trading water and crop outsourcing

China secured the right to grow palm oil for biofuel on 2.8m hectares of Congo, which would be the world's largest palm-oil plantation. It is negotiating to grow biofuels on 2m hectares in Zambia, a country where Chinese farms are said to produce a quarter of the eggs sold in the capital, Lusaka. According to one estimate, 1m Chinese farm labourers will be working in Africa this year, a number one African leader called "catastrophic".

If any investor has a long view on world markets, it's Lord Jacob Rothschild. The 73-year-old scion of the world-famous European banking dynasty need only look to his own family history, which dates back some 200 years to the rise of patriarch Mayer Amschel Rothschild in Frankfurt. "We think right now is an excellent point of entry for taking a long-term position in agriculture," he recently said.

Rothschild did just that last year when he invested $36 million for a 24% stake in a venture called Agrifirma Brazil.

Agrifirma has already acquired some 100,000 acres in the Brazilian state of Bahia and holds an option on another 60,000. This summer it will produce its first crops of soybeans, cotton, and corn. Rothschild and Watson say they chose Brazil in part because there was a large quantity of scrubland, or cerrado, that could be irrigated and converted to farmland, enhancing the value greatly. They also liked the fact that its economy has been growing robustly. And perhaps most important, Brazil has 14% of the world's freshwater resources, the most of any country. "The world is fully in a water crisis, and we haven't realized it yet," says Watson. "When you're exporting agriculture, you're de facto exporting water."

If Water is becoming the "rate limiting Step", the the drought in Australia is forcing farmed to decide crop planting based on water efficiency. recently , the Australian govt. passed tradable rights laws which allow Australian farmers to have the right to use a certain amount of water free. They can sell that right (called a “usufructuary right”) to others. But if they want more water themselves, they must buy it from a neighbour. The result of this trading is a market that has done what markets do: allocate resources to more productive use. Australia has endured its worst drought in modern history in the past ten years. Water supplies in some farming areas have fallen by half. Yet farmers have responded to the new market signals by switching to less thirsty crops and kept the value of farm output stable. Water productivity has doubled. Australia’s system overcomes the usual objections because it confirms farmers’ rights to water and lets them have much of it for nothing.
Tradable-usage rights have another advantage: they can be used in rough and ready form in huge countries such as China and India that do not have meters to measure usage, or strong legal systems to enforce usage rights. Instead of sophisticated infrastructure, they depend on local trust and knowledge: farmers sell a share of their time at the village pump. A system like that works in parts of Pakistan’s Punjab.


As the adjoining graph shows, India, China have to find ways to combat the unsustainable water withdrawal rates and outsourcing crops and tradable water rights are one water to drive the productive use of water. exporting the entire crop production to Africa, as China is pioneering, is one way to conserve water.

A tale of two Rivers : Ganges & Indus

Globally, free-flowing rivers, particularly those moving over a distance of more
than 1,000 Km are increasingly rare. Only 21 (12%) of the world’s 177 longest rivers run freely from source to sea, and the Salween is the last large free-flowing river in SE Asia. We know that free-flowing rivers provide water purification, sediment flux transportation and deposition, coastal and coral reef support, and cultural and aesthetic services which benefit people. Still, our understanding of the contributions they make to the global ecosystem is limited.


Two rivers whose natural flow has been interrupted over the millennia, are the Ganges and the Indus. Both depend on the Himalayan Glaciers for water and have supported millions of people and their livelihood over the ages. ( about 1/2 a Bil.in 2009)


Ganges Water suffers with Over-extraction, combined with climate change, this could spell disater for >200 Million people who depend on it ..


Ganges River Basin

Length: 2,507 Km
Basin size: 1,016,124 Km2
Population: roughly 200 million people Population density: average 401 people/ Km2 Key economic activity: agriculture
Key threats: water extraction, 14 proposed large dams since 2004. Other threat: climate change

Water withdrawal poses a serious threat to the Ganges. In India, barrages control all of the tributaries to the Ganges and divert roughly 60% of river flow to large scale irrigation . India controls the flow of the Ganges into Bangladesh
with over 30 upstream water diversions. The largest, the Farraka Barrage, 18 Km from the border of Bangladesh, reduced the average monthly discharge of the Ganges from 2,213 m3/s to a low of 316m3/s [14%]


The Indus is even more sensitive to climate change. The Himalayan glaciers provide the Indus with 70-80% of its water,the highest proportion of any river in Asia. This is double the proportion of water that they provide the Ganges (30%-40%).


