“A great book which should wake up humankind!” –Klaus Schwab, World Economic Forum
Chapter 2. Signs of Stress: Climate & Water: Facing Water Scarcity
An estimated 70 percent of the water consumed worldwide, including that diverted from rivers and pumped from underground, is used for irrigation, while some 20 percent is used by industry and 10 percent for residential purposes. In the increasingly intense competition for water among these three sectors, the economics of water do not favor agriculture. In China, 1,000 tons of water can be used to produce 1 ton of wheat, worth perhaps $200, or to expand industrial output by $14,000—70 times as much. In a country that is desperately seeking economic growth and the jobs it generates, the gain in diverting water from agriculture to industry is obvious. The economics of water also helps explain the increasingly common sale of irrigation water rights by U.S. farmers in the West to cities.67
Urbanization, industrialization, and ecosystem maintenance also expand the demand for water. As developing-country villagers, traditionally reliant on the village well, move to urban high-rise apartment buildings with indoor plumbing, their residential water use can easily triple. Industrialization takes even more water than urbanization.
Rising affluence in itself generates additional demands for water. For example, as people move up the food chain, consuming more beef, pork, poultry, eggs, and dairy products, they use more grain. A U.S. diet rich in livestock products requires four times as much grain per person as a rice-based diet in a country like India. Using four times as much grain means using four times as much water.68
Once a localized phenomenon, water scarcity is now crossing national borders via the international grain trade. The world's fastest-growing grain import market is North Africa and the Middle East, an area that includes Morocco, Algeria, Tunisia, Libya, Egypt, and the countries eastward through Iran. Virtually every country in this region is simultaneously experiencing water shortages and rapid population growth.69
As the demand for water in the region's cities and industries rises, it is typically satisfied by diverting water from irrigation. The loss in food production capacity is then offset by importing grain from abroad. Since 1 ton of grain represents 1,000 tons of water, this is the most efficient way for water-deficit countries to import water.
In 2000, Iran imported 7 million tons of wheat, eclipsing Japan—for decades the world's leading wheat importer. In 2001, Egypt is also projected to move ahead of Japan. Iran and Egypt, each with nearly 70 million people and adding more than a million a year, are both facing acute water scarcity.70
The water required to produce the grain and other foodstuffs imported into North Africa and the Middle East in 2000 was roughly equal to the annual flow of the Nile River. Stated otherwise, the fast-growing water deficit of this region is equal to another Nile flowing into the region in the form of imported grain.71
It is now often said that future wars in the region will more likely be fought over water than oil. Perhaps, but given the difficulty in winning a water war, the competition for water seems more likely to take place in world grain markets. The countries that will "win" in this competition will be those that are financially strongest, not those that are militarily strongest.72
The world water deficit, as measured by the overpumping of aquifers, grows larger each year, making it progressively more difficult to manage. If countries everywhere decided this year to halt overpumping and to stabilize water tables, the world grain harvest would fall by some 160 million tons, or 8 percent, and grain prices would go off the top of the chart. The longer countries delay in facing this issue, the wider the water deficit becomes and the greater the eventual adjustment will be.
Unless governments in water-short countries act quickly to stabilize population and to raise water productivity, their water shortages may soon become food shortages. The risk is that the fast-growing ranks of water-short countries with rising grain import needs, including potentially the population giants China and India, will overwhelm the export capacity of the grain-surplus countries—the United States, France, Canada, and Australia. And this in turn will destabilize world grain markets.
The water situation is deteriorating rapidly in many countries, but it is the fast-growing water deficit in China that is likely to affect the entire world. The combination of 12 million additional people per year, urbanization, a projected economic growth rate of 7 percent, and the continuing movement of Chinese consumers up the food chain virtually ensures that the demand for water will continue to outstrip the supply for years to come. These trends also suggest that China's need for imported grain could soon start to climb, much as its imports of soybeans have in recent years. Between 1995 and 2000, China went from being self-sufficient in soybeans to being the world's largest buyer, importing over 40 percent of its supply.73
Water shortages can be ameliorated by raising water prices to reduce wastage and thus increase the efficiency of water use, but in China this is not always easy. An announcement in early 2001 that the government was planning to raise water prices in stages over the next five years was a welcome step in the right direction. But for Beijing, this option is fraught with political risks because the public response to increasing the price of water, which often has been free in the past, is akin to that when gasoline prices go up in the United States.74
Other recent announcements from Beijing indicate that the government has officially abandoned its long-standing policy of grain self-sufficiency. China has also announced that, in the intensifying competition for water, cities and industry will get priority—leaving agriculture as the residual claimant.75
As noted, China is not alone in facing water shortages. Other countries where water scarcity is raising grain imports or threatening to do so include India, Pakistan, Mexico, and dozens of smaller countries. But only China—with nearly 1.3 billion people and an $80 billion annual trade surplus with the United States—has the near-term potential to disrupt world grain markets. In short, falling water tables in China could soon mean rising food prices for the entire world.76
67. Irrigation water information from WRI, op. cit. note 4, p. 64; calculation based on 1,000 tons of water for 1 ton of grain from FAO, op. cit. note 65, on global wheat prices from International Monetary Fund, International Financial Statistics (Washington, DC: various years), and on industrial water intensity in Mark W. Rosegrant, Claudia Ringler, and Roberta V. Gerpacio, "Water and Land Resources and Global Food Supply," paper prepared for the 23rd International Conference of Agricultural Economists on Food Security, Diversification, and Resource Management: Refocusing the Role of Agriculture?, Sacramento, CA, August 10-16, 1997.
68. Average grain consumption per person derived from USDA, op. cit. note 12, and from United Nations, op. cit. note 4.
69. WRI, op. cit. note 4, p. 274.
70. USDA, op. cit. note 12.
71. Ibid.; this shows grain imports alone into the region of over 63 million tons, equivalent to 63 billion tons (63 billion cubic meters) of water, nearly the 74 billion cubic meters of usable flow of the Nile River reported in Postel, op. cit. note 15, p. 146.
72. Morris and Smyth, op. cit. note 52.
73. World Bank, op. cit. note 51; Chinese soy import history from USDA, Foreign Agricultural Service, Oilseeds: World Markets and Trade, July 2001, p. 22.
74. Liang Chao, "Officials: Water Price to Increase," China Daily, 21 February 2001.
75. While officially adhering to a grain self-sufficiency policy, China has redefined "self-sufficiency" as importing up to 20 percent of its grain supplies, in National Conditions and Analysis Research Group, Agriculture and Development-A Study of China's Grain and Agricultural Development Strategy in the 21st Century, National Conditions Report No. 5 (Beijing: Chinese Academy of Sciences, March 1997); water preference to industry in Crook and Xinshen, op. cit. note 55.
76. China's trade surplus from Geoff Hiscock, "Weighing Up the Impact of Sino-U.S. Trade Sanctions," Cable News Network, 16 April 2001.
Copyright © 2001 Earth Policy Institute