Securing Water for Food Production
When drought hit Argentina in 2017-2018, the world’s supply of soybeans almost completely dried up. One major food producer in the U.S. reported having to spend an additional $89 million to feed livestock due to disruptions in the supply chain. Securing water for food production is a necessity for a steady and healthy supply of food.
With 70-80% of the freshwater used each year going to the global food industry, we can expect even more scenarios like this in the years to come. In the Feeding Ourselves Thirsty report, Ceres determined that water risk due to climate change, aging infrastructure, and poor regulations would lead to increased operational and reputational risk:
“Of the 35 publicly traded companies evaluated, 77% now specifically mention water as a risk factor in their financial filings, up from 59% in 2017.”
But how can a resource that seems so “cheap and limitless” play such a major role in how stable and profitable food companies will be in the years ahead? Let’s take a look at why water scarcity is linked to food scarcity, and what investors, growers, and other players in the agricultural industry need to know about how it will impact them.
Why Water Scarcity Means Food Scarcity
First, why does the amount of water we use to grow our crops matter so much? Couldn’t we cut down on water use in other sectors and redirect it toward agriculture? The reality is that most other uses of water are negligible. Issues magazine reports that the amount of water used for drinking is only 0.01% of the water that’s used in food production:
“Although people individually need just 2 to 5 liters of drinking water and 20 to 400 liters of water for household use every day, in reality, they use far more: between 2,000 and 5,000 liters of water per person per day, depending largely on how productive their agriculture is and what kind of food they eat.”
The main reason food production uses so much water is because of a process called transpiration, or the loss of water vapor to the air from a plant’s surface. This is a key part of how plants grow and convert energy from the sun through photosynthesis, as well as how they keep cool and distribute nutrients throughout their system.
While transpiration rates can vary based on plant type, temperature, weather patterns, and other factors, they can only be reduced so much. As Issues explains, “Crop yield is roughly proportional to transpiration; more yield requires more transpiration.”
In some parts of the world, rainfall alone is sufficient to produce large quantities of food; Africa relies on irrigation for only 5% of the water used in agriculture. But in areas where agricultural land is limited, as in many parts of Asia, the only way to meet the demands of a growing population is to bring in more water to increase crop yield.
What is the Water-Energy-Food Nexus?
The complicating factor is that any increase in how much water we use in agriculture – or an unexpected decrease in the amount of water available, as we saw in Argentina – can have a domino effect through the global food supply.
Food security experts call this the Water-Energy-Food Nexus. The concept first came to prominence on World Water Day in 2011, when Ban-Ki Moon, Secretary-General of the United Nations announced that “the interconnects between water, energy, and food are among the greatest challenges that mankind faces.”
In short, the Water-Energy-Food Nexus is a way of thinking about issues that may seem to be entirely unrelated, but are in fact impossible to disentangle from each other.
One example is biofuels. Although it’s intended to address one issue – reducing the use of fossil fuels for energy – it has a number of other side effects, including increasing the amount of land and water needed to grow bioenergy crops. As a result, the “increased reliance on biofuels could create scarcity by pushing up agricultural water use.”
Other examples are infrastructure projects, such as dams, reservoirs, and hydro-energy plants, that may have unexpected ecological effects or even displace nearby residents. The Food and Agricultural Organization of the U.N. notes that increased competition for resources will affect a variety of industries, not just agriculture, but also forestry, mining, and transportation, with environmental and social repercussions.
Ultimately, both businesses and consumers may see an impact on their bottom line, as increased costs for water, fuel, and food are passed along the supply chain.
How Brands and Investors Have a Role to Play Securing Water for Food Production
With so much depending on a continuous supply of reliable water resources, corporate boards and brands are “becoming more water-aware”, reports Ceres. Still, there’s a lot that can be done to bridge the gap between what’s happening on the ground and what’s happening in the boardroom.
Ceres recommends that investors raise the issue of water scarcity with brands directly, and encourage them to disclose water risks through the use of standardized reporting tools, like the CDP’s Water Questionnaire.
At a macro level, brands can put more effort into understanding the tradeoff between sustainability and self-sufficiency, and work with governments to develop regionally appropriate food security strategies:
“A strategic increase in international food trade, and thus trade in virtual water, could mitigate water scarcity and reduce environmental degradation.”
While growers have long been involved in water conservation efforts, the World Bank makes it clear that they’ll need more support from investors and regulators in order to “increase water productivity and raise on-farm incomes.”
Ultimately, both the public and private sectors have a role to play in securing water for food production, and stakeholders across the Water-Energy-Food Nexus will need to come together to find common ground. Existing policies often leave no recourse when one industry’s water use practices impact another, and there’s rarely a central forum where both parties can sit at the table to determine a way forward.
As one international brewer puts it in a joint report produced by the World Wildlife Fund, “Business and the societies within which we operate rely on natural capital in ways that become acutely obvious when that natural capital base is eroded.”
As water security becomes an even more pressing issue in the future, businesses will have to develop new strategies to plan for and adapt to water risk.
The Bottom Line
Predicting water-related impacts on the supply chain can be a complex process, even for the experts. That’s why AQUAOSO is committed to providing an easy way for anyone to access and analyze water risk with our unique geospatial mapping tool.
With our Water Security Platform, you can view information from a variety of resources all in one place, including data on water rights, water quality, land ownership, and over 130 Groundwater Sustainability Plans under California’s SGMA legislation.
By learning more about water risk, you can avoid being caught off guard by increased water costs or supply chain interruptions. Reach out to our team for a free demo here, or learn more about the regions we serve or explore the resources we offer.