1. Introduction:

The South Asian Free Trade Area (SAFTA) has a strong economy backed by 1.8 billion people’s consumption and investment expenditure pattern. Strict monetary policy measures and relatively stable currencies have helped South Asia to abandon its customary top-of-the-list place as the region with high economic inflation rates. In addition, agriculture and related services will continue to be the key drivers of economic growth, but will produce weak offsets by 2016 if not invested on efficiently (UNESCAP 2013).

The 5 big players in the SAFTA region – Pakistan, Nepal, India, Bhutan and Bangladesh – have now prioritised security of the 3 domains – food, energy and water – for sustainable regional growth. While food production and mainstream agriculture activities remain the largest users of water globally, about 8% of global water withdrawal is used to generate electricity. In addition to this close to 30 percent of total global energy demand also originates from food production and farming activities (Hoff 2011). This has led to a comprehensive policy and practice change with the focus shifting from “F-E-W” to “W-F-E” in the 3 domains of food, energy and water.

India is at the heart of the multi-domain nexus discussions in the SAFTA region, specifically because of its strong linkages with its hugely landlocked neighbours. Geographically India’s agricultural land size and production dwarf its neighbour’s capacity. Being on the lower riparian side of the Ganges, Indus and the Brahmaputra basins at majority of the water entry points, India is also on the delivery side of the water and energy negotiations. India has also been put on a spot due to its farm subsidies currently covered under the Amber box at the World Trade Organisation (WTO) negotiations. The Amber Box is the domestic support or subsidy based on production under the agreement on agriculture (AoA) treaty among WTO countries. In this scenario, focussing on alternate policy concepts linking the W-F-E nexus is the need of the hour. As is with the case of many developing countries in the SAFTA region, India’s farmers are protected by the various fuel and power subsidies in India from the surging volatile hydroelectricity and energy costs. But, agriculture remains vulnerable to existing climatic variability and also rapid groundwater extraction, which threatens the entire regional agricultural production.

2. Methodology:

This position paper aims to develop a common theoretical framework to examine alternative policy scenarios in water, food and energy nexus across the 5 countries. The paper borrows heavily from the perception study and field work carried out under the Sustainable Development Investment Portfolio (SDIP) project (CUTS International 2013) across 5 countries in 24 locations in South Asia. The study was carried across the Indus, Ganges and Brahmaputra basins in the countries of Pakistan, Nepal, India, Bhutan and Bangladesh. The primary research tools were questionnaire generated perception survey dataset and qualitative analysis of Key Informant Interviews (KIIs) texts among farmers and other relevant stakeholders. Theoretical models based on the “F-E-W” and “W-F-E” nexus scenarios were formulated from literature review and author’s calculations. Based on these models a set of dependent variable and independent variables were chosen from the survey database to substantiate the nexus equation. A correlation comparison of each of the two nexus scenarios was carried out. This was followed by running a number of test regression models on the database and the model with the most significant coefficient was chosen to illustrate the appropriate nexus. The two models were then juxtaposed with the GDP growth in India to scrutinize the national impact.

3. Primary Results:

The coefficients of the regression models indicate that clearly both the “F-E-W” and “W-F-E” models are efficient because they work in a loop with interdependent variables. For example, the variables supporting the market linkages in agriculture were dependent on water characteristics like the availability of water in the farm throughout the year, the type of source of water, type of irrigation used etc. However, in this dataset, a clear causal relationship could also be seen for the “W-F-E” nexus through multiple models of water and agriculture interaction. For instance, the farmers at the upper riparian side of the 3 basins were better negotiators of irrigation water procurement and hence also active participants of the local trade structures.

The paper will contribute to policy recommendations for the 5 countries with a SAFTA perspective based on the analysis of the “W-F-E” success model, since agricultural input and out trade are a priority for the South Asian countries (Mathew 2015). This would touch on numerous topics like efficiency of farmer managed market structures and sustainable agricultural practices across the Indus, Ganges & Brahmaputra basins.

References:

CUTS International. Sustainable Development Investment Portfolio (SDIP) Phase 1. October 2013. http://www.cuts-citee.org/SDIP/

Hoff, H. Understanding the Nexus: Background paper for Bonn 2011 Conference: The Water, Energy & Food Security Nexus. Stockholm: Stockholm Environment Institute Report, 2011.

Mathew, Susan. "Agricultural Input Trade & Food Security in South Asia." CUTS International. October 2015. http://www.cuts-citee.org/SDIP/pdf/Agricultural_Input_Trade_and_Food_Security_in_South_Asia.pdf

UNESCAP. "Water-Food-Energy Nexus in Asia & the Paciifc Region." 2013. http://www.unescap.org/sites/default/files/Water-Food-Nexus%20Report.pdf