Irrigation for Food Security, Poverty Alleviation and Rural Development in the LMB June 2014 Agriculture and Irrigation Programme Mekong River Commission Authors: Barry Hall, Itaru Minami, Prasong Jantakad, Cong Nguyen Dinh Table of Contents 1. Introduction .......................................................................................................................................... 5 2. Development Trends in the LMB .......................................................................................................... 6 3. Magnitude and Distribution of Irrigation ............................................................................................ 11 4. Irrigation Variety and Variation .......................................................................................................... 14 5. Roles in Water Balance ....................................................................................................................... 18 6. Drought and Flood Mitigation ............................................................................................................ 24 7. Economic Value and Trade ................................................................................................................. 31 8. Food security ....................................................................................................................................... 34 9. Poverty Reduction ............................................................................................................................... 37 10. Climate Change ............................................................................................................................... 40 11. Environment .................................................................................................................................... 43 12. Plans and Trends: ............................................................................................................................ 43 13. Suggestions for Future Irrigation Development ............................................................................. 48 14. Glossary ........................................................................................................................................... 50 15. References ...................................................................................................................................... 51 2 List of Figures and Tables Figure 1: Agricultural Contribution to Economic Activity in four countries of the LMB…………………………..8 Figure 2: World Milled Rice Price Projections to 2022 (US$/ton)…………………………………………………………...9 Figure 3: Total Rice Production by Province…………………………………………………………………………………………..10 Figure 4: Actual (1990‐2012) and Projected Average Rice Yields in the LMB…………………………………………11 Figure 5: Total Cultivable Land and Land Used for Paddy Cultivation in the LMB………………………………….13 Figure 6: Percentage of Cultivable Land that is Irrigated in the Wet Season………………………………………….14 Figure 7: Annual Irrigated Areas in the LMB (ha)……………………………………………………………………………………15 Figure 8: Irrigation Canal in Thailand……………………………………………………………………………………………………..16 Figure 9: Floating Pump in Lao PDR……………………………………………………………………………………………………….16 Figure 10: Wooden Weir in Lao PDR………………………………………………………………………………………………………17 Figure 11: Colmatage in Cambodia………………………………………………………………………………………………………..17 Figure 12: Tnup in Cambodia…………………………………………………………………………………………………………………18 Figure 13: Dike and Sluice Gate in the Delta………………………………………………………………………………………….18 Figure 14: Production of Selected Non‐Rice Crops (000 tonnes)…………………………………………………………..19 Figure 15: Simulation of average daily flow at Kratie……………………………………………………………………………20 Figure 16: Estimated Annual Irrigation Water Use in the LMB by Country…………………………………………...20 Figure 17: Monthly Net Water Use for Irrigation in LMB Countries (Million m3)………………………………….21 Figure 18: Khong‐Loei‐Chi‐Mun Water Transfer Project……………………………………………………………………….22 Figure 19: Water Yield Minus Existing Irrigation Demand……………………………………………………………………..23 Figure 20: Groundwater Table in Prey Veng in the Wet Season…………………………………………………………….24 Figure 21: Groundwater Table in Prey Veng in the Dry Season…………………………………………………………….25 Figure 22: Existing Irrigation Projects with Flood Risk Areas……………………..............................................27 Figure 23: Drought Risk Classification………………………………………………………………………………………………….29 Figure 24: Water Balance in October…………………………………………………………………………………………………..32 3 Figure 25: Financial Returns from Rain Fed and Irrigated Rice in Studied Sites……………......................34 Figure 26: Comparison of Average Financial Returns for Rice and Non‐Rice Crops in a Pilot Study……34 Figure 27: Water Productivity Comparison in an MRC Pilot Study ($/m3)………………………………………….35 Figure 28: Rice Balance of Each Province…………………………………………………………………………………………..38 Figure 29: Poverty Incidence and Water Poverty Hotspots…………………………………………………………………41 Figure 30: Projected Irrigation Demand under a Climate Change Scenario…………………….....................44 Figure 31: Planned Irrigation Area Expansion in the LMB (ha)……………………………………………………………46 Figure 32: Total Existing and Planned Irrigation Area in the LMB (ha)……………………………………………….46 Figure 33: Irrigation Projects in Savannakhet and Khamouane Provinces in Lao PDR……………………….49 Table 1: Arable and Irrigated Rice Areas…………………………………………………………………………………………….12 Table 2: Projected Average Rice Yield under Climate Change……………………………………………………………43 4 1. Introduction Irrigation is the largest water user in the Lower Mekong Basin (LMB) but it only uses 12% of the average annual flow. All the countries of the Basin have policies and plans to expand irrigation areas to increase rice production and exports, diversify food production, respond to food security needs or address rural poverty. Various scenarios of current and planned developments suggest that future flows in the mainstream will accommodate the expansions of