2023 McDougall Memorial Lecture by Tharman Shanmugaratnam

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Well, thank you once again for giving me this privilege of addressing this august group of Ministers from Member States. I speak first as a Senior Minister from Singapore, former Deputy Prime Minister for several years. And as you know, Singapore is a country which is both water and food vulnerable by virtue of our geography and from our very inception as a nation, as an independent nation, we have treated water and food as central to our national strategies. Central to our national strategies. It has required innovation. It has required public policy reform. It has required a whole of society effort, particularly on water, to understand that water is scarce. Water needs to be preserved. It needs to be recycled. It needs to be reused. And I'll come back to that very briefly later in my speech. But my speech is fundamentally not about Singapore. I also speak here as the current Co-chair of the Global Commission on Water, which as Director-General Qu Dongyu mentioned, helped shape the outcomes of the recent March 2023 UN Water Conference, the first such conference in 47 years, which tells us how neglected this issue is in multilateral discussion. I think we now are at a turning point in global food security. We've seen remarkable advances over the last 50 years, indeed since the inception of the FAO and since the inception of this lecture, the McDougall Memorial Lecture 65 years ago, we've seen a remarkable improvement, both through the Green Revolution and the introduction of new seeds, as well as through the global spread of nitrogen based fertilizers. Remarkable improvement in yields, in farmers incomes. But most importantly, a reduction in hunger. If you look at it even since 1970, hunger today is about one third of the level it was in 1970, and most of us are old enough to have been there then. So we've made progress. But we're now at a point where we risk not just an enduring level of global hunger, at still unacceptable levels. Still unacceptable levels. After COVID, we still have 10% of the world's population facing hunger, about 828 million people. It's come down a little bit since then, but the projections for 2030 are still dire. 670 million people facing the prospect of hunger. That's 8% of the world's population, no different from where it was in 2015 when the 2030 agenda was set out. And that, frankly, may be an optimistic projection because it does not factor in the very real risk - not the theoretical risk - the very real risk of accelerating effects of climate change, the loss of biodiversity and the destabilization of the global water cycle. And it's not easy to factor this in in a precise way, because even the scientists have been surprised by the effects we are already seeing coming out of accelerating climate change. The extreme weather events at a high frequency, at a frequency that was not anticipated. It has something to do, we think, with tipping points, the tipping points that are happening, the earth system that lead to accelerating change and with one tipping point from the Arctic to the boreal forests to even the tropics, one tipping point leading to another tipping point, it has something to do with that. Hard to quantify, but we know that the direction of change is in the wrong direction. So when we think of 8% of the world's population at the end of the decade still living in hunger, that is very, very likely an underestimate. And it should concern us greatly, not just because it's a humanitarian crisis in its own right, but because it's going to rebound on many other dimensions of the SDGs as well as what every country feels is important to human well-being: health, education and human potential development and very importantly, conflict. I will highlight what I think is one of the most neglected dimensions of this, which is childhood stunting, very clearly related to malnutrition, both child and maternal malnutrition. It is one of the most neglected facts in international discussions. But the fact is we now project that 20% of children by 2030, that's about and 29,000,020% of children will suffer from stunting. And as we all know, once you suffer from stunting at a young age, it affects your life chances, It affects your whole life's trajectory of cognitive development, your ability to work at an increasingly school level, your ability to contribute to the society you live in. So that's that's a serious loss of human potential for individual societies and for the world. 20% of the world's young suffering from stunting. It is totally unacceptable. And our solutions, when we think about food insecurity and conflict, have to bear in mind that ultimately we have to solve this because of the potential of the human population being vastly underdeveloped and human lives being destroyed. We can solve the global food crisis. We can solve for global hunger. It requires a few fundamental shifts in our thinking and the way we organize ourselves globally. And it requires specific policy interventions. And I will talk about each of these briefly in the course of the rest of my lecture. The fundamental shifts first, addressing water not as a addressing food, not as a silo, not as a particular SDG, like SDG 2 on hunger, but as part and parcel of the broader challenge of ecological insecurity. That's the first shift in thinking required. Second shift in thinking is that we have by the same virtue to recognize that this is not just a local problem, it's not just a regional problem, it is a global problem which we have to all take responsibility for. And the third shift of thinking is on the optimistic side, we have to see this not just as a burden on the world requiring burden sharing, but as a huge growth opportunity. The opportunity of addressing food and ecological insecurity together represents a very significant growth opportunity and national development opportunity in the years to come. And I'll come to that in a short while. So those are the three fundamental shifts in thinking required and their solutions to translate that thinking into action. Policy reform first, second, scaling up technologies, which are already available or which can be made available and at low cost, precisely through the scale up and the tapping onto economies of scale. Thirdly, new financing strategies, particularly