Making water pivotal in the design of food systems

Water as an organizing principle in food production

With about 70% of our blue freshwater resources being withdrawn for irrigation to produce food, growing water challenges magnify food system vulnerabilities. Climatic change makes the availability of water more variable. Water scarcity is growing, and global warming has been estimated to reduce renewable water resource availability in many areas and increase water demand. Water withdrawals are expected to increase over time due to factors such as population growth, climate change, biofuel crops and the growing consumption of water-intensive livestock and freshwater aquatic products because of higher incomes and urbanization processes that shift people's diets. This higher water demand has increased competition for water across a range of sectors. In the main food production areas of the world, water withdrawals from rivers, lakes, and aquifers, are significantly reducing the freshwater reserves, despite the improvement of more efficient production and processing technologies. A recent study shows that water consumption reduction in agriculture has not materialised so far (Seijger et al., submitted). Poor water management and misuse also contribute to this reduction in freshwater reserves.There is a growing urgency to ensure that food production use the water based on local availability and that policies cap water use within these limits (Beltran-Peña et al, 2020).

In today’s hyper-connected global economy, characterized by deep trade links, the world is more prone to shocks (e.g., natural disasters, conflicts, diseases). To evaluate whether our food systems are resilient, one needs to take a multiple threat perspective. Our food systems are not only exposed to water scarcity, pollution and floods, but also to changing geopolitical situations. As evidenced recently with the war in Ukraine. Conflict and geopolitics can send shockwaves through trade patterns and spike food prices. In times of instability, national water and food security are critical. As almost a quarter of the total water footprint of agriculture is embodied in the international trade of agricultural commodities, it is essential to understand the political economy of global food trade, markets and policies, food and nutrition security, and water resources sustainability (Konar et al., 2016).

Although water has been recognized as an enabler in food systems, water is not yet pivotal in their design. There is a disconnect between water actors and food system actors. For instance, only 30% of the countries that designed a national food system transformation pathway mentioned water and only 15% addressed this clearly (Lifeng, personal communication). Food-water-energy systems have endured severe shocks in recent times putting the planet’s resilience to the test (Global Commission on the Economics of Water,, 2023). It is clear transformational change is needed to ensure sustainable food production within water planetary boundaries (Matthews et al., 2022, Gerten et al. 2020). This requires us to embrace water as an organizing principle in sustainable food systems. We need to overcome water blindness in food system design to achieve water-responsible food production.

This water blindness raises the question: what’s each actor’s responsibility and corresponding action pathway? Section 2 of this paper dives deeper into this question, using a food systems approach. Section 3 sets out different action perspectives for actors in food systems, section 4 the necessary conditions for them to materialize, and section 5 finishes with concluding remarks.

Why a Food Systems Approach

Food security challenges are not only linked to water, but also interlinked with biodiversity, energy and climate. For instance, redirecting food crops, such as maize, to non-food uses can generate tensions in commodity markets and put an extra strain on food and water security. Overseeing the impact of such interventions is complex. A food systems approach, shown below, can help to navigate this complexity. This paper uses such a “systems lens” to view water not as an input or a sector but as an organizing principle to connect sectors, actors, drivers and outcomes.

Embracing water as an organizing principle helps food system actors -producers, traders, manufacturers, retailers, consumers, governments, and financial institutions- to re-think and act differently when it comes to water use and (re-)allocation. Their choices affect water resource sustainability directly. Water connects actors in global value chains; it also connects developmental objectives, particularly: SDG2 (Zero Hunger), SDG6 (Clean Water and Sanitation for all), SDG7 (Affordable and Clean Energy), SDG12 (Responsible Consumption and Production) and SDG13 (Climate Action). It is important to design contextual and co-designed solution pathways based on trade-offs and enhancing climate resilience and environmental sustainability. These pathways need to be translated into actions and responsibilities for key actors in the food system.

