September 30, 2020

The History - And Future - Of Global Freshwater Resources

by Sara Wensley

Director, Growth and Marketing

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The History - And Future - Of Global Freshwater Resources
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A deep-dive into current and historical case studies within the unfolding global water crisis, the technology and governance involved in using water for agriculture today, and what farmers can do to reduce their impact on our future’s supply.

We find ourselves in a moment of mounting global water crisis. Freshwater scarcity is palpable in our present-day world of 7.8 billion people, and as the human population grows to as much as 10.2 billion over the next 30 years, global water stress will become more extreme.

According to the UN, roughly 47% of people already live in a region that suffers significant water stress at least 1 month out of the year, on average. By 2050, due to uneven distribution of population growth and the depletion of freshwater resources, this number will rise to at least 57%.

As one of the biggest drivers of global freshwater demand throughout history, agriculture will play an outsized role in the evolution of water stress around the world. Conserving water in farming, and maintaining the health of existing water sources used for agriculture, will be critical aspects of the solution to this crisis.

Below, we’ll take a deeper look at some current and historical case studies within the unfolding global water crisis, the technology and governance involved in using water for agriculture today, and what farmers can do to reduce their impact on our future’s supply. We’ll conclude with how water influences farmland property values and why this should matter to you.

People have been manipulating water for farming for millennia

Some of the most iconic ancient human civilizations were built on extensive, complex systems for delivering water to farmland. For example, the river basins of the Nile, Tigris and Euphrates gave rise to the civilizations of ancient Egypt and Mesopotamia, respectively. The floodplains of these rivers were home to extremely fertile soils composed of sediment deposited by the rivers during flood season. And, in both regions, farmers developed ways to control the flow of these rivers during high water through man-made basins, channels and canals.

The archeological records of these civilizations show the sophistication and productivity of farming that they enjoyed, even more than 4,000 years ago. Elsewhere, other civilizations sprang into prosperity through a myriad of technical innovations outside of river floodplains: the Roman Empire built extensive aqueduct networks to deliver water to both farms and cities across its entire territory, many of which are still standing today; farmers in some parts of the Aztec civilization, meanwhile, were turning entire wetlands into floating gardens.

Yet, over time, the intensification of farming and rapid growth of their populations eventually led these agricultural empires to ruin. In fact, the demise of each of those entire civilizations can be told in large part through the role of water, and offer some good lessons on why making sustainable, efficient use of freshwater resources is critical to the future of farming.

The World Resources Institute, a think tank in Washington, D.C., recently launched a new policy analysis program focused on water resource scarcity around the world, and revealed that 17 countries home to more than 25% of the world’s population are facing extreme water stress.

Notably, the majority of the countries in that list of 17 are located in the Middle East, North Africa and the Mediterranean. Looking closer, WRI’s data also make clear that at the sub-national level, places like central Mexico and the American Southwest face similar levels of water stress, even though their countries are comparatively better off as a whole thanks to other much rainier regions.

Put another way, this means that the territories of each of these once-great ancient civilizations - Mesopotamia, ancient Egypt, and the Roman and Aztec empires - are now among some of the most heavily water-stressed parts of the world. The Tigris and Euphrates rivers, thanks to extensive damming, drainage of wetlands and damage inflicted by a rash of wars over the last century, now barely reach their outlet into the Persian Gulf during times of drought.

Modern technology is helping us become more efficient water users

The lesson from the history of these civilizations is simple: To avert disaster and maintain prosperity in agriculture, preservation of ample, high-quality water resources is crucial. Luckily, as with other areas of modern farming, technology is proving to be an important enabling force.

In the span of time between ancient agriculture and the 21st century, a great deal about how farms are irrigated has obviously changed. Primitive approaches to irrigating via flooding a field or a basin, or filling entire furrows with water within a field, have given way to tech-enabled approaches such as center pivot sprinklers and extremely precise drip irrigation systems, which use perforated hoses to deliver water in much smaller and optimally-timed doses. These technologies have undoubtedly made farms much more efficient users of water.

As the global human population and its demand for food has grown, the land area used to grow crops has expanded greatly. Recently, much of this expansion has been directly enabled by the increase in irrigation technology’s capabilities. Furthermore, farmers around the world are now by far the most intensive users of water pumped from underground aquifers.

In fact, the use of groundwater for irrigation is particularly common in arid or semi-arid regions where farmers may not have ample supplies of surface water readily available. Both the US and India, for example, are major users of groundwater for agriculture.

