Research Report 10 Figure to be inserted Cities versus Agriculture: Revisiting Intersectoral Water Transfers, Potential Gains and Conflicts François Molle and Jeremy Berkoff Postal Address: IWMI, P O Box 2075, Colombo, Sri Lanka Location: 127 Sunil Mawatha, Pelawatte, Battaramulla, Sri Lanka International Telephone: +94-11 2787404, 2784080 Fax: +94-11 2786854 Water Management Email: [email protected] Website: www.iwmi.org/assessment Institute ISSN 1391-9407 ISBN 92-9090-624 3 The Comprehensive Assessment of Water Management in Agriculture takes stock of the costs, benefits and impacts of the past 50 years of water development for agriculture, the water management challenges communities are facing today, and solutions people have developed. The results of the Assessment will enable farming communities, governments and donors to make better-quality investment and management decisions to meet food and environmental security objectives in the near future and over the next 25 years. The Research Report Series captures results of collaborative research conducted under the Assessment. It also includes reports contributed by individual scientists and organizations that significantly advance knowledge on key Assessment questions. Each report undergoes a rigorous peer-review process. The research presented in the series feeds into the Assessment’s primary output—a “State of the World” report and set of options backed by hundreds of leading water and development professionals and water users. Reports in this series may be copied freely and cited with due acknowledgement. Electronic copies of reports can be downloaded from the Assessment website (www.iwmi.org/assessment). If you are interested in submitting a report for inclusion in the series, please see the submission guidelines available on the Assessment website or send a written request to: Sepali Goonaratne, P.O. Box 2075, Colombo, Sri Lanka. Comprehensive Assessment outputs contribute to the Dialogue on Water, Food and Environment Knowledge Base. Comprehensive Assessment Research Report 10 Cities versus Agriculture: Revisiting Intersectoral Water Transfers, Potential Gains and Conflicts François Molle and Jeremy Berkoff Comprehensive Assessment of Water Management in Agriculture i The Comprehensive Assessment (www.iwmi.cgiar.org/assessment) is organized through the CGIAR’s Systemwide Initiative on Water Management (SWIM), which is convened by the International Water Management Institute. The Assessment is carried out with inputs from over 100 national and international development and research organizations—including CGIAR Centers and FAO. Financial support for the Assessment comes from a range of donors, including core support from the Governments of the Netherlands, Switzerland and the World Bank in support of Systemwide Programs. Project-specific support comes from the Governments of Austria, Japan, Sweden (through the Swedish Water House) and Taiwan; Challenge Program on Water and Food (CPWF); CGIAR Gender and Diversity Program; EU support to the ISIIMM Project; FAO; the OPEC Fund and the Rockefeller Foundation; and Oxfam Novib. Cosponsors of the Assessment are the: Consultative Group on International Agricultural Research (CGIAR), Convention on Biological Diversity (CBD), Food and Agriculture Organization (FAO) and the Ramsar Convention. The authors: François Molle is a Principal Researcher at the International Water Management Institute, Colombo, Sri Lanka, seconded from the Institut de Recherche pour le Développement (IRD), France and Jeremy Berkoff is an Independent Economist/Water Resources Consultant. This report has benefited from valuable comments by Frank Rijsberman, Jan Lundqvist, Doug Merrey, Hugh Turral, Chris Perry, David Molden and Charles Abernethy on earlier draft versions. Molle, F.; Berkoff, J. 2006. Cities versus agriculture: Revisiting intersectoral water transfers, potential gains and conflicts. Comprehensive Assessment Research Report 10. Colombo, Sri Lanka: Comprehensive Assessment Secretariat. / water scarcity / water transfer / conflict / water demand / water allocation / water stress / water supply / water resources development / water resource management / economic aspects / political aspects / environmental effects / irrigation / groundwater / irrigation water / domestic water / ISSN 1391-9407 ISBN 92-9090-624 3 ISBN 978-92-9090-624 7 Copyright © 2006, by Comprehensive Assessment Secretariat. All rights reserved. Please send inquiries and comments to: [email protected] Contents Summary ......................................................................................................... v Introduction ..................................................................................................... 1 Urban Water Scarcity and Its Links to Irrigation ............................................ 3 Intersectoral Transfers .................................................................................. 12 Intersectoral Water Transfers in Practice ..................................................... 16 Are Urban Uses Constrained by Agriculture? .............................................. 24 Where Are We Heading? .............................................................................. 26 Conclusions ................................................................................................... 32 Annex ............................................................................................................. 37 Literature Cited.............................................................................................. 55 iii iii Summary Water demand management, or making better use financial costs, cities tend to go for the “path of of the water we have—as opposed to augmenting least resistance,” whereby economic, social and supply—is increasingly proposed as a way of political costs are considered in conjunction. mitigating water-scarcity problems. Moving water Problems of urban water scarcity are away from agriculture to uses with higher sometimes compounded by the physical economic value is one of the main measures environment (arid climate) or by the location of widely seen as desirable. Sectoral “allocation cities in upper catchments where no large stress” is often identified as resulting from four streams are available nearby. However, most different observations: a) agriculture gets the large cities in the developing world tend to have “lion’s share” of all diverted water resources; b) deficient-to-poor water supply and sanitation agriculture is not only the main water user but facilities, even if there is abundant water in their also an activity that incurs by far the largest surroundings. As shown by the debate on wastage; c) cities are “thirsty” ; and d) water financing of water-supply infrastructure, the main productivity in nonagricultural sectors is far higher issue is “where to find the money?” rather than than in agriculture. This apparent misallocation is “where to find the water?” It is shown that urban often attributed to the failure of the government to water supply is a reflection of the local political allocate water rationally. economy where the “threat from below” (voice of This report revisits this commonly-accepted civil society, popular unrest, epidemics, etc.,) the wisdom and examines the nature of urban water financial and political benefits accruing to the scarcity, the relative importance of both physical elites and decision makers, and the possibility to and economic scarcity, and how cities secure tap financial resources (through privileged funds for the development of their water relations with the central government or infrastructure (or fail to do so). It investigates international funding agencies) largely determine whether recurrent water shortages in cities have the level of water services and how these are anything to do with agricultural water use (or spatially and socially differentiated. overuse); and assesses whether significant If city dwellers often have precarious supply allocation stresses warrant the view that large and sanitation facilities, there is no strong economic gains can be realized through evidence to show that nonagricultural (notably reallocation. industrial) economic activities are significantly A large number of cities worldwide are constrained by a lack of water, both in their daily reviewed and the ways in which they increase functioning and in their capacity to expand. their water supply is analyzed. It is shown that, in Sectoral water allocation may be hindered where many cases, augmentation of supply is achieved formal water rights systems exist (e.g., the prior through transfers of water from agriculture, or appropriation right system in the western USA) from ecological reserves and aquifers. Transfers but much less so where allocation is centrally may be gradual or outright, minor or major, administered. Contrary to common knowledge, surreptitious or open, above the surface or States, when not going for supply augmentation, underground, and with or without compensation, have consistently given priority to cities and all factors that condition the perceptions and nonagricultural activities, and the large economic reactions of the general public. If cities eventually gains anticipated for intersectoral transfers appear tap additional resources, this is often found to to be greatly overstated. Agricultural water may happen in a nonsustainable or costly manner. In have an opportunity cost at the margin, but this general, rather than using a narrow