Public Disclosure Authorized Improving Water Management in Rainfed Agriculture: Issues and Options in Water- Public Disclosure Authorized Constrained Production Systems June 29, 2010 Public Disclosure Authorized Energy Transport and Water Department Water Anchor (ETWWA) The World Bank Public Disclosure Authorized Contents Executive Summary ……………………………………………………………………………….……4 Acknowledgments.……………...……………………………………………………….…………..…..7 Abbreviations and Acronyms…………………………………………………………………………..8 1. Introduction…………………………………………………………………………………………..9 2. Importance of Improving Water Management in Rainfed Agriculture……..…………...…….11 2.1 Significance of Rainfed Agriculture with Water as a Key Constraint..….……………..….11 2.2 Characteristics of Water-Constrained Rainfed Production Systems………………………..13 3. Interventions for Improving Water Management.….……….…………….…………………..…16 3.1 Main Approaches………….……………….………………………….……………………16 3.1.1 Promoting Soil and Water Management Techniques………..…..…………….…..…16 3.1.2 Payment for Environmental Services...……..…………………………………...…...18 3.1.3 Improving Risk Management……………………………….………….………….…..20 3.1.4 Providing Better Climate Information………….……..……………………………….22 3.2 Experience under World Bank-Supported Projects………………………………………….24 4. Issues Related to Improving Water Management..…..……………………………………………26 4.1 Removing Barriers to Adoption…………..……..……………………….………………….26 4.2 Overcoming Knowledge Gaps.……….……………………………………….………….….27 5. The Way Forward.………………….………………..…………………………….………………..30 5.1 Priorities and Recommendations…………………………………………………….………30 5.2 Predicting and Monitoring the Impact of Improved Water Management in Rainfed Agriculture…………………………….………………………………………...33 6. Conclusions..…….……………………..…………………….………….……………………………37 References……………………………………………………………………..…………………………38 Appendix: Projects Included in the Portfolio Review Annexes Annex 1: Soil and Water Management Techniques Annex 2: Payment for Environmental Services Annex 3: Risk Management Annex 4: Climate Information Provision 2 List of Figures Figure 2.1 Extent of Dryland Sub-Systems……………………………………………………………….11 List of Boxes Box 2.1 Water in Rainfed Agriculture—Some Terminology……….………...……….…………………14 Box 4.1 Innovative Project Monitoring and Evaluation…………….……………………………………29 List of Tables Table 3.1 Climate-Sensitive Agricultural Decisions at a Range of Temporal and Spatial Scales.....……22 Table 5.1 Contributions of Land Use Classes to Total Evapotranspiration in the Inkomati Basin, South Africa…………………………………………………..35 3 Executive Summary Worldwide, more than 80 percent of the cropped area depends on rainfall alone. Rainfed agriculture is practiced in almost all hydroclimatic zones, and can be highly productive. However, in many dry subhumid regions, tropical semiarid and arid regions, as well as in some temperate regions yields tend to be relatively low. With highly variable rainfall, long dry seasons, recurrent droughts and dry spells as well as floods, water tends to be a key constraint for agricultural production systems in these regions. Especially in Sub-Saharan Africa, where 96 percent of the cropland is rainfed, erratic and sparse rainfall often combines with arid conditions, high temperatures, and shallow soils with poor nutrient status to provide extremely uncertain conditions for agriculture. Farmers, and especially the poor, are intrinsically risk-averse, and in these conditions they tend to adopt low-input strategies with limited yield potential even in good rainfall years. The need to improve water management in water-constrained rainfed areas is often emphasized. In particular by increasing timely water availability and the water uptake of crops, yields can be significantly enhanced and agricultural productivity improved. Research has shown that better water management, coupled with improved soil and crop management, can more than double agricultural productivity in rainfed areas with currently low yields. With climate change and increasing food prices, even more emphasis needs to be placed on addressing water management in rainfed agriculture as a key determinant for agricultural production and productivity. However, governments and donors have tended to pay relatively little attention to this area, and investments remain low. During the last decade, for example, commitments to improving water management in rainfed agriculture in World Bank-supported projects amounted to less than 15 percent of the commitments to the irrigation and drainage subsector. Improvements in agricultural water management can be categorized into four broad approaches (one physical and three non-physical), with each comprising a variety of measures. The most usual approach comprises soil and water management techniques, including structural measures (such as stone