water nexus and the environment - european …...water nexus and the environment alban thomas1...

Water Nexus and the Environment

Alban Thomas1

1Toulouse School of Economics (LERNA)Head of Agricultural Economics and Sociology Scientific Division (SAE2),

INRA (French Institute for Agricultural Research)

JRC Workshop, AnkaraFebruary 12-13, 2015

Alban Thomas ( Toulouse School of Economics (LERNA) Head of Agricultural Economics and Sociology Scientific Division (SAE2), INRA (French Institute for Agricultural Research))JRC, February 12-13, 2015, Ankara 12/02/2015 1 / 25

Introduction

Introduction

“The objective of this Workshop is to gather evidence on the potential foreconomic growth deriving from the adoption of a Water Nexus approach inthe Mediterranean region”.

Steps to identify opportunities:

Objectives of energy and food securityAvailable biomass and natural resources including waterCompetition and market opportunitiesGovernance and institutional issues

Three examples for three levels of analysis/action:

1) Innovation in one sector (e.g., agrofood industry)2) Multisectoral integration and optimization of transformation processes

(incl. food, energy, water)3) Food and energy for urban population: cities as processing units of

local biomass


Introduction

Introduction

Three levels of analysis requested by policy makers and addressed toeconomists:

1) Firm/plant scale: technology-driven prototypes (SME)2) Landscape: optimal allocation of water-using activities3) Global scale: water depletion and public policy (national, World)

Examples in this presentation:

1) Innovation in agrofood industry: durum wheat in Mediterraneancountries

2) Limiting waste and optimising the use of co-products from agriculture3) Local food and energy for cities

Methods:

Water footprint (virtual water) at country levelCompetitivity of local production: sector and country integrationCost-efficiency and cost-benefit analysis


Three examples for different levels of analysis Innovation in agrofood industry: Example of durum wheat

Innovation in agrofood industry: Example of durum wheat

Two-thirds of world’s production of durum wheat in Mediterraneancountries

Increased competition from Australia, Russia, the US, hence need toinnovate with new food products

New food items based on semolina (couscous), pasta, burghul, evenFrench bread from durum wheat

A combination of genetic selection, producer organization, andinnovative consumer products

Genetic selection for a better adaptation to climate change (lowerwater requirements)

New cropping systems to mitigate climate change (e.g., rotationswith protein crops) and reduce nitrogen fertilizer applications

Also, innovation in first- and second-transformation processes(reduction of wastes, less water needs, etc.)


Three examples for different levels of analysis Limiting waste and optimising transformation processes

Limiting waste and optimising transformation processes

In relation with the challenge of food security

Consistent with European Societal Challenge 2 on Food Securityincludes ISIB (Innovative, Sustainable and Inclusive Bioeconomy)

Sustainable agriculture and forestrySustainable and competitive bio-based industriesCross-cutting actions covering all the activities

Topic SFS-8: Resource-efficient eco-innovative food production andprocessing

Many applications are still below profitability thresholds because ofscale of activity

Uncertainty about regular access to natural resources and guaranteedaccess to biomass and water is a serious issue



Applications to local biorefinery and energy co-generation frombiomass

Some crops devoted to biofuel are less water-intensive (miscanthus,sorghum, etc.)

Advantages: can be grown on marginal soil and can be mixed withbiomass from urban waste ; can use crop residues from crops

Drawback: may have a negative net environmental effect (pesticide,fertilizer, water)

Strategies to reduce crop loss: a way to reduce the ultimate watercontents of final products

But optimization of technology processes also means optimal spatialallocation of plants and logistics

Literature on the economic analysis of bio-economy innovations?



This is the bio-economy, stupid: upscaling small-scale innovations


Three examples for different levels of analysis Local food and energy for cities

Local food and energy for cities

Food for the cities:

Redesigning the relationships between municipalities (first circle) andecosystems and agroecosystems outside cities (second circle)

Consider cities acting as

Processing units of local biomassReceiving fresh (blue) water and “producing” wastewater (grey)

Water Nexus in this case is defined spatially around and for cities

Innovative partnerships between municipalities, farmer cooperatives andlocal water authorities (if any)Idea: subsidies (from water authority) for water potabilization andpretreatment may be conditional on contracts for best agricuturalpractices between municipality and farmer cooperativeLocal food systems exploiting local water resources, possibly grey water(depending on legislation)And energy available for agriculture and industry from biomass waste“produced” in cities


Methods Methods: Virtual Water and Water Footprint

Methods: Virtual Water and Water Footprint

Using Water Footprint to identify competitive products for localconsumption and/or exports.

