Reforming water policies in agriculture

agriculture policy brief

Reforming water policies in agriculture

June 2019

ater policies in agriculture need to respond to new water risks and ensure that agriculture W production is sustainable; but reforming water policies in agriculture is challenging. ast water and agriculture reforms show the importance of taking advantage of windows of P opportunities to adopt policy changes effectively, and that preparation is key. hen the time is right, governments should build a robust evidence basis, align institutions W with the policy change, consult stakeholder strategically, rebalance economic incentives, and set a flexible reform sequencing.

What’s the issue?

The agricultural sector faces increasing water risks, mainly due to climate change and increased water demand from other economic sectors. In many regions, agriculture production exacerbates these risks, as a major water user and polluter, while impacting water supply for other users and freshwater ecosystems.

A review of recent policy changes in OECD countries related to water in agriculture shows that introducing reforms can be accelerated by external factors, including major water-related events (droughts, floods or pollution).

Reforms can also be effective when the economy is stable and when political conditions are right to support reform.

Governments can also facilitate reforms by ensuring sufficient preparation time before reforms, by discussing the trade-offs for stakeholders, or by building a coalition of the willing.

Despite progress, further agriculture and water policy efforts are needed to respond to these growing challenges.

Governments may be aware of potential policy options but they do not always know how to successfully introduce and implement these options. Policy changes in this area are also often long, gradual, complex and not always fully implemented.

Policy changes on water in agriculture evolve over time: Irrigation support transfers in selected OECD countries 1800

Australia

Chile

Canada

EU

Israel

Japan

Korea

Mexico

New Zealand

1600 1400 1200 1000 800 600 400 200 0

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Turkey

United States

Reforming water policies in agriculture

The reform process: five necessary conditions for effective reform processes 3. Strategic stakeholder engagement and trust-building 1. Evidence-base supported definitions, objectives and evaluations

Robust basis to initiate change

>> REFORM PROCESS >>

5. Adjustable smart reform sequencing

2. Policy change-compatible governance and institutions 4. Rebalanced economic incentives to enable policy change

What should policy makers do?

The timing and design of reforms should be sufficiently flexible to achieve practical and effective policy changes for water in agriculture. More specifically, governments should follow the following recommendations.

While preparing to introduce reforms, governments should: •

Improve their water governance system so as to clarify the roles and responsibilities of the relevant authorities, and to ensure coherence and coordination among government bodies;

•

Support relevant scientific and policy research that encourages sustainable water use in agriculture;

•

Educate the public about agriculture and water challenges and risks;

•

Build capacity of government agencies to improve reform implementation.

When engaging in the reform, governments should fulfil the following five conditions (Figure 2): The following five conditions are necessary to reform policies that affect water use in agriculture, or regulations aimed to reduce groundwater use or diffuse pollution.

However, the relative efforts governments need to devote to each condition will vary depending on the policy change.

1.

Support evidence-based problem definition, reform objective setting and impact evaluation;

2.

Align the governance system and institutions with the policy change;

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3.

Engage stakeholders strategically and build trust between local policy authorities and farmers;

4.

Rebalance economic incentives to enable policy change, including by considering possible compensation mechanisms to cope with short-term economic losses resulting from policy changes, while balancing efficiency and distributional concerns;

5.

Define an adjustable smart reform sequencing; this could combine, for instance, a long-term performance objective, flexible implementation options for the reform at local levels, and credible sanctions.

Further reading • Gruère, G. and H. Le Boëdec (2019), “Navigating pathways to reform water policies in agriculture”, OECD Food, Agriculture and Fisheries Papers, No. 128, OECD Publishing, Paris, https://doi.org/10.1787/906cea2b-en.

• Gruère, G., C. Ashley and J. Cadilhon (2018), “Reforming water policies in agriculture: Lessons from past reforms”, OECD Food, Agriculture and Fisheries Papers, No. 113, OECD Publishing, Paris, https://doi. org/10.1787/1826beee-en.

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