Protecting European economies from global water risks
Marieke lives in the Netherlands and works as a water advisor for the Dutch Government. The government is planning to revise its National Climate Adaptation Strategy and she has been assigned to provide strategic advice to the task force. She needs to deliver a set of recommendations that will help the task force to make well-informed decisions and address the water-related challenges that the Dutch economy may face in the future.
The challenge for Marieke
Marieke knows that the agri-food sector underpins the Dutch economy. It is a diverse sector, covering a wide range of livestock and plant-cultivation industries that include arable and dairy farming, cultivation under glass, tree-growing and pig farming. Together with the USA and Spain, the Netherlands is one of the world's three leading producers of fruit and vegetables. It is the world's second largest exporter of agricultural products after the USA and supplies a quarter of all the vegetables exported from Europe.
In 2014, the value of exports of all Dutch agricultural businesses, including the food and beverage industry and the agro-related manufacturing industry, was over 45 billion euros. Cattle farming and the related dairy industry are of particular importance to the Dutch economy, creating tens of thousands of jobs and generating billions of euros in revenue.
It is clear that the health of this sector relies heavily on water so Marieke wants to find out whether there are any water-related risks that might disrupt Dutch agri-food production in the future. She is aware that the research she needs to inform her recommendations has been limited to date.
Solving the challenge with IMPREX
As part of the IMPREX project, we help people like Marieke and her team assess the water-related dependencies of European economies. On reading our policy briefing, she learns that the Dutch agri-food sector is very reliant on water outside its borders. It reveals how reliant the Dutch meat and dairy sector is, in particular, on imports of certain crops for animal feed.
“The entire European economy is dependent on goods and services from all around the world for its production, consumption and export activities. These commodities can be agricultural raw materials such as soybean, cocoa, tea, palm oil and/or manufacturing materials like steel, computer chips and minerals. For example, the EU relies almost entirely on imports of soybean to meet demand for animal feed for meat and for dairy products. It imports around 30-35 million tons per year and produces only 0.9 million tons/year domestically. The deficit in soybean production in the EU poses a significant risk to its economy and especially to the EU meat industry, due to high demand for the product, its high reliance on imports and the vulnerability of the crop to drought and scarcity in the countries of origin."
Marieke realises that the stability of the agri-food sector could be vulnerable to disruption in climatic conditions (such as droughts or floods) in areas far away from the Netherlands. She is concerned that the current Dutch National Climate Adaptation Strategy does not address climate change impacts on crops produced outside Dutch borders. She understands that this could pose an increasing risk to agri-food importers in the country, such as cattle farms, poultry farms and cheese producers, but she is not sure exactly which sectors might be affected and needs to find out more.
She then notices that most of the research she needs has been provided by IMPREX. The maps and data on the website and in reports give her the details she needs to assess whether any water-related problems have affected agri-food businesses in countries where key import crops are grown and to determine which Dutch sectors are vulnerable, both now and in the future. She finds that:
- Flower (pulp), dairy, poultry, coffee and cocoa related sectors are heavily dependent on raw materials supplied from outside the Dutch borders: soybean used as feed for cattle and poultry (90% of soybean used as feed is imported); pulp imported from Sub-Saharan Africa (70% of pulp is imported). All coffee and cocoa are imported to the Netherlands, from Brazil and Colombia respectively. These sectors, in total, account for more than 2% of Dutch GDP and directly provide more than 10,000 jobs in the Netherlands.
- These sectors are currently highly vulnerable to water scarcity, such as pulp production in Kenya and soybean from the USA.
- Coffee imports from Brazil and cocoa from Colombia are at a high risk of drought in the future due to climate change impacts on precipitation in these regions.
IMPREX benefits Marieke because the data it provides shows how the Netherlands could strategically mitigate the water-related risks to its economy. She used the information to provide a set of clear, evidence-based recommendations to the Dutch National Climate Adaptation revision task force:
- Recommendation 1: Address water-related dependencies on a sectoral basis in Dutch-wide strategies, not only in the Climate Adaptation Strategy but also in trade policies and international development strategies;
- Recommendation 2: Consider the strategic importance of certain regions, such as Southeast Asia, Sub-Saharan Africa and South America, in order to channel investments into measures that will, for example, increase drought resilience and strengthen water governance in order to ensure sustainable, efficient and equitable water use in key producing regions;
- Recommendation 3: Re-direct investments and developing world aid into measures that will enable exporting partner countries to invest in sustainable practices or infrastructure improvements, to expand and diversify their facilities and to better monitor climate change impacts;
- Recommendation 4: Encourage all Dutch businesses that are reliant on international commodity supplies to map their dependencies and better understand their water-related vulnerabilities in order to sustain their businesses;
- Recommendation 5: Provide better access to information on climate change impacts and the associated financial risks for key sensitive sectors such as meat and dairy, cocoa, coffee, and flower.