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The Arab region has grappled with water scarcity for centuries. But population growth, rapid urbanization, changing diets, forced displacement and climate change are posing new, more urgent water challenges that threaten sustainable development, food security and stability.

At the same time, the region has a unique opportunity to harness emerging technological and financing innovations to tackle these challenges.

These are some of the findings in Towards a new generation of polices and investments in agricultural water in the Arab region: fertile ground for innovation, a new study by the Food and Agriculture Organization of the United Nations (FAO) and the International Water Management Institute (IWMI).

Prepared for a high-level ministerial meeting on agricultural water policies and investments at FAO’s Near East and North Africa Land and Water Days in Cairo, the report provides broad strategic guidance to policy-makers, international financing institutions, development partners and the private sector.

IWMI researcher Edoardo Borgomeo, one of the study’s authors, underscored the importance of accelerating the region’s agricultural transformation, given the sector’s importance in supporting employment and gross domestic product.

“Investing in agricultural water can yield significant benefits by creating jobs, revitalizing rural areas and building resilience to water scarcity,” he said.

New generation of policies and investments

The Arab region’s growing population, coupled with rising incomes and changing lifestyles, will increase the demand for food in the coming years, including water-intensive food products.

According to the study, delivering on the Sustainable Development Goals (SDGs) by 2030 – especially zero hunger – will be difficult unless agricultural water management issues are addressed and progress is made on the water-related SDGs.

The study advocates for a new generation of policies and investments built on the principles of coherence, sustainability, innovation, inclusiveness and private sector engagement.

In applying these principles, the study suggests three strategic directions going forward.

The first is to value water. That entails harnessing innovation and technology to safeguard water for multiple uses, considering water allocation reform, adjusting water service fees, modernizing existing irrigation systems and investing in their flexibility.

The second is to accelerate the agriculture sector’s transition by promoting efficient, climate-resilient agrifood value chains, reducing food loss and waste, building capacity and fostering market competitiveness. The study emphasizes the need to remove policy instruments that distort agricultural markets and impede the creation of supportive business environments for investment in modern, high value-added agriculture.  

And the third is to target efficient social protection measures such as cash transfer based social safety nets instead of price distorting interventions. The study highlights that current policies focusing on lowering consumer prices for specific food products have not yielded the desired results: to ensure healthy diets while tackling the region’s high rates of malnutrition and obesity.

One of the innovative aspects of the study is a call for governments to use efficient policy instruments to address social protection issues and contribute to food security in the Arab region.

“Such a strategy would require a broader view of how to address the water-food nexus and an understanding that government institutions overseeing safety nets and social protection programmes need to be part of the solution. This goes beyond just focusing on agriculture sector policies,” said FAO senior economist Nuno Santos, one of the study’s authors.  

“Alternatively, what we see today is an attempt to provide unsustainable access to water at a low price, to make specific commodities artificially cheap for consumers while simultaneously providing some type of income support to farmers. This often results in accelerated environmental degradation and nutritional and health problems at an enormous cost to society,” he added.

Greening the sector

The study quotes existing research, suggesting that improving the way water is stored and delivered to irrigation water users could result in an estimated USD 7-10 billion in welfare gains per year – roughly 0.5 percent of regional gross domestic product.

Broader efforts to transform and green the region’s agriculture sector could also add ten million new jobs to the existing 33-million strong agricultural workforce.

The study calls for exploring innovative technologies. Wastewater reuse, desalination and water harvesting could provide new sources of water. The use of solar energy for groundwater pumping, on the other hand, could increase irrigation productivity and reduce emissions, though it needs to be implemented with appropriate governance mechanisms.

Some Arab countries, especially in the Gulf, are already taking steps to build water resilience. They are improving climate-smart and water-saving practices and adopting controlled-environment agricultural technologies, like hydroponics that reduce the need for land and water. 

But more public sector investment is needed to modernize irrigation infrastructure in the region, according to the study.

And while public spending is still the main source of agricultural water funding, it is often insufficient.  Innovative financial mechanisms, such as blended finance and de-risking mechanisms, need to be promoted to support the region’s efforts towards improved agricultural water management. Including greening aspects in agricultural water investments and leveraging the growth in green finance can be a winning strategy.

FAO Investment Centre Director Mohamed Manssouri noted the growing awareness among national governments of the importance of enabling environments for private investment.

“Private sector engagement is key to making the Arab region’s agriculture sector greener and more resource-efficient and productive, whether it is through the development of digital technologies for greater water productivity, for example, or the creation of public-private partnerships for building, operating and maintaining irrigation and drainage infrastructure, or public-private dialogue for better policy-making,” he said.