IMPACT ON FOOD SECURITY AND RURAL DEVELOPMENT OF REALLOCATING WATER FROM AGRICULTURE
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The competition for limited water resources between agriculture and more highly
valued domestic and industrial water uses is rapidly increasing and will likely require the
transfer of water out of agriculture. This paper reviews and synthesizes the available
evidence of the effects of water transfers from agricultural to urban and industrial areas
on local and regional rural economies; and analyzes the potential impacts of a large
reallocation on global food supply and demand. It concludes with a discussion on the
potential for water policy reform and demand management to minimize adverse impacts
when water is reallocated from agriculture. It is argued that comprehensive reforms are
required to mitigate the potentially adverse impacts of water transfers for local
communities and to sustain crop yield and output growth to meet rising food demands at
the global level. Key policy reforms include the establishment of secure water rights to
users; the decentralization and privatization of water management functions to
appropriate levels; the use of incentives including pricing reform, especially in urban
contexts, and markets in tradable property rights; and the introduction of appropriate
water-saving technologies.