The Looming Water Wars: FARMS vs. CITIES

With not enough supplies to satisfy the demands of both agriculture and urban life, allocation of this vital resource is becoming more contentious and problematic.

WHY WOULD the billionaire Bass brothers of Texas, enriched by real estate and oil deals, make a play for a parcel of farmland in the hot, dry American Southwest? The reason has little to do with the lettuce, tomatoes, and melons grown in California's sun-drenched Imperial Valley, but everything to do with what allows crops to grow there--water. In purchasing more than 16.000 hectares of valley farmland (a hectare equals 2.47 acres), the Bass brothers were simply acting on a tip from an old, but timely adage: water flows uphill toward money.

About one-fifth of the Colorado River's annual flow goes to the Imperial Irrigation District (IID), which irrigates nearly 200,000 hectares of cropland. Thanks to a century-old deal with the Federal government, IID gets this water free. Farmers within the district pay just for the cost of delivering the water, about one cent per cubic meter. A few hundred miles to the west in Los Angeles, the Metropolitan Water District (MWD), the water wholesaler for about 16,000,000 southern Californians, pays up to 16 cents per cubic meter for water that it sells to its customers for about 28 cents a cubic meter--28 times as much as the IID farmers pay.

To astute investors, the math is compelling enough, but politics is weighing in as well. California has been using about 14% more Colorado River water than a 1922 interstate agreement entitles it to, and the U.S. government has put the state on notice that it must find a way to live within its allotted share. Any cutbacks would come out of urban supplies, since the Imperial Valley farmers have more senior water rights, and thus higher priority.

Not long after buying their IID farmland in 1994, the Bass brothers began pushing the irrigation district which actually owns the water rights, to strike a deal with San Diego, MWD's biggest customer. Three years later, the Basses hedged their bets and traded their $60,000,000 investment in Imperial Valley farmland for $250,000,000 worth of stock in the United States Filter corporation, the world's largest water treatment company. Meanwhile, IID did manage to strike a deal with San Diego. In 1998, the irrigation district agreed to transfer up to 246,800,000 cubic meters of water a year to the city at an initial price of 20-27 cents per cubic meter. San Diego residents will benefit from lower costs and greater reliability of future supplies; IID will reap substantial profits; and, if most of the water transferred results from increased efficiency and shifts to less-thirsty crops, farmers will not necessarily need to take land out of production.

Water grabs and power plays are legendary in the western U.S. In the award-winning film "Chinatown," Hollywood capitalized on the drama of Los Angeles sucking farms dry in the Owens Valley. American writer and humorist Mark Twain captured the West's tension over water with his famous quip that "whiskey's for drinking, water's for fighting about." Nevertheless, as water becomes more scarce, the stakes are rising--not just in the western U.S., but in many other parts of the world.

For rapidly growing cities and industries, agriculture holds the last big pool of available water. Globally, irrigation accounts for about two-thirds of all the water removed from rivers, lakes, and aquifers, and in many important agricultural regions, it claims 80% or more. As opportunities to expand water supplies dwindle, competition over existing supplies is mounting. How this competition plays out is about much more than whether rich investors get richer. It is about food security, social stability, the health of rural communities, the plight of the world's poor, and the ability of the aquatic environment to continue supporting a diversity of life.

On an average day in the developing world, about 150,000 people join the ranks of urban dwellers. Some are babies born to couples already living there. Others migrate in from the countryside, hoping for a better life. Most need shelter and a job. All need food and water.

By 2025, nearly 5,000,000,000 people are expected to live in cities, about twice as many as in 1995. At that time, urbanites will represent a majority--59%--of the world's population, up from 46% in 1996. Mark Rosegrant and Claudia Ringler of the International Food Policy Research Institute in Washington, D.C., project that annual water demands by households and industries in developing countries will climb by 590,000,000 cubic meters between 1995 and 2020, and that the share of water going to these activities will more than double--from 13% to total water use of 27%.

