than population, and contributed to reduce the number of undernourished people. To succeed, the green revolution relied on improved agricultural practices and inputs, but would not have been possible without guaranteed access to water, and major irrigation programmes.

Rainfed and irrigated agriculture have to make significant productivity gains in order to feed a growing population and to reduce the number of under-nourished people. The balance between rainfed and irrigated production is critical. Irrigated agriculture is practiced on 20 percent of all arable land but accounts for 40 percent of all crop production and almost 60 percent of cereal production in developing countries. The trend toward more consumption of animal protein will translate into higher demands for fodder crops too.

Enabling agricultural systems to be more responsive to these changing demands, applying technology and the strategic targeting of investment in water control, will be key in closing nutrition gaps.

Irrigation can make a very important contribution to reducing hunger and poverty by raising crop yields, allowing intensive land use, and adding reliability to food supply systems and farm incomes. However, if water is taken out of the range of farm inputs, the pyramid of rural assets will quickly collapse. It is therefore imperative that attention is paid to water’s critical role in poverty alleviation, food security and economic growth.

The most dramatic effect of irrigation has been to keep food prices down to levels affordable to the poor. Without more irrigation many countries will be unable to achieve the agricultural and economic growth rates required to achieve food security and reduce poverty.

FAO projects that agricultural water withdrawals in 93 developing countries will increase by 14 percent from 2000 to 2030 to meet future food production need and a net global expansion of arable irrigated land of some 45 million ha. Seventy percent of the expected increase in cereal production is attributed to irrigation. Thus, there is no major alternative to irrigation. Under existing practices, the scope for improving agricultural water use efficiency is however limited.

With competition for land and water resources intensifying, it is important that agriculture can negotiate continued access to the water resource base, but makes a concerted effort to derive more value per cubic metre of water.

The FAO projection is in contradiction of the expectation that water diverted for irrigated agriculture should not rise over that used in the year 2000 (as maintained in No Water, no Future - A Water Focus for Johannesburg). This statement does not help us examine the comparative advantage in irrigated or rainfed agriculture, nor does it help us solve local and very real problems with food security, nor does it assist us in negotiating access to resources to deal with poverty alleviation and economic growth.

The calls to meet environmental targets for both amenity and ecosystem benefits have also strengthened markedly in the last decade. In this sense irrigated agriculture is under pressure to perform as a service to agriculture, not as an end in itself.

For East Asia, FAO expects that a very modest increase in irrigation efficiency and no overall increase in water withdrawals as a percentage of renewable water resources will allow the region to meets its food security objectives.

This does not mean we will need to make only modest efforts in the irrigated sector. On the contrary, changes will need to be very significant. These figures also only represent averages. At the national, basin or community levels, the situations may be very different.

Having noted the importance of water in food production, it is ironic there has been such a significant fall in the share of agricultural lending by international institutions. This decline has been echoed in the national budgets. Countries with high levels of hunger are also those in which public expenditure on agriculture does not reflect the importance of the sector.

The downward trend in agricultural commodity prices has compounded the effect of the drop in support to agriculture. World prices for agricultural export commodities fell by 47 percent in real terms between 1965 and 1998.

Still more difficult for developing countries to cope with is the high volatility of food commodity prices. Price fluctuations negatively affect the economy and the design and implementation of sound fiscal, monetary, trade and development policies.

However, aggregate investment in irrigation has not declined as drastically as it appears. During the past two decades, resources dedicated to user participation and promoting the revival in indigenous techniques and traditional knowledge have increased. This has led to cheaper, more effective land development.

Contrary to a widely held view, returns on investments in irrigation are generally comparable to alternative investments. Moreover, most analyses fail to take the positive indirect social and environmental effects of irrigation into account. Future investments in irrigation will be mainly for rehabilitation and upgrading and will benefit from the large amount of sunk costs in existing schemes, enabling higher rates of return.

Irrigation can yield adequate return: private investment provides all the financing for about 20 percent of the total area currently irrigated in the world. The share of private investment in the remaining 80 percent is half of the total investment.

Overall, the experience of the World Bank in irrigation lending has been relatively good, with 67 percent of evaluated irrigation projects rated satisfactory. When projects are weighted by size of area served, 84 percent are rated satisfactory.

The average evaluation economic rate of return is 15 percent per project and 25 percent per area served. But here is ample room for improvement.

