In a much discussed subject, three points are made. First, trade can make a substantial impact on water security policies. This means recognition of this aspect in the World Trade Organisation (WTO) negotiations so that sustainability arguments are built in the trade agenda. Freer trade can be water conserving. The second is that the organisational and financial support systems for community based organisations (CBOs) are still not a part of the mainstream policy reform agenda. This has local, national and global implications for policies. Examples are given from India but the implications are global. The third is that standards for human consumption needs of water are somewhat opaque and this needs attention both for resource conservation and basic needs millennium development goals (MDGs).
Agricultural Trade is a Tool of Water Security in India
Last month Ambassador Jayanta Dasgupta warned against any ‘surprises’ in the draft final texts to be issued by the chairs in April for the WTO negotiations. India lays considerable store on agricultural trade as a policy issue and in the past has seen its trade enhancing stand jeopardised in last minute negotiations. There is at the present considerable synergy in different policies for pushing the varied agroclimatic regimes of India in pursuing the objective of a more competitive agriculture, oriented to national and global markets. Agroclimatic policies base themselves on the resource regime and carrying capacity of soil, climate and water and therefore are trade and specialisation enhancing. The Indian farmer has demonstrated the ability to grow more grains. Diversification and widespread agricultural growth, together with targeted distribution policies creates the incomes to achieve the objective of food security.
There is a long history to Ambassador Dasgupta’s statement. It was interestingly on the growth aspects that the drafts after Doha Ministerial Declaration laid a basis for further discussion. This was important to India, since by then it was committed to trade as a policy tool. In the growth aspects, many of India’s general propositions were acknowledged in the negotiations. It was recognised that there would be great difficulty in giving direct income support to farmers but there was full recognition that there had to be support for community based institutions of farmers and producers associations, for land and water development, development of markets, agroprocessing and diversification of agriculture to support broad based development of agriculture. By the time the Cancun meeting approached, India having made its position clear in the committee on agriculture was willing to negotiate around the draft prepared by the special session of the committee. On 17 February 2003, the chairman of the special session of the committee on agriculture of the WTO released the first draft of modalities for further commitments on negotiations on agriculture. This was based on work carried out following the mandate at Doha in March 2002 in which India had kept space for its interests.
For example, on state trading enterprises. Since many Organisation for Economic Cooperation and Development (OECD), countries and others have moved away from direct government budgetary subsidies to working through commodity boards and similar arrangements – bodies that have huge reserves of money – the effort is to bring such interventions under some discipline. But the Indian price intervention programmes were also through state trading enterprises and while all the disciplines did not apply to developing country members, they were required “to ensure that exports of a product by a governmental export enterprise do not take place at a price less than the price paid by such an enterprise to the domestic producers of the product concerned”. India was willing to negotiate on such interventions but wanted the growth aspect to remain intact.
The draft provided, for example, subsidies for concessional loans through established credit institutions or for the establishment of regional and community cooperatives; capacity building measures with the objective of enhancing the competitiveness and marketing of low income and resource poor producers; government assistance for the establishment and operation of agricultural cooperatives; government assistance for risk management of agricultural producers and savings instruments to reduce year-to-year variations in farm incomes.
Paragraph 13 of the Doha Ministerial Declaration (WT/MIN(01)/DEC/1) says, “We agree that special and differential treatment for developing countries shall be an integral part of all elements of the negotiations and shall be embodied in the schedules of concessions and commitments and as appropriate in the rules and disciplines to be negotiated, so as to be operationally effective and to enable developing countries to effectively take account of their development needs, including food security and rural development. We take note of the non trade concerns reflected in the negotiating proposals submitted by members and confirm that non trade concerns will be taken into account in the negotiations as provided for in the agreement on agriculture”.
India was willing to treat the earlier drafts as a base for discussion, since its interests were in laying the foundation of a more open trade as part of a widespread growth process. Issues of rural growth, employment and food security were important to it in the emerging trading world. The issue was not grain, but access. You need money to buy food, even if your farmers produce it and your shops have it. You need agricultural growth, not to grow grain, but to create a source of income on a widespread basis. There have to be well identified shelves of a large number of small projects on land, water and other infrastructure projects available for financing. Financial institutions have to design structures such that community collateral by farmers and their organisations is possible for viable projects. Self help financing groups are only one such group. Farmer organised and run market and rural infrastructure facilities, land and water development groups, local infrastructure projects, in road or communication sectors, productionising products developed in research and development institutions, training for production with improved techniques and market development schemes would be other examples. But the draft was at short notice superseded by the European Economic Community (EEC) United States (US) Ministerial draft. The draft ministerial text did not reflect the concerns of the earlier negotiations and followed the US-European Union (EU) proposals in the main. This time there was substantial preparation by countries in terms of interests and in addition to China and India with their livelihood concerns – countries like Brazil and South Africa had their trading agendas. The collapse at Cancun was inevitable, but it is interesting that in the subsequent discussions, the issues raised are back on the table again. This was evident at the London meeting (May 2004) organised by the US and later. The G5 earlier, US, EU, India, South Africa and Brazil and later developments show this.
The need for not only avoiding surprises, but also for making progress is important. These issues are important for water security because trade in the context of sustainable agroclimatic scenario is water saving.
CBOs and Systems
The argument that each agroclimatic region has its own solutions is well known. It would suffice to say that a framework plan with targets, best practice cases, policies and threats anticipated, exists, sadly only on paper. Its developments have been professionally reviewed. The ‘big ticket’ central sector schemes now demand as preconditions, responsibility and empowerment mechanisms at local levels.
