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Shifting water demands onto the vulnerable? Water impacts of agricultural trade and investment

Our water footprints have gone global. The drivers include modern agribusiness and the unprecedented reach of value chains. Those living where rain falls or rivers flow may give little thought to the water demands of their lifestyles. Others do not have that privilege.

Worldwide, people’s water uses contribute to an increasingly complex web of “virtual” water flows implied in agricultural production, trade, and investment. Wealthy countries, transnational investors, traders, and business elites capture many of the benefits. Rising climatic uncertainty demands that we pay attention to water risks. For many populations in the global South, proper management of these water flows could mean the difference between lives of dignity and lives of desperation.

“Grabbing” water via land deals? Indeed, as foreign investments in agricultural land have grown, so too have concerns that wealthy investor countries might use them to take control of water resources in weaker developing countries. To clarify this, CDE researchers investigated the possible links between land investments and water resources globally and in local settings. Looking at the global level, a CDE study 17 (Box 1) reveals various trends.

This policy brief examines key issues, with a particular focus on the water risks of global market-driven agricultural investment in developing countries.

• Many countries import agricultural products that take a lot of water to produce. It is a good idea for water-scarce countries to import such commodities from water-abundant places. But sometimes the flow goes the other way: water-abundant countries buy from places where water is scarce or poorly managed. Overall, agricultural trade and investment frequently reflect economic power imbalances rather than rational use and allocation of water.
• Targets of foreign agricultural investment include food-insecure countries in sub-Saharan Africa and Southeast Asia that face growing water risks. In these and other countries, foreign agricultural investments too often threaten the water needs of smallholders and other local users.
• Developing countries should strengthen laws that protect their water resources and the human rights, customs, and livelihoods
of food producers and other local water users. Trade or investment agreements that threaten this should be amended or avoided.

Read "Shifting water demands onto the vulnerable? Water impacts of agricultural trade and investment" and learn more