A food systems approach (FSA) provides an excellent entry point to link food with water taking account of climate change and energy. Van Berkum et al. (2018) define a food system approach as “an interdisciplinary framework for research and policy aimed at sustainable solutions for the sufficient supply of healthy food. A FSA analyses the relationships between the different parts of the food system and the outcomes of activities within the system in socio-economic and environmental terms.” It depicts the interactions within the food system as well as with its socio-economic and biophysical environment, and the Food & Nutrition Security (FNS) outcomes (Figure 1). This FSA is important as interventions that are not directly related to water, such as trade restrictions can have a direct impact on local water consumption, which become visible with the FSA.

The food system, activities are categorized into five components (Figure 1): the value chain, the enabling environment, business services, the food environment and consumer characteristics. Three types of outcomes are considered: socio-economic outcomes (e.g. livelihoods, employment), FNS outcomes, and environmental outcomes (impacts on natural resources and climate). The environmental drivers mainly interact with agricultural production activities. The socio-economic drivers affect all food system activities and can give rise to multiplier effects or feedback mechanisms. Van Berkum et al. (2018) acknowledge that there are important interactions, trade-offs and synergies between these different activities, drivers and outcomes that influence the cause-effect relationships. By providing a broad view of the impact of different intervention strategies it can inform policy choices.

The current global FNS challenges are to (Van Berkum et al. 2018):

• Increase food availability (supply) to feed a growing population, predominantly by reducing waste, managing demand (including through dietary changes), and building circular food chains;
• Improve food utilisation (safe, healthy food) by ensuring varied diets to address malnutrition due to a shortage of micronutrients;
• Improve sustainability (reducing environmental impacts) by producing food within the environmental limits;
• Improve food accessibility (inclusive food systems) by improving living conditions of farmers and workers, and alleviate poverty.

In a business-as-usual scenario, most interventions focus on increasing the agricultural productivity to improve FNS. However, Van Berkum et al. (2018) argue that interventions should target other parts of the food system to address the challenges mentioned above. Applications of systems thinking is needed to design interventions. This is also the case for water related interventions.

Recent geopolitical and market developments in the wake of the Ukraine war suggest that a global food-water-energy system approach is critical for the mitigation of cross-border risks affecting water and food security concomitantly (D’Alessandro et al., 2022), especially to avoid the destabilising effects of national export restrictions, to avoid further rises in global market prices and regional food and water insecurity. In countries that have limited coping capacities and are already food insecure or have trade balance deficits, governments may be unable to bear this burden, leading to instability.

Gerten et al. (2020) show that transformation towards more sustainable production and consumption patterns could support 10.2 billion people within the planetary boundaries analysed, but requires spatially redistributed cropland, improved water–nutrient management, food waste reduction and dietary changes. So it requires not only an increase in agricultural water productivity, but also a reduction in food waste and food consumption. According to Ringler et al. (2023) solutions for jointly improving food systems and water security outcomes include: (1) strengthening efforts to retain water-based ecosystems and their functions; (2) improving agricultural water management for better diets for all; (3) reducing water and food losses beyond the farmgate; (4) coordinating water with nutrition and health interventions; (5) increasing the environmental sustainability of food systems; (6) explicitly addressing social inequities in water-nutrition linkages; and (7) improving data quality and monitoring for water-food system linkages, drawing on innovations in information and communications technology (ICT). Most of these solutions are reflected in the food systems approach and action perspectives presented below.

What Action Perspectives

This section sets out the action perspectives for different actors in the food systems to make water pivotal in food systems. These action perspectives are based on input from the actors during various workshops and existing literature.