irrigation areas planned by all countries. But one study (Kirby et al. 2009) suggests that water deficits may emerge in certain sub‐basins and tributaries. Irrigation can be expected to reduce the risk of crop damage from water shortages in the wet season and expand cropping area in the dry season. But conditions are changing. Climate change will increase the intensity and duration of droughts as well as the frequency of extreme floods. In general, this has an effect of exacerbating saline intrusion in the Delta1and storm surges, thereby threatening crop yields, damaging infrastructure, increasing crop demand for water and raising irrigation pumping costs. This will put a premium on efficient water management. Since climate change is altering the pattern of water availability and sea levels, farmers in some areas are diversifying with aquaculture and non‐rice crop cultivation as part of the adaptation process to the natural as well as technical and economic environments. Irrigation has played a major role in increasing rice yields and consequently also in food security in large areas of the Basin. There is no doubt that irrigation has contributed to the impressive LMB record in increased rice production and export. It must have contributed to reducing the incidence of poverty, but between 13 and 28% of households in LMB countries still live on less than US$1.15/day and extreme poverty still occurs in some areas where food security is fragile. Irrigated rice production generates higher returns than rain fed rice, but some systems are more accessible to wealthier households than poorer households. Irrigated paddy fields generate positive and negative environmental externalities including non‐ commodity benefits such as flood protection, groundwater recharge, aquatic ecosystem nurturing and restoration, and soil productivity improvement and conservation but they can also produce negative externalities such as soil erosion, nutrient runoff and leaching. Irrigation has increased yields and marketable surpluses and staple food security is no longer considered a national problem in the LMB countries. However, rice deficit areas still exist in certain areas and in others the margin of security is very modest. Also, with increasing irrigation and intensive crop production, the important rice‐fish relationship for nutritional food security and livelihoods is at risk. Scenario assessments have suggested that planned irrigation expansions can be achieved without negatively affecting water quality significantly. However, various recent studies have cautioned that the often‐associated increased use of fertilisers and chemicals threatens the common property of fisheries and other aquatic resources, endangering the income and food supply of poorer households (Lorenzen et al. 2007) . 1 In this document, the term “Delta” is used for the Mekong Delta or Cuu Long Delta in the territory of Viet Nam. 5 Canal systems properly located, designed, maintained and correctly used can effectively enhance farmer’s access to water during different seasons, and in many cases allow more than one crop to be grown during the year and improve yields. About 20% of the arable land in the Basin is under irrigation but inappropriate location, poor design, limited attention to maintenance and inefficient operation has reduced efficiency and effectiveness of irrigation services and created the need for extensive rehabilitation investments. Irrigation expansions are planned throughout the Basin, but some plans in southern Cambodia and in the mountainous regions of Lao PDR and Viet Nam appear to be in areas with relatively high mainstream and flash flood risk, which may expose crops and infrastructure to potential damage. It has been suggested that most of the better sites for irrigation investments in the LMB have been developed and relatively marginal sites remain. Recent increases in the price of rice stimulated government and donor interest in irrigation expansion; however, prices have since declined and are forecast to remain at lower levels during the next decade, putting pressure on the potential viability of irrigation investments in marginal areas. Planned dry season irrigation expansion will increase person‐months of on‐farm employment for unskilled workers, but it will also increase rural off‐farm employment, which will strengthen rural economies and may help to reduce young people’s migration to urban centres. This document will provide data and information to assess the pros and cons of future irrigation development potential, their social, economic and environmental implications, and the implications for water balance, increased food production, food security, poverty alleviation, environmental considerations and climate change. It was prepared through an extensive review of the Mekong River Commission (MRC), Member Country and international literature, reports, data and spatial information; and drew upon the most recently available irrigation data base of the MRC. 2. Development Trends in the LMB The population of the Lower Mekong Basin is expected to increase from the current 60 million to more than 90 million (UN 2006) by 2050. Current urban centres, other than Vientiane and Phnom Penh, are relatively small but, during the same period, the proportion of urban dwellers is projected to increase from 15 to nearly 40 million. The population of Lao PDR and Cambodia is very young and better educated than their parents, and are expected to lead the urbanisation trend. GDP is projected to grow at a long term rate of about 4.5% annually, and food production in the LMB will need to increase by an estimated 25% during the next 20 years to keep pace with the expected demographic, income and dietary changes (Islam 2008). The dietary changes accompanying urbanisation and income growth in Asia tend to favour increased meat, dairy, fruit, and vegetable consumption and move away from traditional rice (FAO 2004), suggesting a growing need for increased irrigated crop