In some regions in OECD countries agriculture is facing increasing competition for surface and groundwater from urban and industrial demands. Also there is a growing recognition to meet environmental needs through allocations of water for the environment and protection of down-stream impacts from agricultural pollution. Even so, for some OECD countries the issue of water use is not a policy concern because they are richly endowed with water resources.
Governments have traditionally invested in the development of irrigation schemes for the purposes of national and regional development. This often involved a substantial subsidy to establish and maintain irrigation systems and the consequent underpricing of water to agriculture. A number of OECD countries are beginning to seek more efficient and effective use of water in agriculture, by moving towards a full-cost recovery system of water pricing, as a means of adequately valuing water as an input to agricultural production.
OECD is developing three indicators related to agriculture's use of surface and groundwater: first the intensity of water use by agriculture relative to other users in the national economy; second the measurement of the technical (volume) and economic (value) efficiency of water use on irrigated land; and third a water stress indicator to gauge the extent to which diversions or extractions of water from rivers are impacting on aquatic ecosystems.
The share of agriculture in total national water utilisation is high for most OECD countries, with the sector currently accounting for nearly 45 per cent of total OECD water utilisation, and over 60 per cent for nine OECD countries. While utilisation levels are far below available water resources for most countries, for more arid regions the utilisation intensity of water, especially by agriculture, is a much higher share of available resources. In these situations agriculture has to compete with other users for scarce available water resources. Even where competition for water resources between agriculture and other sectors is less pronounced, the growing need to meet recreational and environmental demands for water may require that agriculture improves its efficiency of water use.
Information on the technical or economic efficiency of irrigation water use across OECD countries is extremely limited. Since the early 1980s there has been a continuous upward trend in water use for irrigation in many OECD countries, associated with the increase in the irrigated land area. The expansion in the irrigated area has been mainly encouraged by government investment in irrigation infrastructure and an irrigation water subsidy. The price of water paid by farmers in many OECD countries is substantially below that paid by industrial and household users, even when differences in water quality and the costs of water conveyancing systems between agriculture and other users are taken into account.
There is relatively little information on the extent or trends in water stress caused by diverting surface water from rivers for agricultural use. Also very few OECD countries define and monitor flow rates for rivers subject to diversion of water for agricultural use. In part, this lack of information highlights for many OECD countries that water stress caused by agricultural diversions from rivers is not a concern. Where flow rates are defined and measured, this is to help allocate inter-provincial river flows or transboundary flows.