international financing strategies, and fourthly the strengthening of multilateralism, including our own domestic or local cultures that support multilateral action. I’ll address each of these briefly. But first, the shifts in thinking. We have to address food and ecological insecurities together. Because the science is very clear. Food is the first victim of the triple headed crisis of the global environment, climate change, the loss of biodiversity and the destabilization of the global water cycle. It is a triple headed environmental crisis and food is the first victim of this shift in the Earth system. Represented in global warming, the loss of biodiversity and a destabilized global water cycle. We cannot solve for food without solving for water. We cannot solve for water without solving for climate change. We cannot solve for climate change without solving water. They are intertwined and we have to now address this. Not a separate is SDGs, not just agencies working on separate silos, not as departments and government working on separate agendas. We have to represent this as a collective challenge of the Earth system and the fundamentals that assure us of human welfare. The science links them up and our development strategies too have to link them up, taking a whole of government approach, a whole of society approach, but also a whole of the global community approach to address this combined challenge. And it has to be said that food is not just the first victim of this ecological crisis, but is also part of the cause. Because how we produce food is a very important part of the cause of today's problems and an important part of the solution to today's problems. Agriculture accounts, as we all know, for about 70% of global freshwater withdrawals, of the water that is withdrawn for agriculture, largely for irrigation, very often for flood irrigation, about 60% of the water is wasted, mainly due to leaks in irrigation systems or inefficient irrigation methods that go back a thousand years. If you look at what's happening in manufacturing, in logistics and commerce, in finance and many other areas, the technologies being deployed today are unrecognizable compared to what existed 100 years ago, let alone a thousand years ago. In agriculture, it is fully recognizable that using the same methods that we used centuries ago, which means it can be changed, it can be changed. Second, our rivers are being polluted with chemical runoffs from farmland due to the due to some of the very solutions that led to improved agricultural yields. The use of agrochemicals as fertilizers in an uncontrolled way, leading not just to the rivers being polluted, but to algae blooms in the lakes and in the seas, impacting biodiverse cities and severely affecting marine life. And thirdly, another way in which agriculture is part of the cause and now part has to be part of the solution, is that keeping inefficient methods alive in agriculture simply means that to feed a growing world population, we have to keep expanding agricultural land, which has typically meant more and more deforestation. And the loss of the forests and the loss of biodiversity is itself now part of this vicious cycle of climate change and the global water cycle being destabilized. Agriculture is therefore part of the solution we need more efficient agriculture, more efficient in its own right, higher yields for farmers, more efficient water wise, so that for the same yield use far less water and more efficient with regard to land use and solutions exists for each of these. Agriculture is the first victim, food is the first victim. But how we produce food is also a key solution. We have to view these now as global rather than local challenges. It's not just a problem happening the Sahel or part of Southeast Asia or any part of the world that sees extreme weather shocks because we will all face extreme weather shocks. It is effectively a global challenge. We have understood this well with regard to climate change. Everyone knows that carbon produced here is carbon in the air, that everyone will see the consequences of, carbon is carbon in the atmosphere. It must all be recognized that the same is the case for water. There is a global water cycle. It's not just a local matter. It's not just a matter of transboundary rivers and the occasional conflicts over the use of those transboundary rivers. There is a global water cycle. 40% of the rainfall that we see comes not from the evaporation from the oceans of the rivers. It actually comes from what's called green water. It comes from the forests themselves, it comes from the soil in the forests. And that evapotranspiration of moisture leads to atmospheric flows of atmospheric rivers around regions that are around the world that are part of the global water cycle. So it's not just what we do locally that rebounds on what happens to us locally. What we do locally, everywhere in the world, rebounds on everyone else around the world. It is a global water cycle and we have to take global responsibility. And because food security is now inextricably linked to these global cycles and these global crises of climate change, water and biodiversity, we have to recognize that solving the food problem is also a global responsibility. Third point that is a shift in mindset that we require is that we have to see this as a growth opportunity. You know, economists, when they first started looking at the problem of climate change about 40 years ago, used the way of thinking that economists have always used, which is to think of trade-offs. Much of economics is about trade-offs and the way the issue was framed was there would be a trade-off between addressing climate change and economic growth. It is one versus the other, and you have to decide on the right trade-off. That was 40 years ago and it was a mistake in framing. It was a mistake in framing because we now know that it is entirely possible to achieve sustainability with economic growth, with appropriate technologies, market development and finance. And in fact, we have before us the opportunity now to have higher quality growth, not just for the sake of the global commons, but for the sake of each of our own countries. Higher quality growth, less pollutive, much better for the health, much better for sustaining the welfare of future generations. It's not a trade-off between development