There has been a revival of these ideas in India’s Eleventh Plan. Many of the Plan’s blue ribbon schemes are in the agroclimatic mould. An important innovation during the Plan was the new Rashtriya Krishi Vikas Yojana (RKVY), which was designed to give more flexibility to the states and provide incentives for them to spend more on agriculture and to do so on the basis of properly designed district and state plans. The state agricultural plan, it said, should be based on (these initial) district plans, subject to reasonable resources from its own plan and adding those available from the centre, aimed at achieving the state’s agricultural growth objective, keeping in view the sustainable management of natural resources and technological possibilities in each agroclimatic region. This plan should then determine each district’s final resource envelope, their production and the associated input plan.
The recent mid term appraisal of the Eleventh Plan has a sober review of this approach. It says, “States like Madhya Pradesh, Uttarakhand, Kerala, Tripura, Punjab, and West Bengal have adopted the approach to some extent while others are still dragging their feet in this regard”. Again. “Comprehensiveness and convergence was the other important objective of the Comprehensive District Agricultural Plan (C-DAP) preparation. Madhya Pradesh, Uttarakhand, Haryana, Andhra Pradesh and Himachal Pradesh have achieved this objective to some extent. But convergence of non governmental programmes has been invariably omitted by the states” (Government of India (GoI), 2010, p.76). A rudimentary district agricultural plan exists for each district, but an Institute of Rural Management Anand (IRMA) State of Panchayats Report for 2008/09 did not find any district very savvy on such a plan. So there may be some disconnects to remedy.
As regards banking finance for projects in the agroclimatic approach, in 1990, the National Bank for Agriculture and Rural Development (NABARD) had introduced a concept of agro climatic planning in its lending but that was allowed to get into disuse. This concept is being reintroduced. In 1990 NABARD was to write its annual report on financing agroclimatic plans, but under the V P Singh and Narasimha Rao governments, the entire system was dismantled. The earlier NABARD report was in the old style, funding each programme. NABARD’s new thinking is state of the art in the rural development game. It sees its role as developing refinancing for financial products to suit each regions agricultural priorities leaving the state funding to the Plan. This is fascinating and can really go far. Very few private and no foreign banks, apart from the Dutch cooperative bank, Rabo, give rural credit. Some states have worked it out for example Maharashtra has an easy scheme to finance watershed development, ridge furrows, seeds for tree crops – even expensive ones as in Bt and drips for the tree growing cycle for horticulture, but that is an exception. There can be many new needs. Fodder crops, money for innovative water management, combinations of farm ponds and drips, piped delivery systems, certifying organics and meeting the preliminary costs of leaching the soils of accumulated muck and so on. The usual examples are to the contrary, producer groups incorporated in the companies act who do not get working capital since the rules are only for cooperatives.
Water for Human Consumption
On the demand side, techniques of estimating water demand for industry and agriculture are well known and are integrated with market and supply data. There is much less clarity on water requirements for personal consumption. Domestic use of fresh water is relatively small and yet critical from welfare angles and is often counted as a basic need. According to World Resources Institute (WRI), agriculture accounts for 69 per cent of fresh water withdrawals on a global plane, industry 23 per cent and domestic use 8 per cent (WRI, 1998). There are regional variations with industry, the largest user in developed countries. In 1995, domestic use accounted for 350 cubic km of fresh water (Shiklomanov, 2000). In Africa, per capita withdrawals for personal use were only 47 lt per day, while this figure was 85 for Asia, 334 for the United Kingdom (UK), and 578 for the US. Peter Gleick proposes an international standard of “an overall basic requirement of 50 lt per person per day” as a minimum need for drinking, bathing, sanitation and cooking. According to him, in 1990, 1 billion people in 55 countries did not meet this standard. Malin Falkenmark suggests a standard of 100 lt per day for personal use in developing countries. However, there is little unanimity in these estimates. It has been shown that the minimum water requirement for basic needs ranges from 400 to 2000 cumet/percaput annual according to different experts (Rosegrant and Ringler, 1998). Therefore, this is obviously an area for further work.
In recent policy discussions, a demand driven approach for water planning and policies has been suggested. The point has been well made that in service provision, centralised and bureaucratic methods and procedures fail. At the same time the basic need approach has great votaries for drinking water as seen above. Most sensible policy studies see the need for a ‘dual’ approach. Drinking water for poor populations is seen as a minimum need, within the framework of market driven systems. Votaries of market driven systems also see the need for ‘transitional strategies’ (World Bank, Allied, 1999). But more astute observers have been seeing the practical difficulties of transitional strategies. World Bank consultant, R RIyer, a former water resources secretary, saw water literally leaking in a transitional strategy (Water Roundtable, World Bank, May 2000, Delhi).
A way out may be a strategy which models a simultaneously functioning market and a rationing system for water. The real issue would be the design of an operator – a contractor working under public supervision or a community body working in a transparent system. This needs careful thinking and would vary around local conditions. A parallel to this would be a dual demand system, which has both prices and quantitative allocations built in and can also work with income distribution categories. Such systems have been built earlier, in transitional strategies for public distribution systems and can be adapted to water markets.
As regards demand for water, the focus has to change from an exclusive emphasis on normative studies to a much greater focus on study of behavioural parameters and the expected changes in demand arising as market phenomenon get greater attention. However policy will also have to be concerned with both the basic needs of water of poor people and the need of informed directions of water systems as markets play a larger role. The role of hybrid systems that can illuminate transitional paths will be particularly rewarding. There is a tradition of such work in policy reform strategies of food security systems, particularly, those that phase out non merit subsidies and these should be integrated with work in the water sector. As noted earlier there is little unanimity in normative standards on water demand and this needs reconciliation. These issues will become important for India as it implements a food security system for the hungry.