Measuring economic water scarcity in agriculture: a cross-country empirical investigation

Abstract

High water availability enhances agricultural performance and food security. However, many countries where water is abundant according to hydrological indicators face difficulties in the utilization of water in agriculture, being in a situation of economic water scarcity (EWS), due to lack of institutional and material means for water management and governance. EWS faces a stronger challenge of measurability, if compared to physical water scarcity. Since the Sustainable Development Goal Indicator on Integrated management of domestic and transboundary water resources (IWRM) is a unique attempt to quantify information on water management at a national level, we explore whether it can represent a valid metric for EWS measurement. We first show that a high level of water management is neither necessarily associated to high economic power of the country nor to low physical water availability. Then, we analyze whether the indicator can predict typical EWS situations such as low agricultural productivity and inefficient water use. Although the importance of water institutions for agriculture is well known through case studies at the local level, we make the first attempt to quantify the strengths of this relation at a global scale for different crops in climatic diverse countries. We detect a positive and significant association between IWRM level and yield, and consequently a negative and equally significant association between the IWRM level and the crop water footprint. Statistical significance holds also when potentially confounding variables are included in a multiple regression analysis. We infer from this analysis that good water management, as detectable through the IWRM indicator, improves land productivity and water saving, in turn mitigating EWS. Our findings pave the way toward the use of the IWRM indicator as a valuable tool for measuring EWS in agriculture, bridging the measurability gap of economic water scarcity, with straightforward policy implications in favour of investments in water management as a lever for enhancing food security and development.