and global public goods or the global commons. It's not a trade-off between having food security in a particular location and solving problems somewhere else in the world. The strategies come together. We know this now as economists, because we know that, in fact, markets have been imperfect and underdeveloped and we can, in fact, create fuller markets so as to be able to achieve both sustainability as well as national development. We also know, very importantly, that policies even today are working in the wrong direction. Policies on pricing and on subsidies are today encouraging inefficient use of water. Quite apart from encouraging still today, carbon emissions in large parts of the world. And we do know now a lot more about the economies of scale that are involved in green technologies. We know it already from what you see in solar energy. We know that there are significant economies of scale. Once we get going on green technologies and other new sustainable platforms, and if you exploit these economies of scale, if we create fuller markets through public private collaboration, you'll scale up the use of technologies that exists. We can actually avoid this trade-off between food security, environmental security and economic growth. And that is of fundamental opportunity, because it is going to require more investment. When you think of it this way as a growth opportunity. And if you think of it as a global issue and not a local issue, it is not to be solved through a call for more aid. This is not about aid budgets. This is about investment budgets. This is a case for investment. Investment in future growth that will earn returns both commercially as well as social returns for society as a whole. It's an investment and the scale of this investment required for this combined challenge of food security and ecological security, it's a significant scale of investment required something like three percentage points of GDP, extra investment each year for the next 30 years. If we succeed in mobilizing the resources for that purpose and organizing ourselves for that purpose, it will lead to a very significant increase in growth globally, roughly 20-25% increase in growth, with an even further increase in the developing world. So this is a growth opportunity and a national development opportunity that is to be seized. Solutions next, I start with policy reform because our policies are still, by and large in the wrong place internationally, in particular when it comes to water. We today have in most parts of the world, pricing strategies and subsidies strategies that encourage the inefficient use of water. The supply of fresh water globally is finite, is fixed. The demand has been unmanaged or mismanaged. It's either neglected or it is mismanaged in the sense that the incentives of prices and subsidies encourage people to use more water. So we have a fundamental problem. The supply is fixed, but the demand is uncontrolled and water is going to become more and more scarce everywhere in the world, including in the most countries. Europe already has a severe crisis of groundwater, a severe crisis of groundwater. All of us have to address this fundamentally. Politicians and many people commenting on these issues tend to think of pricing water as something offensive, as something that's unfair to the poor, as something that isn't good for equality. In fact, exactly the reverse is the case. The more efficient use of water will be good for the poor. Pricing water so as to be able to get revenue from large corporations, the rich and the middle income group would provide us the revenues to expand water systems so that everyone has access to clean water. It will also provide us the revenues to subsidize the poor, and currently we are doing neither. Currently we have systems which either don't price water or price it vastly below its true costs, leading to excessive use by the largest users, and inadequate water particularly inadequate clean water, for the poor and vulnerable populations. Inefficiency is the biggest threat to the poor, inefficiency in the use of water and more efficient use of water, encouraged by proper pricing strategies and the withdrawal of subsidies that encourage overuse of water are helpful to the poor. They're helpful to inclusive development. And we have to recognize that forthrightly, explain it to our populations, explain why we need proper pricing of water, and that we will use subsidies to benefit the poor and to expand those systems to ensure that we have sustainable water systems which don't exist today. So that's the first fundamental policy reform. And the low hanging fruit to that is subsidies, because we have about $700 billion of subsidies in agriculture and water each year, most of which goes towards encouraging unsustainable practices. So there is low hanging fruit there. Second, we have to use technologies that already exist, scale them up, particularly in the developing world, and make them affordable. I spoke about agriculture, and I'll just focus very quickly on agriculture, because the scope to improve irrigation practices so as to improve farmers yields and income as well as to reduce the use of water, is very significant, very significant. The techniques exists, whether it's drip irrigation or other techniques. The techniques exist for this, the scope for improved seeds, just like we did in the Green Revolution a long time ago, seeds that allow for crops to be drought tolerant, to have much less water requirements, to be pest resistant and yet have higher yields compared to today's seeds is also significant. The scope for sensor based technologies, which we think of when we think of advanced manufacturing and the like, the fourth Industrial Revolution, actually we need a fourth agricultural revolution. Actually it's the first agricultural revolution because we haven't had one yet. We need an agricultural revolution that involves these relatively cheap sensors to be used together with more efficient irrigation techniques and many countries, by the way, including China, have already started implementing this. Having every farmer equipped with these sensors, making it affordable by scaling it up so that you know exactly when you required to put more water in the soil. It's not some fancy frontier technologies. It already exists. Urban farming, which countries like the Netherlands are leaders