HIGH PANEL ON WATER,FOOD AND ENERGY 5. WORLD WATER FORUM Istanbul, 18. March 2009

1. Overview Global Challenges for Food and Agriculture HIGH PANEL ON WATER,FOOD AND ENERGY5. WORLD WATER FORUMIstanbul, 18. March 2009 Alexander Müller Assistant Director-General Natural Resources Management and Environment Department Food and Agriculture Organization of the United Nations (FAO)

2. 1. DEMAND FOR FOOD WILL GROW

3. The driving forces of demand to 2030 The main drivers of the long-term outlook Slow-down in world population growth 12.0 0.9 0.8 0.7 9.0 0.6 0.5 Annual increments (billions) 6.0 Total population (billions) 0.4 0.3 3.0 0.2 0.1 0.0 0 1750 1800 1850 1900 1950 2000 2050 Source: UN, World Population Assessment 2006

4. The number of undernourished is increasing

5. Is there enough water? Agricultural resource use: state, challenges and options for the future Irrigation water withdrawal as a share of renewable water resources (%) 70 Today in 2030 60 50 40 30 20 10 0 East Asia South Asia Latin America sub-Saharan Africa Near East/North Africa All developing countries Source: Global Perspective Studies Unit, FAO

6. The resource base How much land is in use, how much is available now and in 2030? 1200 1066 1031 1000 874 Suitable for rainfed crop production 800 Arable land use, 1997/99 million ha 600 497 366 400 387 220 265 200 232 228 99 207 203 86 0 Latin America sub-Saharan East Asia South Asia Near Industrialized Transition and Africa East/North countries Economies Caribbean Africa Source: Global Perspective Studies Unit, FAO

7. 2. THE ENERGY MARKET - with a focus on BIOENERGY-

8. Energy Consumption and Income are Linked 5 billion low-income people in countries with rapid economic growth rates

9. How big is the market for Energy? Energy production and potential, biofuels and land use 1.) Potential based on Schrattenholzer and Fischer, IIASA, 2000 2.) Based on IEA: Key energy statistics, 2006 3.) Derived from http://www.earth-policy.org/Updates/2005/Update49.htm, Earth Policy Institute

10. How big is the market for Energy? Energy production and potential, biofuels and land use 1.) Potential based on Schrattenholzer and Fischer, IIASA, 2000 2.) Based on IEA: Key energy statistics, 2006 3.) Derived from http://www.earth-policy.org/Updates/2005/Update49.htm, Earth Policy Institute

11. How big is the market for Energy? Energy production and potential, biofuels and land use 1.) Potential based on Schrattenholzer and Fischer, IIASA, 2000 2.) Based on IEA: Key energy statistics, 2006 3.) Derived from http://www.earth-policy.org/Updates/2005/Update49.htm, Earth Policy Institute

12. Bioenergy supply in 2004 (according to IEA 2006)

13. Energy market (TPES): nearly 500 EJ Biomass: 50 EJ (80% in developing countries) Biofuels: 2.1 EJ, on ca. 26 million ha Transport energy needs: ca. 95 EJ Crop area to cover transport energy needs: >1000 million ha, i.e. 2/3 of global crop area. Energy market is large, creates perfectly elastic demand for agricultural produce at break-even points (parity prices). How big is the energy market?

14. Preiseffect 1: Floorprice effect The impacts on prices and markets Source: Global Perspective Studies Unit, FAO

15. The competitiveness Price effect 2: Price link tightens with rising energy prices Parity prices: Petrol–Crude oil – Ethanol Various feedstocks and farming/production systems 120 100 80 Crude, US$/bbl 60 40 20 0 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 Petrol, US$/l Gasoline-Crude US$ Cane Brazil, top producers Cane, Brazil, average Cassava, Thaioil, 2 mio l/d Maize, US Cassava, Thailand, OTC joint venture Palmoil, MPOB project Mixed feedstock Europe BTL: Synfuel/Sunfuel Josef Schmidhuber (2005)

16. Ethanol production, 2005-2017 Source: OECD-FAO, 2008

17. Biofuels will have a modest impact on energy markets... • 62 billion litres in 2007 (90% in US, Brazil and EU) • 150 billion litres in 2017 (80% in US, Brazil and EU) • 1.8 percent of world transport fuels in 2007 • 3.5 percent of world transport fuels in 2030 • total financial support over $6 billion in US in 2006 • and about $5 billion in EU in 2006