Irrigation has, however, often failed to live up to its expectations. Many issues affecting the success of investments are not technical, but social and institutional or related to macro-economic policy.

Irrigation schemes have fallen into disrepair because of the practical difficulties of ensuring – and paying for – maintenance. But farmers may find themselves worse off if water supplies become unaffordable or unavailable.

Large areas are also going out of cultivation because of waterlogging and rising salinity. Human health needs to be safeguarded from the risk that irrigation may create habitats for disease vectors.

The response to these problems is not to stop investing in irrigation but to approach project design and management with a good appreciation of the conditions for success and the comparative advantage in servicing clearly defined markets.

Intensive agricultural water use has produced massive environmental externalities, on wetlands for instance, which are in themselves highly productive and provide important environmental services. Intensive use of fertilizers, herbicides and pesticides can damage surface and groundwater irrevocably.

Agriculture has to shoulder these environmental responsibilities much more actively if it is to continue to justify its allocation of limited water resources.

As governments are forced to roll-back their investments in irrigation and their role as operators of infrastructure we are now witnessing attempts to transfer state-owned assets to water user associations or private operators. Such transfer of assets and management functions may work when private sector has the capacity to take on liabilities and risks.

However in many countries the incentives for user involvement in joint management of infrastructure are not clear. At the heart of the problem are often the systems of land tenure and water use rights. These have to be transparent, stable and transferable if farmers are to engage with the resources and secure term finance for individual or collective investment.

In fact, the past 50 years has witnessed a boom in private investment in individual groundwater pumping. This often occurs in response to poorly performing surface irrigation delivery and is not considered an official, regulated asset. Farmers want good service and groundwater has satisfied that demand: but we are now seeing the impacts of unregulated pumping. Accessible groundwater buffers are now being depleted rapidly and impacting the poor who are the first to lose access as groundwater levels decline.

International and national financing flows for investment in water resources development may take at least four forms, comprising of: (i) domestic public finance; (ii) private/corporate; (iii) ODA through multilateral and bilateral loans and grants; (iv) philanthropic contributions from the private sector and individuals; and (v) alternative/innovative finance through emerging and new mechanisms or the adjustment of existing mechanisms.

Any of the above sources may have links with domestic public and private resources at local and community level. Domestic finance mobilization will be also associated with non-monetary investment by rural people.

It is our experience that the response of the private sector in generating finance for improved water control can be dynamic where it is not constrained by arbitrary limits or outdated legislation. The incentives for individuals and user groups to invest in water control will always be there when clear comparative advantage exists in servicing local markets in food staples and export markets in cash crops.

In such cases, the financing mechanisms have to match the medium to long term nature of investment and also the sophistication of the market pull. In this respect a strategic mix of micro-credit for small holders, commercial credit for emergent and large-scale farmers and concessional finance for large scale public infrastructure needs to be aimed for. The inter-play between these types of investment is vital in increasing the sector’s poor performance.

Agriculture will continue to be the main water user: improved water use in irrigated and rainfed agriculture will have a direct impact on local and regional water demands. Allocations of water out of agriculture to other higher utility uses – municipal supplies, environmental requirements and hydropower generation are already taking place, but there is still scope for these allocations to be optimized in economic and environmental terms.

Closing gaps in food needs while also making room for transfers will involve a shift in approach from a supply, or input-driven activity, to a much more demand responsive activity. Irrigation institutions need to adopt a service orientation and improve their performance in different areas, including the adoption of new technologies, modernizing infrastructure, application of improved administrative principles and techniques and promotion of participation of water users. Irrigation sector institutions need to link the central task of providing irrigation services to agricultural production services and to integrate into basin level management.

Principles of irrigator participation, financial autonomy, partial and progressive privatisation and corresponding government withdrawal are gaining widespread acceptance and will enhance the viability of investments in the rehabilitation and upgrading of existing schemes or in new schemes.

Adaptive management

Irrigation management must adapt to the new reality, but often, existing command and control management styles are not adapted to the farmers’ needs. Management must be flexible and contextual, able to adapt to the needs of different scales and situations.

The scope of policy intervention to improve agricultural water use is broad. While globally, food production has kept pace with demand, many problems of local food insecurity and vulnerability to drought persist. Overcoming constraints and allowing poor marginalized populations to break out of poverty will require changes in the way economies and societies organize themselves around water in agriculture.

Three areas of policy and investment intervention can be identified.