barriers, bunds or terraces) and in-field or agronomic practices (such as mulching, fertilizing, intercropping, crop rotation, agroforestry and reduced tillage). Many of these measures—such as terracing—have been practiced for centuries (and some for millennia); others, designed to serve less settled forms of agriculture, have been demonstrated to be beneficial locally, but few have spread spontaneously in the way that the varieties and practices of the Green Revolution have come to dominate irrigated agriculture through user-demand. Several research centers of the Consultative Group for International Agricultural Research (CGIAR), most importantly the International Centre for Research in the Semi-Arid Tropics (ICRISAT) and the International Centre for Agricultural Research in Dry Areas (ICARDA) as well as 4 other research agencies, have focused for many years on developing ways to improve the productivity of these areas, and have documented a wide array of potential interventions, both indigenous and new. Other non-physical approaches have also been discussed, and in some cases applied. An innovative approach that could help provide incentives to farmers for adopting soil and water management techniques is payment for environmental services (PES). Some physical interventions can have positive externalities on downstream users. For example, terraces are likely to reduce soil erosion and lead to less sedimentation in downstream reservoirs, and agronomic practices such as mulching do not only lead to better water retention, but also increased carbon stocks in the soil. While most PES schemes are fairly recent, very few exist that pay for changes in agricultural practices in developing countries. To a large extent this is due to administrative complexities, such as the problem of quantifying and monitoring the positive externalities, and high transaction costs. A third approach is improved risk management, in particular risk-sharing strategies that help farmers cope with climate risks. These include forms of crop insurance that protect farmers from the impacts of poor weather, thus mitigating risk. The majority of these schemes, including both conventional indemnity- based insurance and the more recent index-based products, are targeted more at stabilizing income than inducing higher agricultural productivity. Furthermore, the administrative framework required is substantial: to document what area has been insured for which crop by which farmer; to apply criteria to determine situations where payments are appropriate; and to disburse payments effectively. The fourth approach is provision of better climatic information. Since the primary problem faced by rainfed farmers is uncertainty regarding water availability, improvements in the prediction of seasonal rainfall, the onset of rains, or specific rainfall events must constitute valuable information. Satellite systems such as the Tropical Rainfall Measurement Mission provide near real-time data on rainfall patterns, but to date there are few documented studies to demonstrate the benefits derived from such systems in less developed areas—either because the evidence is hard to gather and interpret, or because the evidence is absent or not clear. A review of the four approaches for improving water management in rainfed agriculture shows that while a few examples of successful interventions exist, progress in scaling them up is usually much slower than expected. Various barriers to their wider adoption have been identified. There is also a lack of quantification of their impacts in different settings, and almost no attempts to value them. Rigorous monitoring and evaluation of interventions to assess investment performance ex post has generally not been carried out. The use of advanced and well proven watershed-based models appears to offer a basis 5 for estimating the impact of physical and non-physical interventions ex ante and hence for designing cost- effective approaches. Yet not many modeling studies have been carried out. This may perhaps reflect the complexity of the water-constrained agricultural production systems, but offers little assurance that enough insights are available to provide a robust framework for planning future interventions. This is not an encouraging situation. Vast numbers of the world's poorest farmers depend on rainfall to derive a precarious livelihood, increasingly threatened by climate change. The development of non- agricultural employment or the expansion of irrigation services may not be possible, or will at best leave many unaffected, and may not even keep pace with population growth. Doing nothing for the many whose livelihoods will not be insulated from the vagaries of rainfall in the foreseeable future is not an option. Much has