Agricultural production is highly dependent on water and increasingly subject to water risks, such as floods, droughts and poor water quality. Mounting evidence suggests that supplies of freshwater are becoming less reliable and sustainable (GCEW, 2024[1]). As water risks can have significant economic and social effects (production, markets, trade, food security, shortages, loss of income) on the sector, countries’ ability to anticipate and monitor these risks for agriculture is paramount.
Drawing on a review of recent literature and an expert workshop,1 this policy paper documents the different facets of water risks facing agriculture and showcases the tools available to policymakers to anticipate and monitor these risks. Water risk management is an important component of building overall agricultural resilience, defined as the ability to plan and prepare for, absorb, recover from, and adapt to adverse events (OECD, 2020[2]). The ability to anticipate and monitor water risks forms part of the “prepare and plan” phase. While the evidence points to a confluence of water risks for agriculture, not all countries are equipped with tools and methods to assess these risks comprehensively.
This paper focuses primarily on physical water risks related to the quantity and quality of available water (as opposed to water-related financial, regulatory or reputational risks)2 and the tools available to anticipate, monitor and assess them. An analysis of mitigation and adaptation measures in response to water risks is beyond the scope of this paper. Finally, this paper explores tools best suited to support decision making and water risk assessment by public authorities. While some of the tools used by public authorities may be the same or similar to those used by farmers to inform plot-level decision making, public authorities require a range of tools that cover several spatial scales, including watershed/basin, regional, national and potentially transboundary levels.
The paper starts by describing the different water-related risks that agriculture faces and their drivers. The next section showcases examples of tools to anticipate and monitor water risks for agriculture organised according to a typology. The final section sets out the public policy levers to facilitate better anticipation and monitoring of water risks.