It is a fairly sure bet that a portion of these increased urban and industrial demands will be met by transfers of water out of agriculture. What is not known is how much water irrigators will transfer, whether they will do so voluntarily, and how much crop production will decline as a result of the transfers. These are important issues. As Rosegrant and Ringler conclude, the way the farm-to-city reallocation of water is managed "could determine the world's ability to feed itself."

If farmers make little effort to save water by irrigating more efficiently or growing less-thirsty crops, transfers of water out of agriculture will cause crop production to fall. Yields will decline in farming areas that lose or sell some of their water. In some cases, farmers will take cropland out of production altogether. If, for example, half of the projected rise in urban and industrial demand by 2020 is met by shifting irrigation water to these users and little improvement is made in irrigation efficiency, grain production could drop by some 300,000,000 tons--about 1.5 times current global grain exports.

A quick reality check shows that the shift of water from farms to cities is under way and is likely to increase. In parts of north China, including areas around Beijing, reservoirs that had supplied irrigation water to farms are often being used almost exclusively to supply households and factories. Farmers in Daxing County, about 30 miles south of Beijing, for instance, no longer receive irrigation water that used to be shipped in by canal from Beijing's reservoirs. In 1993, they told a New York Times reporter that it had been more than a decade since local farmers could flood a rice paddy.

Nationwide, China has been urbanizing at a rapid rate. The number of cities has climbed from 130 in 1949 to more than 600 today. About half of them are already short of water, and there is increasing pressure to pull supplies away from agriculture to narrow the urban water deficits. A mid 1990s planning study by China's State Statistical Bureau and Ministry of Water Resources concluded that 40% of the projected demand gap in 2000 could be met by shifting water out of agriculture. Moreover, these gaps will widen over the next couple of decades. Eugene Linden notes in Foreign Affairs that "the great urban migration has only just begun in China, which is still more than 70 percent rural." The United Nations projects that more than half of China's people will live in cities by 2025.

In China, as elsewhere, both politics and economics drive water's reallocation. A cubic meter of water used in China's industries generates more jobs and about 70 times more economic value than the same quantity used in agriculture. As supplies tighten, water will shift to where it is more highly valued. Moreover, because just a small fraction of urban and industrial wastewater is treated before being released back to the environment, a growing share of China's rivers and streams are becoming too polluted to use--worsening the water crunch. The Huai River in central China, for example, is so polluted that officials have banned farmers from using it to irrigate crops. Canadian geographer Vaclav Smil, a specialist on China's environment, has estimated that as much as one-fifth of that nation's river water is too polluted for irrigation use, much less for drinking.

Farmers in India face mounting competition over water as well. India will add around 340,000,000 people to its cities between 1995 and 2025, more than the current populations of the U.S. and Canada combined. Reallocations are reportedly occurring to increase supplies for the cities of Madras, Coimbatore, and Tirupur and for a number of smaller towns. Tirupur, in the southern state of Tamil Nadu, suffering from a water deficit of about 22,000,000 cubic meters a year and serious degradation of water quality, has begun to import more water from outside the city. Many farmers within 20-25 miles of the city have abandoned farming and instead sell their groundwater to urban and industrial users.

Rice farmers in parts of the Indonesian island of Java are losing water supplies to textile factories, even though Indonesian law gives agriculture higher priority. A study of one irrigated region in West Java found that some factories not only take more water than their permits allow, they do so directly out of irrigation canals, leaving too little for the farms. Some factories buy or rent rice fields from farmers just to get access to the irrigation water, but then leave some of the fields fallow. The factories have polluted local water supplies, lowering rice yields and killing fish in local ponds. Lacking legally enforced rights to the water they have been accustomed to using, the farmers have little recourse. Researchers Ganjar Kurnia, Teten Avianto, and Bryon Bruns note that "many farmers, suffering from lost production and insecurity of water supplies, feel they have no choice but to sell their land."