of, and Singapore is also moving into, urban farming solutions which are quite far less water, what you call hydroponics, using nutrient rich water recirculated in close systems to cultivate crops directly. Dramatic reductions in water required, about 90% reduction in water compared to conventional soil based agriculture. And finally, regenerative agricultural practices. Crop rotation that can also improve yields whilst improving water retention in the soil are extremely important and again doable on a much larger scale internationally. Besides improving water retention in the soil, it also increases carbon sequestration ability because if there's not enough water in the soil, the soil is no longer a carbon sink. So that's existing technologies that can be scaled up. But I want to highlight a very particular opportunity there. We have to transform the way rice is produced, particularly in Asia, because it's in Asia where over 90% of the rice is produced and over 85% of the rice is consumed. Asia is both the rice basket of the world, but also the rice consumer of the world. And we have a problem because the current methods of rice production are simply not sustainable. They are extraordinarily water intensive. There's less and less of water available and we have a major problem. It can be solved. It can be solved. And it has to be said, by the way, that this is not just a problem of water, because rice is also a major source of methane emissions from agriculture. It accounts for 10% of methane emissions in agriculture and is also a very significant source of greenhouse gas emissions from all crop production. A major source of greenhouse gas emissions, about 40% of greenhouse gas emissions. So we have to do something about this. The examples that are already in play are very encouraging. In Vietnam, for instance, the government's strategy of using new irrigation techniques, what they called alternate wetting and drying irrigation. First put irrigation for about five centimeters, you wait until the water has subsided to about 15 centimeters below the soil, then you add a little bit more water, just as an example, has led to very significant improvement in water use, up to 40% reduction in water use and improve farmers’ yields as well. So it improves incomes, serves national development purposes, but it reduces water use. This is in the Mekong Delta, very impressive program in Vietnam. China is a very good example and on a large scale. China embarked on a climate smart staple crop production project some years ago. Again, farmers have benefited significant improvement in yields, something like 22% significant reduction in greenhouse gas emissions, just like in Vietnam, but reduced water use by about 38%, almost 40%. They did it mainly in China through drip irrigation, but also use of sensors and other techniques and making it all affordable for farmers. If we do not adopt these known techniques, ASEAN in Southeast Asia is going to become a net importer of rice from the rest of the world rather than a net exporter. But it is also possible that you won't have net exporters anywhere in the world. So you have a problem. You have a problem with regard to staples consumption. We have to change for the purpose of food security, for the purpose of water security and environmental security. And the techniques exist that require policy support. They require financing support for farmers especially. But these are techniques that do not require a five or ten or 15 year payback when you invest in them. The payback is six months, one year, maximum three years depending the type of technique. It’s a fully investible opportunity from the point of view of farmers. So I really want to highlight that we need a revolution in the way rice has grown. The techniques exist, and in the next decade we have to start making significant moves in that direction. Finance is the third solution. I spoke first about policy reforms, then about using technologies and the particularly importance of the transformation in rice production. But finance is necessary. And for wherever we are in the world, whatever the level of income, you must always think first and foremost about how we raise domestic resources, both through tax strategies that are fair to the poor, in other words, progressive tax strategies. Making sure that tax collection systems are modernized and tax evasion is not prevalent or is not easy. And we have to make more use of domestic capital markets. Developing the domestic financial markets, particularly the low- and middle-income countries in the middle-income countries. So that's the first strategy. When you combine the challenge of food security with ecological security, we are all going to have to raise more resources domestically in the public sector, but is not going to be enough because the scale of investment required vastly exceeds what the public sector alone can provide nationally or through international institutions. So we've got to mobilize a lot more private resources on this task, mobilized private resources for the public good. And that means it's got to be commercially viable resources. And for this purpose, we really need to update our thinking quite fundamentally in how we use the international financial institutions. We need a greater scale of financing public, private and philanthropic. But public sector finance, because of its limitations in any scenario, has to be now used to mobilize public private sector finance to improve the investment environment and to help to mobilize private finance. The scale has to go up several fold. We're talking about $3 trillion a year. That excludes China, by the way, $3 trillion a year to invest in the developing world in the next 30 years per year. That's a lot of money. There's no lack of money in the global capital markets, which are about $280 trillion. But we've got to organize it and incentivize it so that you have enough money flowing into sustainable investments in the developing world. And that scale is not determined by international organizations or by economists. It's scale that is determined by the science. The science is telling us what are the costs of not investing in climate change, in ecological security and food security, now. If you don't invest now, we know because what the science tells us about the future, that the costs in the future are going to be vastly