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Water is an essential element in the global F&A business,
although it is fast becoming a scarce commodity. This
situation is set to worsen considerably, as a growing
global population and higher incomes lead to more
consumption, while rising pollution levels and climate
change alter the dynamics of the supply. The agricultural
sector, which accounts for more than 70 percent of
global usage, needs to be creative in coming up with
solutions. Examples include using efficiënt irrigation
technologies and practices. Investors, meanwhile, are
increasingly aware of the opportunities in the water
sector, which is an interesting development for a leading
F&A bank. But how does Rabobank International view
these developments?
- 4tH
front
While our dependence on water is evident, the solution for water problems
now and in the future is less clear. Some regions have more than enough
water, while others are plagued by droughts. Some seasons have adequate
rainfall, while others are too dry. There is no single solution to this issue. 'The
big issue is that the agricultural sector is one of the biggest consumers of
available water resources," Domenic Carratu, Global Head of the Commodities
Weather Derivatives Group in London, says. 'This position is likely to increase
given the need to increase land under management and erop yields, as well as
the continuing population growth and boost of consumerdemands. However,
different farming methods and innovative technology can help here. On the
one hand, better handling of available water is key, as is the development of
more drought resistant crops. Additionally, there is the possibility to relocate
certain crops outside the 'dry zone'. The question isn't if there is enough water
overall, as certain regions have too much, while others have too little, and this
puts the local areas - and specifïcally the agricultural sector - under intense
pressure." These choices require the involvement of many stakeholders,
including banks which need to act as facilitators and supporters.
That water is a scarce resource is certainly feit in California, where virtually
all agricultural production is irrigated. Farmers in areas that did not receive
any water in 2009 expect to get a forty percent allocation this year, says
Agribusiness Division Manager Bob Dingler. "The last time the Californian
farmers received a full water supply was fïfteen years ago." In Australia,
meanwhile, water storage for irrigation has been adversely affected since
2001To mitigate this shortage the Australian government has shown its
commitment to the concept of water conservation by investing AUD 5.8 billion
ISSUE 24 2010 RI WORLD
