Anticipating and monitoring water risks for agriculture

Public policy levers

Better anticipation, monitoring and assessment of water risks for agriculture can support sound decision making around what can be done to reduce risk exposure and vulnerability and increase preparedness, as well as prioritise investments that build resilience capacities both on-farm and for the sector as a whole. These decisions will not only concern water resource management directly, but also a wide range of areas that influence water risks for agriculture, from land use zoning and economic development strategies to infrastructure planning, environmental protection and more.

This section discusses the public policy levers that can promote the use of water risk information for decision making, highlighting the circumstances where risk assessment tools provide the greatest benefit, and where their application may offer limited added value. It also delineates the role of the public sector vis a vis farmers and agro-food businesses and the private sector more broadly in innovation and technology deployment for water risk monitoring and assessment for agriculture.

When to use water risk assessment tools… and when not

Water risk information is just one potential input into decision making. While water-related tools for risk management provide important evidence, decisions are rarely based on risk information alone. Additional factors include the cultural and social value of water, as well as legal and institutional contexts, including water rights regimes that vary significantly within and across countries. As a result, there may be valid reasons why policymakers do not fully defer to the outputs of risk assessment tools, particularly when these tools do not align with broader policy objectives, legal constraints or social priorities. Moreover, different users will have different levels of risk tolerance. As such, there is no single “acceptable” level of risk, underscoring the need for flexible, context-specific approaches rather than one-size-fits-all solutions.

Developing and maintaining water risk assessment tools can be costly, making it essential for decision makers to ensure that their use delivers a clear and proportionate return on investment. The value of such tools is highest when they are applied at decision points where the costs of poor choices are large or irreversible. For public authorities, this includes use prior to major infrastructure or policy investments, where risk assessments can help avoid sunk costs; in public budget allocation and policy prioritisation, to target limited public funds more effectively; and in situations involving competing water users or sectors, where transparent, evidence-based trade-offs can help build trust and prevent disputes. For producers and agri-food companies, higher returns on investment are most likely in contexts of increasing climate variability or more frequent droughts, where tools can help prevent production and supply-chain losses, and where rising regulatory, compliance or environmental risks create exposure to fines and reputational damage. Across all actors, the potential impact of risk assessment tools is greatest in mature data environments, which support reliable analysis and enable the sustained, long-term use of tools rather than one-off applications.

There are several valid reasons why decision makers may choose not to use water risk assessment tools. In some contexts, the decision at hand does not warrant complex analysis, for example where risks are low, operations are routine, and regulatory frameworks are stable. In other cases, high levels of data or model uncertainty can make tool outputs misleading, particularly when data quality is poor, models are poorly matched to the decision context, or results convey a false sense of precision; transparency about uncertainty is therefore essential. Institutional and timing constraints can also limit uptake, including short decision cycles, limited technical capacity or fragmented authority across agencies. Practical cost-benefit considerations matter as well, as high set-up and maintenance costs, complex user requirements, or limited incremental value can outweigh potential benefits. Finally, governance and political factors play a critical role: lack of trust in tools or their developers, limited stakeholder participation, and the need for discretion and flexibility in policy decisions can all reduce reliance on risk tools. Very often, attention is placed on improving tools rather than on understanding how decisions are made. A more effective approach may be to start from decision-making needs and work backwards to the information required.

The role of the public sector

There is a strong case for government involvement in providing public goods and implementing “no regrets” policies to strengthen agricultural resilience. Encouraging the production and use of high-quality water risk information is one such example of a public good. As stated in the OECD report Strengthening Agricultural Resilience in the Face of Multiple Risks (OECD, 2020[2]), “even in cases where the relevant actor is the farm or the private sector, there is a “behind-the-scenes” role for government in providing information, supporting knowledge systems, and engendering an overall enabling environment to support informed on farm decision making.” The public sector can address many of the barriers to the use of water risk information mentioned above and create the enabling conditions that encourage uptake where there is a clear case for high return on investment.