Growing demand in the megacities of Southeast Asia--including Bangkok, Jakarta, and Manila--is partially being met by overpumping groundwater, so pressure will intensify to shift water out of agriculture in these regions as well. In addition to booming populations, cities in these areas face increased demands from rising affluence. In Malaysia, for instance, the number of golf courses has tripled over the last decade to more than 150, and 100 more are planned. Together, Malaysia, Thailand, Indonesia, South Korea, and the Philippines maintain 550 golf courses, with another 530 in the planning pipeline. Besides chewing up farms and forests, golf courses in these countries typically require irrigation at the same time crops do--during the dry season, when supplies are usually tight.

Competition is heating up

Overall, cities in industrial countries will likely pull less water out of agriculture because their water demands are rising much more slowly. In rapidly urbanizing, watershort areas, such as the western U.S., however, the city-farm competition is heating up. Cities are buying water, water rights, or land that comes with water rights in parts of Arizona, California, Colorado, and elsewhere. The biggest trades so far have involved the Imperial Irrigation District in southern California, an area within striking distance of urban areas that are home to 16,000,000 people, and still growing.

In addition to the recent deal with San Diego, IID agreed to a trade in 1989 with the Metropolitan Water District in Los Angeles. MWD agreed to invest in efficiency improvements within IID in exchange for the water those investments save. The trade will shift up to 106,000 acre-feet (130,800,000 cubic meters) a year from farm to urban uses for 35 years. MWD benefits because the cost of the conserved water will be less than 10 cents per cubic meter, much lower than its best new-supply option. IID benefits from the cash payments and an upgraded irrigation network. Because the water traded is generated through conservation, no cropland needs to come out of production.

Another MWD deal, though, does require farmers to take land out of irrigated production. In 1992, the urban water wholesaler entered into an agreement with the Palo Verde Irrigation District, located on the west side of the Colorado River between Parker and Imperial dams. The agreement called for Palo Verde farmers to let a portion of their cropland lie fallow for two years and transfer the resulting water savings to MWD.

Facing unstable crop prices, 63 farmers signed on, following a total of 8,181 hectares. MWD paid the irrigators $3,064 for each hectare left unplanted and, in return, received a total of 228,000,000 cubic meters of water--the equivalent of about 10% of MWD's yearly deliveries. The transferred water was stored in Federal reservoirs on the lower Colorado River for use any time MWD desired before the year 2000. As in its deal with IID, MWD benefited by obtaining additional supplies at a lower cost. Palo Verde farmers benefited from more stable income. However, because land was taken out of production, farmworkers lost jobs.

Water transfers often affect people not involved directly in the sale, which makes a full accounting of costs and benefits hard to achieve. The costs to so-called third parties, who rarely have a place at the negotiating table, can be substantial. These can also be cumulative, affecting rural communities, employment, the tax base, and the environment. Because poorer farm laborers may be the ones to lose jobs, even economically efficient water trades may worsen inequities. Water trades can damage downstream wetlands and lakes, IID's deals with the MWD and San Diego, for example, could harm the inland Salton Sea, an important stopover for many species of migratory birds. Though polluted, IID's drainage is critical to sustaining the area and the quality of the sea, which is already 25% saltier than the Pacific Ocean. As IID sends increasing amounts of its water to southern California cities, the sea will shrink and become even saltier.

In sum, the limited evidence to date suggests that the impacts of water transfers are decidedly mixed, complex, and difficult to predict. Moreover--especially in Third World settings--irrigation water is often used for many things other than farming, including household activities, home gardens, livestock, and fishing. In these cases, thirdparty impacts can be substantial and, without compensation to the losers, can worsen inequities and deepen rural poverty.

So far, few countries have the institutions and incentives in place to steer water competition in both a productive and equitable direction, and to compensate those negatively affected by water trades. In Chile, where government policies encourage water marketing, negative impacts seem to be minimal in part because farmers typically sell relatively small portions of their water rights to cities, while at the same time investing in more-efficient irrigation technologies and practices. This allows them to maintain their crop production levels even as some water shifts from farming to urban uses.