diversification in the LMB. 6 With economic growth and development in the industrial and service sectors, agriculture has declined as a proportion of GDP but it remains an important contributor to the value of economic output and is the single most important economic activity for the LMB population providing employment, food security and livelihood for nearly 60% of the labour force (See Figure 1). Figure 1: Agricultural Contribution to Economic Activity in four countries of the LMB Source: World Bank 2012 (data from 2008) Although economic development has been characterised by a decline in the relative importance of agricultural production, in some areas the sector has become more complex through the increased service requirements for irrigated and intensified crop production, resulting in more diversified input and output value chains that expand the rural service employment and income base. Although the proportion of the population economically active in agriculture has declined only moderately in Lao PDR, Cambodia and Viet Nam since 1990, the decline has been more significant in Thailand where development of agricultural production and the rural service sector has been more intensive and is resulting in labour shortages for the agricultural sector. This trend is expected to accelerate in Lao PDR and Cambodia as their rural and urban economies become more diversified and off‐farm employment expands. In Lao PDR, Vientiane and other areas, urban expansion is attracting increasing numbers of farmers and farm youths into paid labour, prompting Lao farmers to perceive that labour shortage is one of the most important constraints to agricultural expansion (MRC 2010d). Productivity in agriculture, in terms of GDP per worker is relatively low, particularly in Viet Nam ($379), Lao PDR ($426) and Cambodia ($458). In more mechanised and diversified northeast Thailand, worker productivity is considerably higher ($969) (World Bank 2012; MRC 2010c). Viet Nam and Thailand are the world’s largest rice exporters, although both Lao PDR and Cambodia have recently begun to produce national surpluses and are exporting, mainly to China, Thailand and Viet Nam, and organic rice is being exported into the EU. Future opportunities into world markets, however, are not expected to grow as rapidly over the next few decades as they have during the recent past. The World Bank estimates that overall demand for food will decrease despite expected income gains (World 7 Bank 2012), and FAO estimates that cereal demand will grow at 1.5% to 2030, somewhat slower than the previous two decades (FAOSTAT 2012). Rice prices spiked at above US$570/tonne and averaged about US$550/tonne between 2009 and 2012, bringing a surge of farmer interest in expanding production, but have begun to decline and, along with other major staple crops, are expected to continue to decline in the near term as production on a global scale responds to the recent high prices. Nonetheless, after these initial declines, long‐term growth in global demand for food, a depreciating US dollar, and continued bio fuel demand are expected to hold prices of many crops above pre‐2007 levels (USDA 2013, World Bank 2012).Figure 2 shows that milled rice prices (Thailand 5%) are projected to remain in the low US$400 range over the next decade (USDA 2013). Figure 2: World Milled Rice Price Projections to 2022 (US$/tonne) Source: USDA Economic Research Service, 2013 Current Basin rice production stands at about 53 million tonnes (World Bank 2012), most of which is produced in the Delta and the Mun‐Chi Basin of northeast Thailand; Savannakhet, in Lao PDR; and western and south‐eastern Cambodia (see Figure 3). 8 Figure 3: Total Rice Production by Province 9 Average rice yields in the predominantly rain fed crop growing systems of the LMB are relatively low compared to other Southeast Asian countries (FAOSTAT 2012), though yields have been growing at around 3% annually during the past two decades in Cambodia, Lao PDR and Thailand. Pure rain fed rice crop yields in these countries are currently around 2.3 tonnes/ha during the wet season, increasing to about 2.8 tonnes/ha with supplementary irrigation and to between 3.1 and 3.9 tonnes/ha during the irrigated dry season. In the Delta, however, wet and dry season irrigated rice yields are 35% higher, and a third season crop is obtaining about 7.0 tonnes/ha (MRC 2010c). Figure 4: Actual (1990‐2012) and Projected Average Rice Yields in the LMB Source: FAOSTAT 2012; Shivakoti et al. 2014 Generally, the areas of the LMB with the highest productivity are those with the highest rainfall or irrigation water use (MRC 2010d). Along with higher yielding varieties and improved water agronomic practices, better water management is fundamental to increasing yields (Young 2009). As farmers increase their knowledge, experience and confidence in working with more intensive farming systems, prospects for further increases in yield will continue to improve. The past trends of average rice yields show rather steady growth, as shown in Figure 4 (Shivakoti et al. 2014). In Thailand, yields are expected to increase by 25% to 2025 compared to 32% in Lao PDR and 35% in Cambodia if these trends continue. In Viet Nam, already producing high yields, the trend projects growing by 19% (Shivakoti et al. 2014). Although rice is the major crop in the Basin, a number of non‐rice crops are grown in the Basin. Despite potentially as high returns and lower water requirements, farmers have been reluctant to diversify beyond rice cultivation, in spite of considerable government encouragement in some regions. As the staple food for the majority of the LMB population, inhabitants consume between 100 kg/cap/yr of milled rice in Thailand and 162 kg/cap/yr in Lao PDR (MRC 2010d).With continuing urban population and income growth, and improving market access, increasing local and world demand for non‐rice crops is likely to stimulate increased diversification. 10
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