At micro level, farmers and households need to be assured stable engagement with land and water resources. Systems of land tenure and water use rights need to be flexible to promote the realization of comparative advantage in food staples and cash crops.

But they need to be matched by access to rural credit and finance that are not just linked to annual repayment or harvest production, but allow longer term finance of farm inputs. This will have to be complemented by the dissemination of technology and good practice in water control and agricultural productivity.

At irrigation scheme level, modernization of both infrastructure and management, as already mentioned, offers tangible scope for extracting the full value out of sunk costs and reducing pressure on public funds.

At macro level, government policy and investments need to be aligned to allow local markets for agricultural produce to become more effective in meeting local demands. This will require investment in the key public goods such as roads and storage but will also involve a more progressive role for large scale private investment.

It is important to look at all three areas in parallel and stage investments as demands grow and the existing asset base is realized.

Looking on the technological aspects of rainfed production, there are several measures for improving its productivity. Soil and water conservation techniques, selecting crops with deeper rooting systems and crops that requires less water for the same nutrition value, water harvesting for supplementary irrigation to avoid devastating effects of droughts are the main types. Water storage can be in tanks, ponds, cisterns and earth dams. Groundwater is also a form of storage.

Integrated pest management can also significantly reduce the pollution of surface and groundwater bodies by agricultural chemical inputs.

I have called for a more responsible management of irrigated agriculture that faces and addresses its potential negative consequences. The first impact is due to overuse or misuse of water. Overuse as water is consumed. Misuse as the clean water abstracted is often contaminated with salts, pesticides and herbicides. In doing so, irrigated agriculture deprives downstream users, including the environment, of water that could be put to beneficial use.

Poor management of irrigation and lack of drainage creates rising water tables, but drainage also has drawbacks. Better drainage upstream causes larger downstream flows, increasing flood risks. By pumping more water than is replenished each year, groundwater levels are falling which reduces future food supply and affects other water users.

Poorly designed and mismanaged irrigation contributes to health hazards as contaminated water is used for washing, drinking and irrigation and water-borne diseases such as malaria and bilharzia. In addition, there are of course also impacts on people and the environment associated with large dams.

To control the disposal of irrigation return flows and to save water for other uses, four categories of measures can be distinguished: 
•   water conservation, 
•   drainage water reuse, 
•   drainage water treatment. and
•   safe disposal of drainage water.

The ecology of water-related vector-borne diseases is well known: adequate planning and management can reduce negative impacts.

FAO and particularly the regional office for Asia and the Pacific are engaged in programmes to assist member countries in all the areas mentioned earlier, including through one programme that reflects our focus on water and food security, FAO’s Special Programme for Food Security. I will not describe it here as I understand that a case study on the SPFS in Indonesia will be presented this afternoon. The SPFS is on-going in Laos, Cambodia and Indonesia. Thailand and Viet Nam have supported the programme through South-South Cooperation.

Governments in the region and the international community are committed to development goals with pressing humanitarian implications as well as integrated water resources management. Land and water productivity are primary elements of strategy to achieve these goals. But the productivity of these resources needs to be stimulated through a judicious mix of public and private investment.

Substantial production increases, and diversification of farm income can only be achieved if conditions of optimal water supply can be secured through the introduction of appropriate technologies for irrigation, water conservation, drainage and flood control.

While the case for investment may be clear, conventional approaches to investment have found limited application. There is a need to expand the investment space and look at innovative approaches to raising and channeling public and private investment flows.

Rainfed agriculture also needs to do its part, conserving soil and water resources and moving towards more eco-friendly approaches.

Likewise, the livestock and agro-processing industries must also reduce their environmental impact and become good water citizens.

While we are committed to facilitate these changes, we also resolutely support the transition towards IWRM as it a necessary condition for empowering rural communities to unlock the productivity of agricultural production. IWRM is also essential to facilitate the recognition of the contribution of aquatic resources to local and national food security and economy and of the multiple roles of agricultural water use.

I hope that the case studies and your deliberations will assist in defining a concrete agenda for change and identifying and perhaps initiating here specific actions that will have a positive impact for farmers, the population in general, and the health of the aquatic eco-systems. I have no doubt that you will be able to make a significant contribution.

Rest assured that, as far as FAO is concerned, we will continue to work actively with our partners to reach the regional goals of food security, poverty alleviation and IWRM. Ladies and gentlemen, Dear participants, Thank you for your attention.