The human capital transition and the role of policy

Along with information and communication technology, infrastructure, and the innovation system, human capital is a key pillar of the knowledge economy with its scope for increasing returns. With this in mind, the purpose of this chapter is to investigate how industrialized economies managed to achieve the transition from low to high levels of human capital. The first phase of the human capital transition was the result of the interaction of supply and demand, triggered by technological change and boosted by the demands for (immaterial) services. The second phase of the human capital transition (i.e., mass education) resulted from enforced legislation and major public investment. The state’s aim to influence children’s beliefs appears to have been a key driver in public investment. Nevertheless, the roles governments played differed according to the developmental status and inherent socioeconomic and political characteristics of their countries. These features of the human capital transition highlight the importance of understanding governments’ incentives and roles in transitions

Water resource decoupling in the MENA through food trade as a mechanism for circumventing national water scarcity

This paper explores the trends driving the growing demand for food imports to the Middle East North Africa (MENA) region through the lens of ‘decoupling’. The analysis deploys a water-specific model of the general idea of resource decoupling to analyse the role and potential of food and virtual water trade in alleviating national and regional water limits. Decoupling theorises the breaking of the link between economic and population growth and need for water demand for domestic food production. A key means of reducing pressure on scarce water resources of a growing population is to increase the proportion of food sourced from abroad. This strategy has been strongly embraced politically in a number of MENA economies facing a combination of water and labour shortage. Food imports provide a politically silent mechanism to achieve national food security, and generate significant markets for food-exporting, water abundant, economies including those in the tropics. This paper combines FAO Food Balance data with Water Footprint data to reveal how virtual water flows interact with food import tonnages to enhance or retard national decoupling based on food trade. The analysis reveals that much MENA water is directed at crops adapted to the MENA climate. However, the analysis reveals significant potential for the import of large quantities of MENA water needs from more water abundant countries through supply of staple crops

Opportunity costs of virtual water: a justification for green-water based agricultural capacity growth for economic, social and environmental sustainability

Traditional development of water and agriculture based on irrigation tends to lead to over-extraction of environmentally-derived water as water use rises to an unsustainable peak. This behaviour is traditionally remedied by maintaining agricultural production while re-investing in efficiency and alternative water resources. Such behaviours effectively pay twice for the same production capacity. An alternative approach would adopt a different development pathway; a conjunctive use of both irrigation (blue) water and rainfed soil (green) water to provide a reliable production, meaning that ‘virtual water’ exported in crops contains less blue water. Blue water resources can then be directed at activities with a higher opportunity cost (industrial and municipal use), yielding greater value per drop to local populations, especially important when using non-renewable groundwater. Through sustainable optimisation of resource allocation, the new paradigm of agricultural water development avoids, an unsustainable over-development of water, and greater virtual water sustainability

The role of virtual-water decoupling in achieving food-water security: lessons from Egypt 1962-2013

Since the 1970s, many economies have increasingly relied on ‘importing’ water embedded in food imports, a process referred to here as virtual-water ‘imports’. In water scarce countries virtual water ‘imports’ are used to protect the economy’s own water that would otherwise be consumed in food production to meet growing population and economy food needs, or to support population food needs beyond that sustainable by internal water resources. This process is referred to here as virtual-water decoupling. Water-scarce countries use virtual-water decoupling to secure the water embedded in food and feed consumption, referred to here as food-water. Food-water insecurity poses significant existential threats to societies and political economies due to the crucial role food plays in human life, be it through drought precipitating hunger, or through drought precipitating food price rises and social dislocation. Despite, or perhaps because of the significant threat posed by food-water insecurity to political-economic systems, it has rarely been foregrounded in public policy or as a research priority. While food production has always been the major water consumer by society in most countries and regions, the importance of water in food security, and food systems as key actors in water management, is invariably politically silent. This study examines the role of virtual-water decoupling to achieve a version of food-water security for water scarce societies. The paper analyses the Egyptian virtual-water decoupling policy during the period 1962-2013. Egypt food-water policy was chosen as a case study as it provides an important example of an economy that has relied on virtual-water decoupling to achieve its food-water security. The Egyptian case has shown that virtual-water decoupling can close the gap between the locally available physical water resources and the water actually needed for food and fibre by the economy. Importantly, the study shows that there are factors both within and outside the sphere of food and water policy that strongly influence the pattern and the outcome of virtual-water decoupling policy. These factors include the virtual water trade pattern, the national economic and social contexts, the international virtual water market and the international economic context. The analysis highlights the importance of economic development and diversification policies, diversification of diets and the international supply of virtual water ‘imports’ to encourage and facilitate greater virtual water decoupling. Understanding of such factors and links between water and food resources and wider economic and social policies will therefore be essential for the development of more effective future virtual-water decoupling policy in other water-scarce countries

A development pathway to optimise sustainability of water investment and minimise social cost

Traditional development of water and agriculture based on irrigation tends to lead to over-extraction of water from the environment as water use ‘peaks’. The remedy to this behaviour is to re-invest in efficiency improvements and alternative water resources, in effect paying twice for capacity. An alternative is to adopt a different development pathway, utilising both irrigation (blue) water and rainfed soil (green) water to provide a reliable supply. Such conjunctive use means that ‘virtual water’ exported in crops contains less blue water. This means the higher opportunity cost of blue water use can be directed to advantage local populations, especially important when considering non-renewable groundwater resources. The new paradigm avoids ‘peak water’ through sustainable optimisation of available resources

A development pathway to optimise sustainability of water investment and minimise social cost

Traditional development of water and agriculture based on irrigation tends to lead to over-extraction of water from the environment as water use ‘peaks’. The remedy to this behaviour is to re-invest in efficiency improvements and alternative water resources, in effect paying twice for capacity. An alternative is to adopt a different development pathway, utilising both irrigation (blue) water and rainfed soil (green) water to provide a reliable supply. Such conjunctive use means that ‘virtual water’ exported in crops contains less blue water. This means the higher opportunity cost of blue water use can be directed to advantage local populations, especially important when considering non-renewable groundwater resources. The new paradigm avoids ‘peak water’ through sustainable optimisation of available resources

Opportunity costs of virtual water: a justification for green-water based agricultural capacity growth for economic, social and environmental sustainability

Traditional development of water and agriculture based on irrigation tends to lead to over-extraction of environmentally-derived water as water use rises to an unsustainable peak. This behaviour is traditionally remedied by maintaining agricultural production while re-investing in efficiency and alternative water resources. Such behaviours effectively pay twice for the same production capacity. An alternative approach would adopt a different development pathway; a conjunctive use of both irrigation (blue) water and rainfed soil (green) water to provide a reliable production, meaning that ‘virtual water’ exported in crops contains less blue water. Blue water resources can then be directed at activities with a higher opportunity cost (industrial and municipal use), yielding greater value per drop to local populations, especially important when using non-renewable groundwater. Through sustainable optimisation of resource allocation, the new paradigm of agricultural water development avoids, an unsustainable over-development of water, and greater virtual water sustainability

Understanding the effectiveness of investments in irrigation system modernization: evidence from Madhya Pradesh, India

Investments in modernizing irrigation infrastructure are key to enhance water security for agriculture. However, outcomes of investments are insufficiently understood, limiting the future design of interventions. This article applies a fixed effects regression model to test whether modernization of irrigation systems in Madhya Pradesh leads to improvements in district-level yields and protection of yields against sub-basin rainfall variability. Findings suggest that investments fail to improve yields in districts with deficient rainfall and fail to buffer crops against monsoon variability, compared to control districts with no investments. Interventions should be designed to respond to the complexities of sub-basin rainfall variability