Proposed Regional Programme on Climate Change, Food Security and Trade Linkages in South Asia

1. Proposed Regional Programme on Climate Change, Food Security and Trade Linkages in South Asia By Rashid S. Kaukab Regional Meeting Climate Change and Food Security 27 June ,2011 Dhaka, Bangladesh

2. Structure of the presentation • Introduction to SAARC • SAARC: Climate Change-Food Security-Trade Linkages • Trade-Food Security link • Trade-Climate Change Link • Climate Change-Food Security Link • Climate Change-Food Security-Trade Link • Capacity Building Needs • Proposed Regional Programme

3. Introduction to SAARC • Economic Overview • Agriculture holds a central place in all South Asian economies, except for Maldives • Moreover, this sector employs more than half of the labour force in SAARC countries, reaching 97% in Bhutan

4. Introduction to SAARC • SAARC Food Imports and Exports • There is a growing dependence on cereal imports, particularly for India • The same trend can be obvserved for Live Animals and Meat, and Marine Products

5. Introduction to SAARC • Intra-SAARC Food Trade • Despite two decades of efforts at regional economic integration, South Asia is one of the least-integrated regions in the world • Intra-SAARC trade in Food is very marginal

6. Introduction to SAARC • Relevant Policies • Agreement on the South Asian Free Trade Area (SAFTA) (2006). While this is a good step, all member countries maintain a sensitive list of products with no tariff concessions. • SAARC Regional Strategy and Regional Programme for Food Security (2008) • Action Plan on Climate Change (2009-2011). Prioritized regional issues related to food security such as over exploitation and degradation of natural resources. SAARC is transitioning from a declaratory to implementation phase, envisaging itself to play more enabling roles in addressing climate change. • The Thimpu Statement on Climate Change (2010) proposes an action-oriented programme

7. SAARC: Climate Change-Food Security-Trade linkages Climate Change-Food Security Link The expected impacts of Climate change on food security include: NEGATIVE • Impact on coastal economic activities: Increased land salinity and land loss in coastal areas, displacing several million people and severely impacting coastal economic activities including fisheries • Impact on cereal productivity: 15 to 30% decline of cereal productivity on average across the region by the middle of the century and a rise of food prices by 94 to 111% for wheat, and by 32 to 37% for rice. • Water stress: 2 to 4% rise in temperature will expose up to 924 million people to water stress

8. SAARC: Climate Change-Food Security-Trade linkages Trade-Food Security Link • Because of agricultural production shortages, these countries are heavily dependent on food imports, which are not sourced in South Asia because of a number of trade barriers and supply-side constraints. POSITIVE • Trade offers the possibility to stabilize domestic prices, to balance food deficiency and to harness comparative advantage • Trade can enhance food security by increasing livelihood opportunities directly through improved profitability and spin-off and multiplier effects. NEGATIVE • However, it also exposes a country to prices volatility on international markets which can threaten food security. Moreover, the current WTO agreements allow distortive practices (e.g. subsidies, export restrictions)

9. SAARC: Climate Change-Food Security-Trade linkages Trade-Climate Change Link Climate change may significantly alter trade flows. • Climate change could exert significant impacts on trade flows, given its expected impacts on agricultural yield. • Climate change can alter existing patterns of comparative advantage in trade, e.g a sudden increase in price will shift production patterns as farmers are driven by higher returns. Trade can affect the environment in both positive and negative manners. • Trade liberalization and foreign direct investment may bring in new techniques of production that are more energy efficient. • However, trade itself will lead to more GHGs given increased transportation and greater distances.

10. SAARC: Climate Change-Food Security-Trade linkages Climate Change-Food Security-Trade Linkages A positive food security-trade linkage to face climate change challenge can be established through: • clearly aligning trade, environment, and agricultural policies; • understanding the particular food security needs and the impact of climate change on food security in a country; • targeting trade policy and its instruments to ensure steady imports in the case of structurally food-deficient countries; • improving export performance to garner resources to pay for needed food imports; and • adjustment of production and trade patterns according to climate change adaptation and mitigation plans.