• Producers of food can cope with shocks in various ways. Farmers can build resilience to climate change and water risks (Smith et al., 2023) – by using climate-smart interventions, such as drought and salinity resilient seeds, improve the moisture content in the soil, adjust production to local circumstances and use improved agricultural and water management technologies. They can also adapt to future water regimes and risks – with enhanced climate information, preparedness, management innovation and capacity development (Smith et al., 2023). Farmers can also convert some rainfed areas to sustainable irrigation (Rosa, 2022). Initiatives and developments, such as embedded in regenerative agriculture and conservation agriculture, can also be initiated in rainfed areas where more variable rainfall patterns will urge the development of more effective rainfall capture and use systems – i.e., creating a higher rainfall absorption capacity in the soil, with which the possibilities to cope with rainfall variations can be enlarged. An integrated approach and context specific knowledge and incentives are required to do so. It requires a change in thinking in placing agriculture as a solution to water systems by enhancing water storage (World Bank, 2023), buffering climate shock (floods and droughts) and re-cycling water use. Reliability of water service to the farmers is also important, as this reduces a major risk (Waalewijn et al., 2019; World Bank, 2023).
• The connecters of the producers and consumers in the value chain are the traders (importers), manufacturers, retailers and other market intermediaries. They can explore the ability to drive change towards sustainable food production. The market (retail) has huge power and can transform the way they go about water. There is still a strong focus on a low price. Mechanisms need to be developed that allow retailers to take on a much stronger stake in responsible sourcing from a water perspective. These mechanisms need to send financial streams to farmers (organizations) in countries of origin to carry out water stewardship (protect, restore, do conversation). Agro-exporters need to strive for making the local implications of water consumption for global food trade (the trade footprint) visible, which is in practice complex to do so. This is because of a lack of knowledge, capacity, and –sometimes- interest. So there is a role for the private sector by performing due diligence that includes the effects of business activities on water resources. Water should be properly included in responsible business conduct and due diligence requirements.
• Consumers need to be aware that food loss and waste is water waste. Halving global food loss and waste could reduce the water footprint of global food production by 12-13% (Jalava et al., 2016). Consumers require transparency on water and energy in the food they eat – incentivizing the food system actors to monitor water and energy consumption from farm to fork. It is important to consider not only the water intensity of a crop, but also the nutrient density. An avocado requires more water to grow than lettuce but also has much more nutrients. Nutritional and health experts should work side by side with water managers at national and farm level to increase nutrient-dense crops, fruit, and vegetables. The EAT–Lancet Commission (Willett et al., 2019) has proposed a global benchmark diet to guide the shift towards healthy and sustainable dietary patterns. Tuninetti et al. (2022) found that countries at the highest level of development have an above-optimal consumption of animal products, fats and sugars but a sub-optimal consumption of legumes, nuts and fruits. Countries suffering from limited socio-economic progress primarily rely on carbohydrates and starchy roots. Globally, a gradual change towards healthy and sustainable dietary targets can be observed for seafood, milk products, poultry and vegetable oils. Tuninetti et al. (2022) show that if all countries adopted the EAT–Lancet diet, the water footprint would fall by 12% at a global level.
• It is important that national governments make a clear prioritization of water use and reallocation based on insight into the trade-offs of the multiple values of water. Demand management, for instance by capping water use, is also important (Perez-Blanco, 2020). The current food crisis brings to the fore the need to 1) improve the resilience of food and water systems and 2) to reassess the socio-economic value of water for agricultural production and of open trade, in terms of food security for stability in vulnerable regions. Firstly, national government policy responses to shocks in case of a drought or conflict (e.g., food export restrictions) can magnify food insecurity and associated costs for other countries as well as negatively impact actors along the value chain (Global Commission on the Economics of Water, 2023). Hence, water insecurity at national level influences not only the production related actors such as farmers, but the influence may amplify within the food system. This amplification needs to be avoided by improving the resilience of food systems, for instance by means of food stocks. Secondly, the discrepancy between the low financial value of water for staple crops – which is often taken for granted – and the high socio-economic value of water for food security – for social stability – (Hellegers and van Halsema, 2019) indicates the importance of approaching water valuation from a systems perspective (Hellegers, 2022). On the cost side, trade in high-value and water intensive agricultural products does not adequately account for externalities on resources and the environment. It is also important to understand the various policies that may have unintended effects on water systems, directly or indirectly and thus better integrate water in policy impact assessments (Tondel et al., 2022). Options to transform agriculture and food systems to better serve the health of people, economies, and the planet (Gautam et al., 2022) include repurposing of agricultural subsidies. A joint FAO-UNDP-UNEP report (FAO et al., 2021) calls for governments to rethink the way agriculture is subsidized and supported. The majority (87%) of $540 billion of support to agricultural producers is either price distorting or harmful to nature and health. Repurposing this support and environmentally harmful subsidies can help transform food systems and achieve the SDGs (FAO et al., 2021 and Damania et al., 2023) and reduce the cost of the negative externalities (Gautam, 2022). Finally, water can be used as a guiding principle for spatial planning.
• Financial institutions are often approached by development actors as a source of capital for blended finance projects. While there is a pressing need for increased private investment to achieve the SDGs, this debate can sometimes overlook the importance of making the financial system itself more sustainable (Ray, communication, 2023).