Variable DefinitionVirtual water Water used for the production of a good or

service, not visible in the final productVirtual water content Volume of fresh water consumed or pollutedof a product for producing a productWater Footprint Multi dimensional indicator of freshwater use

(both direct and indirect) by a consumer or producerBlue water Fresh surface or groundwaterGreen water Precipitation on land that does not run off or recharge

the groundwater but is stored in the soilor temporarily stays on top of the soil or vegetation

Grey water Volume of polluted water flow, aquifers and rivers



Water and Land Heterogeneity across Regions

Table: Water resources (m3 per capita) and Agricultural Land (m2 per capita)

Country Surface Ground Precipitation Agriculturalwater water land

Malta 1.22 122.23 438.08 220.04Bahrain 4.32 120.98 67.19 84.35UAE 27.75 22.19 1206.35 1076.19Suriname 23,9151.9 156,820.9 748,623.9 1435.35Guyana 321,304.2 137,320.9 684,071.3 22,346.28Iceland 532,792.4 77,030.23 641,276.6 73,729.38



Table: Hidden water use (virtual water) in domestic goods

Commodity Water consumed (litre)

1 litre of beer 71 litre of gasoline 101 cola 70A single bath 2001 kg of paper 3201 kg of bread 1,0001 kg of potatoes 1,000Television set 1,0001 kg of meat 4,000 to 10,000One pair of jeans 8,000

Source: UNEP (2004).



Virtual water balance per country related to trade in agricultural andindustrial products, 1996-2005. Net exporters are in green, net importersin red.

Source: Mekonnen and Hoekstra (2011).



Hotspots of blue water footprints for products exported to France.

Source: WWF (2012).



Table: Hotspots of the French blue water footprint for agricultural products

Region % Blue Water Footprint Product(s)

Aral Sea (Uzbekistan) 6.38 CottonGaronne (France) 5.44 Maize, soybeanEscaut (France) 4.46 Maize, potatoLoire (France) 4.43 MaizeIndus (Pakistan) 3.85 Cotton, rice, sugarcaneGuadalquivir (Spain-Portugal) 2.98 Cotton, sunflower, rice, sugarbeetSeine (France) 2.23 Maize, potato, sugarbeetGange (India) 2.19 Rice, sugarcaneGuadiana (Spain-Portugal) 1.79 Grape, sunflower, citrusTiger & Euphrate (Turkey, Syria, Iraq) 1.62 Cotton, ricePo (Italy) 1.59 Rice, animal productsEbro (Spain) 1.39 MaizeSebou (Morocco) 1.39 SugarbeetDouro (Spain-Portugal) 1.29 Maize, sugarbeetTejo (Spain-Portugal) 1.02 grape, maize, animal productsMississippi (US) 0.60 Maize, soybean, rice, cottonKrishna (India) 0.45 Rice, sugarcaneGodavari (India) 0.31 Rice, sugarcaneKizilirmak (Turkey) 0.27 SugarbeetChao Phraya (Thailand) 0.26 Rice, sugarcaneSakarya (Turkey) 0.25 SugarbeetBandama (Cote d’Ivoire) 0.21 Sugarcane, animal productsCauvery (India) 0.19 Rice, sugarcaneYongding He (China) 0.12 Cotton, soybeanLimpopo (SOuth Africa) 0.11 Sugarcane, cottonSacramento (US) 0.10 RiceSan Joaquin (US) 0.10 Cotton, Maize


Methods Competitivity of local production: sector and country integration

Competitivity of local production: sector and countryintegration

Investigate price transmission and explore substitutability betweenlocal and imported goods

Main constraint: consider sectors relevant both for local and importedcommodities

Compare Consumer Price, Producer Price, Import Price indices

Application to Lebanon: National accounts (retrospective 1997-2007,and 2008-2009)

10 sectors of the Lebanese economy: Agricultural products, Livestockand fish, Energy, Food industry, Textile & leather, Non-metal ores,Metals, machines & equipment, Wood, rubber & chemicals,Furniture, Other industrial products



Price Transmission

Model for price transmission in first differences:

∆PDkt = µ+ γεkt + θ∆PW

kt + α∆CPIt + ukt ,

where

PDkt : domestice price, sector k and year t

PWkt : world price, sector k and year tεkt = PD

kt − α− βPWkt ,

β: long-term relationship between PDkt and PW

kt ,γ: speed of adjustment (towards long-run equilibrium),θ: intensity of price transmission,α: degree of inflation pass-through (to sectors).