11. SAARC: Climate Change-Food Security-Trade linkages An Endowment-Entitlement Framework for Climate Change-Food Security-Trade Linkages Endowment-Entitlement Equation: A small piece of land, good rainfall, and access to inputs may comprise the endowment set of a small rice farmer in Bangladesh. She uses these endowments to get her entitlements for livelihoods. This is her endowment-entitlement equation. Impact of Climate Change: Climate change will introduce shocks like variations in rainfall, temperature, flooding etc. into the equation and change it. For example, either less or much rainfall may render her plot of land incapable for rice production and thus reduce the set of her endowments. Even if she continues to have that plot of land and access to rice market, she may not be in a position to transfer that ‘endowment’ to her ‘entitlement’ due to inability to produce rice. Impact of Trade: The linkage between endowment and entitlement will also depend on other factors and here trade can play an important role. For example, trade can offer another set of endowment (e.g., increased opportunities in manufacturing through Duty-Free-Quota-Free market access for Bangladeshi manufactured exports) to compensate for the loss of earlier set of endowment of the farmer or use her given set of endowment to convert into entitlements through a different utilization, e.g., producing crops that are suited to the changed climatic conditions with a market in the region. Application of Framework: Application of this framework in a regional programme will allow for robust and evidence-based research, focussed and targeted advocacy, and contribution to appropriate and integrated policies and action plans related to climate change, food security, and trade that target these linkages to improve endowment-entitlement equations.

12. Capacity Building Needs Capacity needs and recommendations for the way forward Capacity needs of SAARC stakeholders can be categorized into the following broad categories: • Research to fill the existing gaps in the knowledge and understanding of climate change-food security-trade linkages • Knowledge and expertise development to establish and implement holistic trade, food security, and climate change mitigation and adaptation policies and responses • Awareness-raising and advocacy to widely and effectively disseminate the relevant information about the imminent challenges, climate change-food security-trade linkages, and the need for adequate responses. • A forum that brings together the sets of actors dealing with climate change adaptation, export promotion and agricultural production to share perspectives and identify integrated responses.

13. Proposed Regional Programme Main Objective To build the capacity of stakeholders in the SAARC region to better understand the climate change-food security-trade linkages and design and implement mitigation and adaptation responses that use trade to improve food security in the face of climate change challenges. The focus will be on shielding the poor and marginalized from the worst effects of climate change on food security. Specific Objectives • Increasing knowledge on climate change-food security-trade linkages in the region • Increasing capacity of the stakeholders to take advantage of the positive linkages and develop adequate policies and strategies to deal with the negative linkages • Increasing interaction among relevant stakeholders from the region on these issues to facilitate integrated and coordinated responses

14. Proposed Regional Programme Methodology • Collaborative and evidence-based research involving partners in Norway as well as in project countries to improve the understanding of climate change-food security-trade linkages • Building regional, multi-stakeholder networks to pool knowledge and expertise and to develop integrated policy and programme responses • Maximizing synergies by establishing partnerships with other relevant organizations, particularly FAO, UNEP, and WMO • Emphasizing the regional dimension including of the problems and their solutions • Empowering the poor and marginalized through awareness-raising and advocacy activities

15. Proposed Regional Programme Activities and Outputs Organically linked Research-Advocacy-Networking (RAN) activities for: • Identification of climate change-food security-trade issues affecting the region • Building knowledge base on identified issues through research and pooling of experiences • Utilizing knowledge for policy and programme development and appropriate legislation • Feeding of information and lessons into other important processes in the region • Utilizing the information and lessons to inform negotiating positions of SAARC countries in the WTO and other relevant international fore, e.g. climate change negotiations • Providing information and lessons to policy makers and local communities as well as international agencies like FAO, UNEP, WMO

16. Proposed Regional Programme Expected Outcomes • Expanded body of knowledge on issues related to climate change, food security and trade • Improved understanding among stakeholders in the region of the climate change-food security-trade linkages • Greater involvement of relevant stakeholders in related policy making and implementation

17. Proposed Regional Programme

18. Proposed Regional Programme

19. Thank You !