Governance

Water governance incorporates systems-political, social, economic, and administrative-to develop and manage water resources and delivery to different members of society. Elements of a strong water governance program should include mechanisms and processes through which all involved stakeholders communicate their needs, exercise their legal rights and mediate their differences to develop fair and equitable water programs.

Agriculture is a major water user and is therefore likely to be impacted by potential future changes to water allocation and access. Issues of great importance to the cotton industry include:

o   Allocation of water resources for application in agriculture and industry (textile processing)

o   Access to efficient water delivery and irrigation systems

o   Pricing

o   Increased regulations or reporting

A strong governance program would guide the decision-making process, regulation creation, and execution, operation, and monitoring of all aspects of a water program. Water governance can exist at a local (watershed) level, national level, or regional (transboundary) level. The interconnections between these different governance programs should be considered to optimize their effectiveness and integrity. Communities may benefit from having a national Integrated Water Resource Management system that considers and addresses all aspects of a water program.

It is important to establish the water governance systems and mechanisms in the short-term because it will likely be more difficult and contentious as resources become more scarce, demand increase and lesser reliability of weather patterns (rainfall) due to climate change.

In future blogs, I will continue to explore water governance with a focus on introducing tools and systems that can be used to develop water governance programs and system.

Questions

- What, if any, efforts are being made within the cotton industry to evaluate, improve or develop water governance programs that protect the cotton industry's water allocation and rights?

- What are examples of strong governance programs that address local watersheds but work within a defined national or regional water governance framework?

Organisation for Economic Co-operation and Development (OECD) analysis identifies three layers of risk faced by farmers:

• Normal risk is frequent but that is typically managed at the farm or household level - for example, small variations in price or yield.
• Potentially insurable risks have intermediate levels of frequency and magnitude of losses such as hailstorms.
• Catastrophic risks are infrequent, but cause great damage for many farmers - flooding, drought or disease outbreaks, for instance.
  

The management of some of these risks should involve not only the farmer but also other stakeholders whose interests are also affected by the event and/or the farmer's ability to manage such risks (e.g. governments, buyers).

Many organizations often approach risk management in agriculture in a linear and compartmentalized manner. The risk is often assessed by the farmer, who then determines a strategy to manage these using mechanisms available to him. Policymakers might then look at the identified risk and strategy from the farmer's perspective rather than considering the broader context. For example, a risk such as price volatility could cause difficulties for the farmer, and with cotton futures can help minimized this risk but only if designed and governed effectively.

Agricultural risks are not independent but linked to one another and are part of a system that includes all available instruments, strategies and policies designed to manage risk. Using our example of price volatility, a price hike may have been caused by drought and a price fall by overproduction - themselves both risks that a farmer must manage. A farmer should have the ability and access to use a range of strategies, mechanisms and tools to manage these risks as effectively as possible given the various conditions he faces.

In both of these situations, the government could intervene by creating mechanisms that protect the farmer - and market - from such direct or indirect risks.

A holistic approach to risk management that focuses on the interactions between different types of risks, the strategies undertaken by farmers, and the whole set of government policies that impact on risk management.