γ = 0 if No convergence

θ = 1 if Law of One Price

θ + α = 1 if Neutral inflation & pass-through



Convergence and pass-through: Test results for Lebanon

Test results, sector by sector (p-values)

Sector γ = 0 θ = 1 θ + α = 1

11. Agricultural products 0.010 0.0735 0.265212. Livestock 0.021 0.0383 0.311514. Food industry 0.110 0.0754 0.717016. Non-metal ores 0.129 0.1682 0.189218. Wood, rubber 0.169 0.0802 0.5125110. Other industrial products 0.035 0.1094 0.0748

Interpretation:

Significant convergence for sectors 11, 12 and 110

Law of One Price in all sectors except 12

Neutral inflation pass-through in all sectors



Import Substitution

Estimation of a simple AIDS-type model, for 2 goods: local (D) orimported (M)

Share of imported commodities, sector k

wMkt = αk + γD,M

k log pDkt + γM,Mk log pMkt + βk log

(Rkt

P∗t

)+ ukt ,

where

Rkt = pDktqDkt + pMkt q

Mkt ,

P∗t =

∑i=D,M w i

kt logP ikt

Computation of substitution elasticities: local vs. imported commodities



Price elasticities, local vs. imported commodities

Sector Own-price Cross-priceelasticity elasticity

11. Agricultural products -0.6553 -1.039112. Livestock & fish -1.0673 -0.468713. Energy -0.8274 0.207914. Food industry -0.3488 -0.878115. Textile, leather -1.2373 -0.234716. Non-metal ores -1.5458 1.551717. Metals, equipment -0.9528 -0.504018. Wood, rubber -1.3890 0.015019. Furniture -0.3899 -1.4419110. Other industrial products -0.3122 0.4405All -0.8933 -0.5214



Interpretation

Strongly elastic import demands: Textile & leather, non-metal ores,metals & equipment, wood & rubber

Poorly elastic import demands: food industry, furniture, otherindustrial products

Almost all local products are complements, not substitutes


Methods Cost-efficiency analysis

Methods: Cost-efficiency analysis

Application to water desalinization vs. demand management

Table: Desalinization plant capacity, 2009

Country Capacity (m3/day) Capacity per head (m3/head/day)Saudi Arabia 7 410 460 0.28UAE 5 730 000 1.07Spain 2 500 000 0.053Qatar 1 197 150 0.613Libya 1 000 000 0.178Israel 800 000 0.105Bahrein 518 600 0.415Egypt 431 870 0.005Oman 377 480 0.122Jordan 239 530 0.036Algeria 200 000 0.005Tunisia 100 000 0.009Malta 93 000 0.227



Table: Desalinization costs

Technology OI OI MSF MED(grey water) (sea water)

Capacity : 10,000 m3 / dayInvestment (euro/m3/day) 575 1427 3408 2023Marginal cost (euro/m3) 0.27 0.67 1.40 0.83

Capacity: 50,000 m3 / dayInvestment (euro/m3/day) 376 1050 2122 1539Marginal cost (euro/m3) 0.18 0.50 0.87 0.63



OI : Inverse Osmosis ; MSF : Multi-Stage Flash ;MED : Multiple-Effect Distillation



Cost-efficiency analysis: example of Algeria

Emergency programme of seawater desalinization adopted in 2002

Objectif towards 2030: 2.2 million m3/day

Cost-efficiency analysis: comparison of two strategies

supply-side management: seawater desalinization (the current plan)demand-side management: promote a more efficient irrigationDuration: 20 years (discount rate 8 %)

Akli, S. and S. Bedrani, Cahiers du CREAD, 96, 2011.

Desalinization Irrigation

• Eight single-block stations • Irrigation (fruit trees), West MitidjaInverse osmosis • Yield drip irrigation: 35 %• Production 4.58 Mm3/year • Same reduction objective• Return 60 % Area considered 1852 ha• Cost: 68.34 DA/m3 • Saving: 8.59 DA/m3

(0.66 euro/m3) (0.08 euro/m3)


Concluding remarks

Concluding remarks

Point of view: agricultural and environmental economist, France.

Claim 1. Nexus cannot be explored from agriculture and industryalone: need to design integrated systems with cities

Claim 2. Different ways to look at the water-food-energy-ecosystemnexus

1) A stock of natural resources as a potential for future services2) A combination of ecosystem services from natural resources, biological

processes, and human activity3) A set of process innovations involving many sectors, to reduce waste

and losses.

Three levels of analysis requested by policy makers and addressed toeconomists:

1) Firm/plant scale: technology-driven prototypes (SME)2) Landscape: optimal allocation of water-using activities3) Global scale: water depletion and public policy (national, World)


Concluding remarks

Thank you for your attention

[email protected]


water nexus and the environment - european …...water nexus and the environment alban thomas1...

Documents