This report was prepared by Rabobank in collaboration with the World Resources Institute.
In many regions around the world, demand for fresh water now outstrips renewable supplies. Water scarcity is projected to worsen considerably due to a combination of factors such as population increase, higher incomes and changing lifestyles, pollution, and climate change.
Agriculture is by far the biggest water user, accounting for more than 70% of global withdrawals. With booming industrial and domestic demands for water, especially in fast-growing emerging economies, the competition for finite water resources is intensifying.
Water scarcity and increasing competition present the agricultural sector with a huge challenge. Farmers are expected to meet the rapidly increasing demand for food, feed, fuel and fibre crops even though most land and water resources have already been committed. Consequently, crop water productivity must increase (‘more crop per drop’), partly through raising irrigation water-use efficiencies, either at the system or at the farm level. This is also an investment opportunity which, we believe, will attract the necessary private capital for at least three reasons.
However, the current turbulence in the global financial markets (October 2008) may impact private investors’ decision making and their investment options which we cannot oversee at the time of writing. In practise this means that some of the conclusions drawn in this report may be affected although the general picture still holds.