18. 3. FOOD, ENERGY AND WATER

20. A few numbers • Water needed to produce: • 1 kilo of wheat: 1 000 litres • 1 kilo of meat (beef): 15 000 litres • Daily water requirements per person: • Drinking: 2-3 litres • Domestic needs: 20–300 litres • Food: 2 000-3 000 litres • with 2 500 litres of water, we can produce: • food for one person for one day • 1 litre of biofuel

21. Biofuel and water use (2005) Source: de Fraiture, IWMI, 2007

22. Projections for water demand - 2030 Source: de Fraiture, IWMI, 2007

23. Projected impacts of climate change Global temperature change (relative to pre-industrial) 0°C 1°C 2°C 3°C 4°C 5°C Food Falling crop yields in many areas, particularly developing regions Falling yields in many developed regions Possible rising yields in some high latitude regions Water Significant decreases in water availability in many areas, including Mediterranean and Southern Africa Small mountain glaciers disappear – water supplies threatened in several areas Sea level rise threatens major cities Ecosystems Extensive Damage to Coral Reefs Rising number of species face extinction Extreme Weather Events Rising intensity of storms, forest fires, droughts, flooding and heat waves Risk of Abrupt and Major Irreversible Changes Increasing risk of dangerous feedbacks and abrupt, large-scale shifts in the climate system

24. THANK YOU

25. 4. BIOFUELS AND FOOD SECURITY- TANZANIA-

26. Bioenergy and Food Security Project (BEFS) Objective: Mainstreaming food security concerns into national and sub-national assessments of bioenergy potential. • Phase 1: Develop analytical framework and guidance to assess the bioenergy and food security nexus • Phase 2: Assess bioenergy potential and food security implications • Phase 3: Strengthen institutional capacities, exchange knowledge, pilot sustainable and food-secure bioenergy practices and recommend standards and policies BEFS Partners: Cambodia, Peru, Tanzania and Thailand

27. TANZANIABEFS Analytical Framework 1. Biomass Potential Fed with COUNTRY SPECIFIC DATA agricultural and environmental impact 2. Biomass Supply Chain Production Costs 5. Household level Food Security Bioenergy Food Security Household socio-economic impact technological and industrial impact 4. Economy wide Effects 3. Agriculture Markets Outlook National and international socio-economic impacts

28. TANZANIAClimatic resource inventory Meteo Station (temp, rainfall, evapotranspiration) Thermal zones Length of growingperiod Soil and landform resources inventory Soil (dominant) Elevation Slope

29. TANZANIASelected “reality checks” in the field Case study in Kisarawe and Bahi indicate that biofuels investment impact on livelihoods so far... • Smallholders, already structurally marginalized from land, inputs, and markets face risk of displacement and land grabbing • Inconsistent land tenure system leads to misappropriation during the land acquisition process; risk perception of selling land very low • Decentralized government and weak local regulatory institutions increase smallholders' vulnerability (compensation for land never paid) • Expensive transportation system contribute to unreliable extension services and missing markets for crops, inputs, and labour that influence smallholders disinterest to modernize and generate surplus production.

30. TANZANIASome of the key preliminary Modelling Results • Conservation agriculture increases the amount of suitable land • Safeguarding livelihoods requires improved land institutions • Outgrower schemes can be economically viable. • Cassava-based ethanol production incorporating smallholders into agro-fuel production chain can be economically viable. • With investment in agro-industries ethanol made out of sugar cane molasses or cassava can be competitive for export (under EBA). • Long-term coexistence with food security requires continuous monitoring, institutional support, extension and training. • To better assess impact of food prices increases, the next household budget survey would need to include household agriculture income by crop.

31. Production costs exceed net fossil fuel prices for most major biofuels Source: OECD-FAO, AgLink/Cosimo database 2008

32. ...and varying impacts on greenhouse gas emissions... • impacts vary with feedstock, location, agricultural practices and conversion technologies • 80-90 % reductions for Brazil sugarcane ethanol and 2nd-generation biofuels • 40-60 % reductions for EU rapeseed biodiesel • 10-30 % reductions for US corn ethanol • smaller reductions—or even increases—when land use change is considered

33. Preliminary BEFS recommendations .....if it • does not hinder the natural resource base • involves smallholders, increases employment and takes into account the specific risks for subsistence farmers • increases access to markets and infrastructure • builds domestic skills and expertise • ensures local benefits and sustainability of the industry • monitors welfare impacts at the household level • respects and protects the livelihoods of women • strengthen farmer’s negotiating power • further enhances institutional capacity

34. Biofuel impacts on prices?

35. ...but much bigger impacts on agriculture and food security • a significant and growing share of agricultural land and commodities are used for biofuels