Indus River Basin

Length: 2,900 Km Basin size: 1,081,718 Km2
Population: 178,483,470 people
Population density: 165 people/ Km2
Key economic activity: agriculture
Key threat: climate change
Other threats: water extraction, agricultural pollution, water infrastructure,
6 proposed large dams

The Indus river basin spans parts of four countries (Afghanistan, Pakistan, India and China) in an area that is more than 30% arid,and much drier than the nearby Ganges river basin.
The Indus River is critical for Pakistan’s 160 million people, and irrigates 80% of its 21.5 million ha of agricultural land.

The Indus River is extremely sensitive to climate change due to the high portion of its flow derived from glaciers. Temperature controls the rate of glacier melt, which in turn, provides more water in dry, warm years and less water in cool years. River catchments with a large portion of glacial melt water experience less variability in water flows. With climate warming, many glaciers will no longer exist to moderate the flow of these rivers. Thus communities which depend on glacier water will face more severe water shortages, variability and potentially greater flooding too.
The Indus basin is already suffering from severe water scarcity due to over extraction for agriculture, causing salt water intrusion in the delta. In 1995, the Indus River already supplied much less water per person than the minimum recommended by the United Nations and by 2025 is predicted to suffer even more severe water scarcity.

Lakes : going.. going.. gone

Water like energy will be a defining issue for the next half a century. Lakes are disappearing on every continent and for the same reasons: excessive diversion of water from rivers and over pumping of aquifers.

Disappearing Lakes
River flows are reduced and water tables are falling from over extraction. Lakes are shrinking and in some cases disappearing. Some of the world’s best known lakes - Lake Chad in Central Africa, the Aral Sea in Central Asia, and the Sea of Galilee are shrinking and disappearing...

“walking on the Sea of Galilee is a feat a mere mortal can accomplish,”

Of all the shrinking lakes and inland seas, none has gotten as much attention as the Aral Sea. Ports are now abandoned and look like the ghost mining towns of the American West.

Each day the wind lifts thousands of tons of sand and salt from the dry seabed, polluting the regions for miles around.

The disappearance of lakes is perhaps most pronounced in China. China’s Qinhai province, through which the Yellow River’s main stream flows, there were once 4,077 lakes. Over the last 20 years, more than half have disappeared. The situation is far worse in Hebei Province, which surrounds Beijing. With water tables falling throughout this region, Hebei has lost 969 of its 1,052 lakes.

Lake Chapala, Mexico's largest, is the primary source of water for Guadalajara, which is home to 4 million people. Expanding irrigation in the region has reduced water volume in the lake by 80 percent.


There is no Box

current US policy promotes waste while prices do not reflect true costs. When Elizabeth Kolbert, a writer for the New Yorker, asked energy guru Amory Lovins about thinking outside the box, Lovins responded: "There is no box".Were running out of options and there is really no alternative.. No one knows exactly how many lakes have disappeared over the last half-century, but we do know that thousands of them now exist only on old maps.

Grow your food where the water is : Even if that's in another country !

In China the water table under the North China Plain, an area that produces more than half of the country's wheat and a third of its corn, is falling fast. Overpumping has used up most of the water in a shallow aquifer there, forcing well drillers to turn to the region's deep aquifer, which is not replenishable. As water tables have fallen and irrigation wells have gone dry, China's wheat crop, the world's largest, has declined by 8% since it peaked at 123 million tons in 1997. In that same period China's rice production dropped 4%. The world's most populous nation may soon be importing massive quantities of grain.

But water shortages are even more worrying in India. There the margin between food consumption and survival is more precarious. Millions of irrigation wells have dropped water tables in almost every state. Half of India's traditional hand-dug wells and millions of shallower tube wells have already dried up, bringing a spate of suicides among those who rely on them. Electricity blackouts are reaching epidemic proportions in states where half of the electricity is used to pump water from depths of up to a kilometer [3,300 feet].

A World Bank study reports that 15 % of India's food supply is produced by mining groundwater. Stated otherwise, 175 million Indians consume grain produced with water from irrigation wells that will soon be exhausted. The continued shrinking of water supplies could lead to unmanageable food shortages and social conflict.

Between the start of 2007 and the middle of 2008, The Economist index of food prices rose 78%; soybeans and rice both soared more than 130%. In the five largest grain exporters, the ratio of stocks to consumption-plus-exports fell to 11% in 2009, below its ten-year average of over 15% , this shrinking of food stocks is driving countries with large populations ( India, china ) to try out alternative investment models to food security.