Owing to its unrivalled influence over the corporate world, harnessing the power of the financial sector is critical if we are to successfully transition towards more sustainable water and food systems. Aligning trillions of dollars in capital flows with the objective of a food- and water-secure world requires engagement with mainstream financial actors and the government to divert capital away from economic activities that are detrimental to food and water security towards those that are sustainable. Driving such changes to capital allocation requires an understanding of – and ultimately a strategy for influencing – the specific financial instruments and incentives to which different financial actors respond and through which they are able to influence the corporate world.

Examples of how the financial sector can be mobilized on water security issues include:

1. Incentivizing companies to disclose their impact on water resources and making this information available to investors^[1]; [1] Why disclose as a company - CDP
2. Encouraging pension funds to use their influence as institutional shareholders in large companies to push for improved corporate water stewardship^[2];[2] Valuing Water Finance Initiative | Ceres

3. Convening financial policymakers such as central banks to address water insecurity as a material risk to financial stability^[3]. [3] Watered down? Investigating the financial materiality of water-related risks in the financial system | en | OECD

The results of these initial engagements suggest a growing awareness of water issues in the financial sector and an increasing understanding that water insecurity is material to financial portfolios^[5]. [5] Financial Institutions are Valuing Water - CDP However, more work in this space is needed, and there are a wide variety of other financial actors such as commercial banks, credit rating agencies and insurers that are not yet being systematically engaged on food and water security issues. There remains significant scope for advocates of food and water security to improve their engagement with the financial sector in pursuit of these aims.

How to materialize action perspectives

For the actions perspective presented in section 3 to materialize a number of necessary conditions have been formulated below:

• Collective action, roles & responsibilities, integrated policy planning:
  Transformational change is needed in the way we tackle water challenges. First and foremost, the public and private sector need to step up collective action for responsible water use within food systems to respond and further prevent shocks. Global collaboration and coordination are key. Each of the above mentioned stakeholders needs to its role and responsibility. In the field of policy, more cross-cutting actions are required, e.g., specifically on better governance and more integrated policy planning. Policies do not act in isolation and may involve trade-offs or synergies with other policy measures and objectives. For instance, shifting the global population to a more nutritious and less water-intensive diet in parallel with food loss and waste reduction measures reduces blue water footprints and green water footprints by 23 and 28%, respectively, which is more than the sum of the two strategies implemented independently (Jalava et al., 2016). It is therefore important to align water, energy, food, and trade policies. National and regional water scarcity can be mitigated by food trade. However, the impact of shocks (such as extreme weather events and conflict) in one country can be transmitted to others via food exports restrictions. Integrated policies are also needed for circular use and management of treated wastewater, which can reduce the reliance of agricultural production on freshwater resources.
• A common language, reliable datasets, sustainable footprints:
  A common language is needed on how to determine sustainable water use. More reliable datasets and information systems (including artificial intelligence) can help by improving water accounting and monitoring of water quality. Data and information barriers can be overcome by operationalizing digital solutions for basins and aquifers worldwide through better collaboration between the public and private sector (Smith et al., 2023). This in turn can support greater insight into water footprints (Dalin et al. 2017) and the sustainability of those footprints in specific local context, which can help align policies and design incentives to address issues in hotspots. On a higher level, sharing and harmonising data at an inter-sectoral level can support more integrated, long-term policy planning across the food, water and energy sectors. Finally, accessibility and inclusiveness of data and digital technologies is also key: local and indigenous knowledge should be part of the transmission and utilisation and all actor, including for example small-holder farmers, should have easy and practical access to relevant data.
• Recognize the monetary and non-monetary values of water: Prioritise water consumption based on insight in the trade-offs of the multiple monetary and non-monetary values of water. By this we mean the trade-offs of water reallocation between uses (e.g., different crops), users (e.g., between households, nature, and food and other industries), and scales (e.g., from local to transboundary level) (Global Commission on the Economics of Water,, 2023). Water reallocation is a policy process based on transparent and accountable setting of policy priorities and social objectives. Water valuation can play a key role in making explicit the trade-offs intrinsic to decision-making and priority setting with respect to water allocation; especially, when it concerns societal needs such as food security and stability, which are not revealed in the marketplace. Special attention needs to be paid to the role of staple crops in trade vis-a-vis the low economic gains per unit water produced in farm settings. Hence, re-thinking food systems within prevailing water limits in a changing climate, requires us to reassess agricultural production areas for commodities and incentivize water sensitive agriculture across the storage – extraction- use continuum. As such, valuing water -considering the true value of natural capital and ecosystems- may be a key tool in guiding decisions, whereby its value lies not so much in its numerical assessment as in the process it offers to engage stakeholders across different perspectives and interests of water use (Hellegers and van Halsema, 2019).

Conclusions

Although water has been recognized as an enabler for transformations of food systems, water is not yet pivotal in the design of our food systems. We can overcome the current water blindness in the food domain and food blindness in the water domain, by connecting actors from both spheres more explicitly when designing food systems. A food systems approach provides an excellent entry point to link food with water while also considering climate change and energy. This paper proposes to view water not as a sector, input or adverse outcome, but as a pivotal component in the design of food systems. It calls for more attention for interactions, trade-offs and synergies in water use between different activities, drivers and outcomes in food systems. Taking a broad view of the impact of different intervention strategies on water can help inform better policy choices.

This paper has laid out various action perspectives for the various kinds of actors in the food system. Most interventions currently focus on increasing the agricultural productivity, whereas interventions should be broadened to other parts of the food system as well. Better linking international economic, food, energy and trade policies and water challenges is an important next step.

Collective and cross-cutting actions are important conditions to materialize action pathways. Water needs to become a shared responsibility of all actors in the food system, accompanied by clear action perspectives and corresponding responsibilities. Joint planning and action by all stakeholders -from civil society, the public sector, and private sector- is required to increase the resilience of our food systems.

Finally, we need a common definition of how to determine sustainable water use and more reliable data and information systems to underpin it. Better data can provide better insight into the trade-offs of the multiple values of water for a clear prioritisation of water use and allocation, and could help put currently unsustainable production areas on a path towards sustainability. The idea of food trade to mitigate water scarcity is for instance appealing, but countries have to have strong trade policies in place, such as diversified sources of trade partners, to ensure that they are resilient to a geopolitical shock. The idea of food self-sufficiency on the other hand makes countries vulnerable to weather risks. It is therefore important to reassess the socio-economic value of water for agriculture and food (security) when assessing trade-offs in water-reallocations.

Acknowledgement

The authors are grateful for the input received from Karin Andeweg, Hester Biemans, Ivo Demmers, Marijn Gülpen and other members of the Global Working Group on Water and Food.

The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of World Bank, or the governments they represent.