To augment water supply beyond surface water and groundwater, other approaches are being developed for supplying water to farms from alternative sources, with varied success. The two leading examples are use of treated wastewater and desalinated seawater. Still, compared to water from rivers, lakes and aquifers, both of these technologies are usually prohibitively expensive, and also carry non-economic risks. If water is insufficiently desalinated, contamination of soils with salts and other imported chemicals can be devastating to the soil’s fertility; meanwhile, the simple “yuck” factor that comes with using wastewater for irrigation has proven to be a significant barrier to adoption of using treated wastewater for farming.

Amid increasing water scarcity, responsive governance of water resources will be critical

Governance of water resources has always been a tricky subject, particularly in arid or drought-prone regions. Legal systems for water’s appropriation are being disrupted both by water scarcity and growing demand from increased population.

Water rights frameworks emerged originally from governing surface water, and essentially have two main branches: “Riparian” rights and “Appropriative” rights.

Riparian rights entail that any landowner whose land is situated on the banks of a river is entitled to the “reasonable use” of water from the river, so long as his or her use doesn’t compromise other users of that water downstream from that land. In places where surface water is abundant year-round, riparian rights are all that’s needed - in fact, having riparian land can even be a disadvantage in parts of the world where rainfall is plentiful and rivers are prone to flooding and waterlogging soils.

On the other hand, in more arid regions, riparian rights alone are insufficient, as many farmers will be denied access to water simply by not being located near a river. Appropriative water rights, therefore, give landowners whose land is not directly next to a watercourse the right to use surface water via a system of permitting and diverting water through canals, pipes and aqueducts at predetermined delivery rates.

Groundwater resource governance presents an especially difficult challenge

Variability in surface water supply has driven farmers to rely increasingly on groundwater. By contrast to surface water, groundwater use has been largely unregulated throughout most of history both in the US and abroad.

Often, appropriative groundwater rights are determined simply by proximity and a first-come, first-served basis. A landowner looking to pump water from the aquifer beneath his or her land has generally been allowed to do so unchecked, and even to transfer water pumped from one tract of land to another.

With access unrestricted, excessive groundwater pumping has become a leading factor in some of today’s most pressing water crises. India, for example, has been through a string of historic droughts over the last couple of decades and is now facing a compounding crisis, as farms have depleted the country’s groundwater by as much as 23% just in that span.

Similarly, unchecked groundwater use has led to the rapid depletion of several of America’s largest aquifers, including the once-enormous Ogallala Aquifer of the Great Plains, a region considered America’s “breadbasket” for its phenomenal scale of grain production. Elsewhere, California’s historic drought of 2011-2016 caused another spike in groundwater pumping, in a state that has already seen some of its land subside more than 30-50 vertical feet in some places thanks to depletion of its aquifers.

To avert disaster, new legal frameworks are emerging, such as California’s Sustainable Groundwater Management Act, commonly referred to as “SGMA”. This new law requires each of the state’s agricultural water districts to set up a Groundwater Sustainability Agency responsible for managing supply, and ensuring that aquifers are not overdrafted. Its implementation will be a challenge: Although California’s Central Valley is one of America’s most productive agricultural regions today, certain parts of it rely exclusively on water pumped from already-stressed aquifers. Many Central Valley farmers may choose to agree to fallow large amounts of presently-cultivated land in the interest of water conservation.

Yet despite the implementation challenges, SGMA also provides a great example of where mutual recognition by stakeholders of the need to control groundwater pumping in the interest of sustainability has manifested into law. SGMA, in fact, has had some particularly vocal backers even from within agriculture. Driscoll’s, one of the world’s leading distributors of berries, is headquartered in central California and has been a vocal supporter of SGMA, even convening its own local governing bodies around groundwater conservation before the law was passed.

If you invest in farmland, you are investing in water

Before you invest in farmland, you must get to know the landscape you’re investing in, its history, and the specific characteristics of the properties you target. Water is central to the property you’re investing in. Surface water and groundwater access, the health of those resources, and demands from the surrounding area that could affect your property all play a significant role. At FarmTogether, sustainable and prosperous water use is central to our sourcing model.

Our approach at FarmTogether is to make evaluating these factors a central part of our due diligence process, and ensure that all of the investments we make are chosen specifically due to a favorable water resource profile. We also make these characteristics of each property a central feature of the webinars we conduct when introducing each new offering.

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Disclaimer: FarmTogether is not a registered broker-dealer, investment advisor or investment manager. FarmTogether does not provide tax, legal or investment advice. This material has been prepared for informational and educational purposes only. You should consult your own tax, legal and investment advisors before engaging in any transaction.

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