Traditionally Governments used to invest in domestic agriculture, cereal and food production became a prime target for investments. ( Rice in Japan, Fruit in Saudi Arabia Etc..) However, in the recent past, Governments are inviting other governments to develop and invest in their Ag sector. Africa is a very prominent destination and China is a large investor..OPEC/Mid East oil exporting countries are another.

China secured the right to grow palm oil for biofuel on 2.8m hectares of Congo, which would be the world’s largest palm-oil plantation. It is negotiating to grow biofuels on 2m hectares in Zambia, a country where Chinese farms are said to produce a quarter of the eggs sold in the capital, Lusaka. According to one estimate, 1m Chinese farm labourers will be working in Africa this year.Peter Brabeck-Letmathe, the chairman of Nestlé, claims: “The purchases weren’t about land, but water. For with the land comes the right to withdraw the water linked to it, in most countries essentially a freebie that increasingly could be the most valuable part of the deal.” He calls it “the great water grab”.

The China Development Bank has granted loans worth millions of dollars to agricultural processing firms in East Africa. Chinese assistance has been provided to plan crops of cereals as well as cash crops like rubber and pine. Angola has received a $ 1 billion agricultural loan from Beijing to improve the sector after decades of war. Senegal recently signed a deal to sell 10,000 tons of groundnut oil to China during Chinese premier Hu Jintao’s visit.

This is a solution that balances the water-ag-food connection. Given 70% of the world water se is Agriculture, the "export" of crop production to "water-rich" countries in Africa is a trend that will accelerate is the coming years.

Agasthya and the Water Trifecta

Legend has it that Agasthya, the Indian Vedic guru, drank all the water in the oceans to pursue a demon. Now India needs a lot of water to support it's growing populations and a reverse-Agasthya is needed to convert the ocean waters to better use - desalination ?

India is largely a Vegetarian country living off cereals and vegetables. The water needed to grow these crops is a fraction of the water needed to produce meat. China, on the other hand, has a growing population with accelerating consumption of meat. China in 1985 had a per capita consumption of Beef of 20 Kg. In 2009 this consumption is 50kg ..water needed to support the production of meat is 390 Trillion Liters. A kilogram of Meat needs about 15 000 Liters of water compared to about 1000 Liters for Wheat.

The majority of the 2 Billion humans that will be added to the world by 2025, will be in India and China. Over this time frame, wealth will drive the per capita protein consumption in both India and China putting a disproportionate pressure on water needed to grow this food.

Even the cloth to clothe these populations will demand a lot of water. To make a Kg of cotton cloth, 11 000 Liters of Water are consumed. India and China are among the top 3 producers of cotton :

Millions of Bales of Cotton :

1. China 25,500

2.United States 17,559

3.India 12,500


In fact India and China combined are twice the size of the US cotton Production.


With current drought conditions in China and scarcity of Water in India, a change in the policy of both countries to reuse and recycle water is needed now to endure the coming crises in Water.

The trifecta of food, population and water scarcity is the impending challenge before us.

Mexico : water shortages

Mexico City has a lot of water until it was drained in the 60s this Easter, 5 Million people went without water as the water levels in the reservoirs are very low.

The National Infrastructure plan identified in 2007 as a cornerstone of development in Mexico is designed to improve this situation . The NIP identifies over 300 infrastructure projects in multiple sectors with spending targeted at over $141 billion .

Lack of water for human and agriculture poses one of the biggest threats to development and one way is to add more water capacity ( one of the NIP Projects is to build a 650MGD Water plant in Mexico City ) another way is to improve farm productivity.

Maize, a staple diet for Mexicans is very wasteful in the consumption of water compared to corn grown in the US.The most efficient user of water in corn is the US , India at 2500 m3 is closer to Mexico with a 5x water footprint. In fact, if the water used in all the Cereals imported into USA were to be calculated a 7 Bil m3 of virtual water flows from the US to Mexico.


This virtual water is keeping pressure off the stressed water condition in Mexico.

Low Cost Potable Water

I follow the Earth Institute and came across the video clip covering the work JM Eagle did in Senegal , piping water to a village and freeing up time for the folk there, especially women.

One of the images in the video is of a water tower and it looks like the one in the picture on the right.
The equipment in the front in this picture ( from Thailand) is a system we have developed and deployed in many countries that are off the water grid.

Typically towns in the 5 000 to 20 000 range with potable water supply needs. This system has few moving parts, and is easy to operation , with very low maintenance .. We have installed these in St Lucia, Puerto Rico & Thailand.


Rough Costs of a 20 Gal / Day /head for this system works out to a range of 2 to 3 US $ per Year. No special skills, energy consumption is a fraction of a membrane system delivering comparable water quality.