The impacts of biophysical factors and public agricultural water investments on net agricultural...
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The impacts of biophysical factors and public agricultural water investments on net agricultural exports in Southern Africa
Matchaya G, Nhemachena C, and Nhlengethwa S
ReSAKSS-SA/IWMI
Introduction • SADC -interesting divide of middle and low income countries • The Middle income –generally mineral or service based
– The Low income ones, have huge presence of agriculture
• Also note that in all the countries Agriculture- very critical• The dichotomy offers opportunities for intraregional trade in
agriculture• Trends show SADC heating and drying,
– with decline in rain, reliability, increase in floods
• Factors that affect agricultural production affect agro-trade – Through surplus– Deficits /shortages
Objectives • The main objectives are two fold
– Discuss the importance of biophysical and climatic factors
– Speculate on what would be potential impacts of changes in the factors on net exports in the SADC region
– Draw some recommendations for SADC countries to consider
Methodology
• To meet the objectives above, – Present trends in key variables that may affect agri production and
consumption
– Use an econometric model to estimate potential effects of factors on net exports
– Use model estimates to generate some simulations on potential impacts of the factors
Econometric model estimation
• Estimation based on
• Where Yit is the net exports in country i at time t; • Nit is a matrix of biophysical risk variables in country i at time t; • Cit is a matrix of crop and livestock disease risk variables in country i at time
t; • Sit are the variables related to socioeconomic risk in country i at time t • Wi is a matrix of agricultural water development indicators in country i and
at time t. • The fixed effects (μit) control for the heterogeneity among countries, and eit
is the common error term
ititititititit euWSCNY +++++=
Methodology …
• Data and Sources, – Production, exports, imports, data are from FAO– Additional data on other variables –sourced from IFPRI etc– Biophysical Risk included (temperature, rainfall, vegetation, land
degradation and forest coverage)– Socio-Economic Data included population, public expenditure on water
development and GDP per capita
Results-descriptives• Gross production value trends
An increase in valueMainly led by SA
Most MI countries produce less
Potential for intra-regional trade
Results-descriptives• Total Agricultural Exports
An increase in export value
MI countries export more value
Low income countries need to value add to gain more
Results-descriptives• Total Agricultural imports
An increase in import value
MI countries importing more
Negative trade balance in the SADC as export<import
Not good for agro-based economies
Results-Biophysical Risk
Growing conditions risk index-Temporal variability of NDVI, rainfall, temperature and a low soil nutrient capital indicator
The higher the index number the more the growing condition risk
Compared to other regions, SADC has more risk of this kind
Results Descriptive
Drought mitigation is rated by estimating the area receiving above normal rainfall and that receiving below normal rainfall
SADC mitgable risk is at ~49%Logic: if drought area< non-drought area, high mitigation potential through trade
Assuming no trade restrictions
• Drought Risk Mitigation potential through internal trade
Descriptives• Population is booming, GDP per capita is rising, but productivity of cereals is
increasing at a slower rate• Irrigation potential is still under utilized and investments in the water sector
appears stagnant or declining
Results -econometricOLS Random Effects Fixed Effects
Coef. Coef. Coef.Rainfall 0.00* 0.00* 0.00Temperature -0.91 -0.91 -0.07Temperature squared 0.02 0.02 0.00NDVI 0.99 0.99 1.59**Soil Quality decline -0.09*** -0.09***Tree coverage 0.01*** 0.01***Total population (millions)
-0.03*** -0.03*** 0.00
GDP per capita, PPP (constant2011 international $)
0.00* 0.00*
Population of largest city (million) 0.39* 0.39*Total crop land area 0.00*** 0.00***Constant 3.09 3.09 -0.94Number of observations 107Adjusted R-Squared 0.84
Results-simulations • 50% rainfall reduction and 25% reduction in vegetative cover
-6-4
-20
24
Mill
ion
US
$
1993 1999 2004 2010year
actual net exports Effect of shock
Shock: 50% rainfall and 25% NDVI decrease
Results-simulations • Reduction in investments in irrigation, and an increase in
temperature as well as population also appear to impact negatively on net exports
Conclusions/recommendations• Climate related shocks on production affect agricultural exports for most of
the region’s countries. • The SADC region can mitigate some of the shocks by enhancing within
country and intra-regional trade.
• There is a case for increase in investment climate change adaptation strategies
• Removing barriers to trade, can mitigate the negative impacts of drought
• Generally, then investments in water resources, can help reduce effects of erratic rainfall on net exports.