Without a doubt, cities will continue to siphon water away from agriculture. What is not known is how much ultimately will be reallocated and how great an impact that will have on food production, farmers, and rural economies. Unless this competition is managed well, it could dampen food supplies in some areas, while making the rich richer and the poor poorer. An additional problem is the probability that competition for water may force more rural dwellers to head for the cities--which, in a vicious circle, would intensify the situation.

Global effects

Will the growing competition for water have global effects, besides local, regional, and national ones? The answer depends in part on how water is transferred from farms to cities and from farms back to the environment. There is, though, one fairly certain global impact that few researchers and political leaders have noticed--the effect regional water scarcity and competition will have on the global grain trade.

Because water is so unwieldy and expensive to transport long distance, nations running short rarely import it. Instead, they import grain--which Tony Allan of the University of London has called "virtual water." With each ton of grain representing about 1,000 tons of water, countries in effect balance their water books by purchasing grain from other nations, rather than growing it themselves.

Most economists view this practice as a sensible way to respond to water shortages. They point out that water-scarce countries can generate much more income from their limited water by using it in commercial and industrial enterprises and then purchasing their grain on the international market. Israel, for instance, has done nicely with this approach. As long as surplus food is produced elsewhere, nations with surpluses are willing to trade, and the countries that need food can afford to pay for the imports, it would seem that water-short states can have food security without needing to be food self-efficient.

This tidy logic is shaken, however, by the rapidly growing number of people who will be living in countries forced by water scarcity to follow this path. As a nation's net precipitation per person drops below about 1,700 cubic meters, food self-sufficiency becomes difficult, if not impossible. In most countries, it is only possible to store and control 20-50% of the total runoff, so just a fraction of the water resource is actually available for use. As a result, below 1,700 cubic meters per person, there is often not enough usable water to meet the demands of industries and cities and to grow enough food for the entire population, while at the same time sustaining river flows for navigation, fisheries, and other ecological functions. Nations in this situation then begin to import water indirectly, in the form of grain.

At present, 34 countries in Africa, Asia, and the Middle East have per capita runoff levels below 1,700 cubic meters a year. All but two of them--South Africa and Syria--are net importers of grain, and 24 of them already import at least 20% of their grain. Collectively, these water-stressed countries import nearly 50,000,000 tons of grain a year. Annual world grain exports total about 200,000,000 tons, so water scarcity is to some degree driving about one-fourth of the global grain trade.

As populations grow, per capita runoff will drop below the 1,700-cubic meter level in more and more countries, and those already in this group will also have larger populations. By 2025, Africa will add 10 countries to this list. India, Pakistan, and several other Asian nations will join it as well. The total number of people living in African, Asian, and Middle Eastern countries with per capita runoff below the benchmark level will jump more than sixfold by 2025--from about 470,000,000 to more than 3,000,000,000. The vast majority of these people will be living in Africa and South Asia, where the deepest pockets of poverty and hunger are.

Like an M.C. Escher drawing, this larger picture of water scarcity's implications only comes into focus by standing back and absorbing all the parts at the same time. What appears to be a solid and sensible recommendation for any one country may appear just the opposite when applied to many. It seems dangerous to presume, as many economists and officials do, that there will be enough exportable grain to meet the import needs of all these nations at a price they can afford. With world food aid at its lowest level since the mid 1950s, having dropped two thirds since 1992-93, relying on the generosity of grain-surplus nations to fill food gaps is a risky strategy.

Water, long left out of the food security equation, may now be driving it. As domestic competition for water spills over into international competition for grain, it will be the poor, food-deficit nations that lose out. Without a concomitant increase in the income levels of the very poor, a rise in food prices could place the health and lives of many additional millions at risk. Confronting this threat head-on will take efforts to raise the food production and income levels of the poor directly.

Sandra Postel is director of the Global Water Policy Project, Amherst, Mass., and a senior fellow of the Worldwatch Institute, Washington, D.C.

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