larger, vastly larger. So investing now, mobilizing resources now is far more cost effective than delaying the investment. Quite apart from being for more beneficial to human welfare and avoiding the loss of lives that we're going to see from now till then. So we've got to avoid being myopic about this. We've got to utilize the resources that already exist and in particular, or reorient the multilateral development banks to the task of mobilizing private finance and the several studies that are underway on this. In fact, I'm a member of a G20 expert group that will be presenting a report on this very shortly, on the reforms to the MDGs. Doable reforms, What pie in the sky, doable reforms. It also requires that you don't just raise more finance, but you also organize ourselves differently. The fact of the matter is international finance today is a fragmented picture. Each MDB doing his own thing, each national development finance institution, DFI, also doing their own thing, the private sector doing their own thing. And philanthropies coming in and doing their own thing. The system doesn't work as a system. We've got to make the system work as a system because when you organize yourself country by country, in a country platform where there's some understanding as to how we are all going to go in together to invest in a coherent fashion, the outcomes are far more powerful. The impact of our investment is far more significant compared to individual investments in individual projects. So we've got to avoid taking a project by project approach in the MDB world and move towards a sectoral and country platform approach that involves working together with the DFIs, the national business development finance institutions, the sector, and very relevant the philanthropies. It's a real opportunity. Finally, we will only achieve this if we strengthen multilateral mechanisms. The UN is planning a Summit for the Future next year. That I think will be a very important moment in time, an important opportunity for us to strengthen multilateralism. There was a recent high level panel that was set up to advise the Secretary-General on a more effective multilateralism that I happen to be a member of. But the solutions are themselves not complex. They require political will, they require sense of what we're up against in terms of the scale of the challenge and, how every nation is going to be affected, not just the poorest nations. Every nation is going to be affected if we don't get our act together, mobilize more resources, deploy it more effectively. It requires strengthened multilateral mechanisms. The UN Secretary General coming out of the recent water conference, in fact, committed to strengthening the way in which UN agencies organize themselves to solve the water problem, providing a stronger home for water in the UN system, working better jointly across the UN agencies, and also appointing a UN water envoy to work together with the agencies. It's an important start, but it requires all Member States to really join efforts together and coalition of the willing to support specific initiatives to tackle the global water crisis. Ultimately, however, and this is my final point, ultimately we all know and I'm a politician for many years, I interact with politicians all over the world in both the developing world and the advanced world. And we know that something has gone wrong. And the something that’s gone wrong is not just when people gather in New York at the United Nations or gather in Geneva at the WHO, or gather at any other international organization, something that's gone wrong is something that's gone wrong domestically within societies themselves. There is good evidence to show that the loss of trust in government and institutions domestically is also related to the loss of trust in international cooperation. And typically, in fact, there's a greater loss of trust in domestic institutions than there is an international institutions. When trust in government is higher, trust in international cooperation is also higher. And even when trust amongst people themselves is higher, people within these societies is higher, trust in the idea of cooperating with the rest of the world is higher. The first set of data that I was talking about came from the World Values Survey, which in fact the UN Human Development Report last year highlighted. I was a chair of the advisory group for that report. This is not black and white, so these are always impressionistic, but you can tell that there's some realism in it. People aren't inherently selfish or against communities elsewhere. They're not devoid of humanitarian impulses, but where they are getting along better within their own societies and where they have greater trust for their own governments and institutions. They're also willing to see the prospect of improved lives for themselves coming out of international cooperation. So we have to fix the problem of domestic polarization and the loss of trust domestically in institutions as well as within society itself. That is fundamental to multilateralism. We will not achieve a less polarized world, we will not prevent a bifurcated world if we do not address domestic polarization. And that requires a certain orientation to politics, that requires much greater emphasis, and that is ultimately in our self-interest wherever we are in the world. Because the global commons are the global commons, they are common to all of us. They will affect all of us and food security somewhere in Africa is something that results not just because of happenings in Africa. It comes about because of what's happening in the global cycle for water, for global warming, in biodiversity. Everyone has to take responsibility for it. And if we don't, we will all be the worse for it. So let's have that sense of realism, that sense of opportunity, that sense of being able to unleash a new growth opportunity in the global system. It can be done. It requires the political will and it requires a political reorientation at home, wherever you are. Thank you very much for this opportunity to address you. Thank you.
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Channel: Global Commission on the Economics of Water
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Length: 42min 17sec (2537 seconds)
Published: Tue Jul 11 2023
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