Governments can also create the enabling conditions for private-sector innovation. Innovation ecosystems and market openness in terms of trade, private capital and competition can be drivers of technology deployment such as sensors, AI, precision irrigation and water‑quality monitoring. Market‑based tools, such as voluntary standards or performance‑based incentives, as well as private data sharing can further accelerate the adoption of technologies that bolster agricultural resilience.

Framework setting

As framework-setters, public authorities play a central role in encouraging water risk assessment that takes a holistic view of water risks for agriculture, beyond the common focus on floods and droughts to also consider water quality, freshwater ecosystem resilience and encourage a “whole of water cycle” approach.

Governments are also well positioned to ensure a long-term perspective on water risks. By producing and disseminating forward-looking risk information over longer time horizons, public authorities can help counterbalance the short-term imperatives that often shape decisions by farmers and businesses. This long-term focus is essential to encourage actions that build systemic resilience, rather than reactive responses to immediate water-related shocks. At the same time, governments should engage farmers as key partners in risk monitoring, given that they are often the first to directly observe the impacts of water-related risks.

The public sector has an important role at larger spatial scales, such as river basins, watersheds and national systems. While farm-level decision-support tools can guide water risk management at the field or plot level, risk assessment and management at basin or watershed level requires different tools, shared data and multi-stakeholder governance and co-ordination arrangements. Public authorities are critical to convene actors, align incentives and manage risks that transcend individual farms or users.

Finally, governments can deploy water risk assessment tools to support decisions that balance multiple policy objectives. Tools designed to optimise agricultural production, such as precision irrigation systems, may at times conflict with other public goals, including sustainable aquifer management or ecosystem protection. The public sector is therefore responsible for balancing competing objectives and safeguarding the public interest in the face of systemic and cross-sectoral water risks. In this context, governments play a central role in tracking water abstraction across agriculture and other uses, assessing whether abstraction levels are sustainable, and establishing priorities where competing demands arise under conditions of water scarcity. In such situations, deliberative water planning tools can be valuable to build community confidence (Tan, Bowmer and Mackenzie, 2012[115]).

Data environment

The public sector is well positioned to promote a mature data environment that enables the sustained, long-term use of water risk assessment tools. While agricultural producers and agri-food companies increasingly generate granular, operational data, governments generally retain primary responsibility for providing continuous, high quality, coherent, and authoritative datasets, including the climate, hydrological and water-quality baselines.

Public intervention is critical across the full data value chain. This includes investment in data collection infrastructure such as satellite and remote sensing systems, as well as the operation of meteorological, hydrological and water-quality monitoring networks. Governments also play a key role in data validation and quality assurance. In Canada, for example, the Real-Time In-Situ Soil Monitoring for Agriculture (RISMA) network provides ground-sourced data that is vital for the calibration and validation of remotely sensed data and various modelling application. Setting standards or guidance for how uncertainty in models and tools is measured and communicated is another way governments can further strengthen the usability and trustworthiness of risk information.

Transparency and integration are equally important. Public authorities can provide open access to core water risk information, ensuring a level playing field for market participants and stakeholders. Moving from fragmented, siloed datasets toward harmonised and interoperable systems – enabling tool developers to, where needed, better link meteorological, hydrological, agricultural, land-use, and socio-economic data, often held by different local and national bodies – can significantly enhance risk assessment.

The public sector can also shape data governance arrangements that encourage responsible data sharing. This includes promoting standards that enable voluntary sharing of private-sector data while protecting commercial confidentiality and encouraging agri-food companies to disclose methodologies used in supply-chain water risk assessments. As well as meeting potential compliance obligations, companies that transparently measure and report risk information are viewed more favourably by their capital market signatories, helping secure access to capital (CDP, 2026[116]).

Finally, as a knowledge producer, the public sector plays a critical role in generating actionable water risk intelligence for agriculture. This includes the provision of early-warning systems for droughts, floods and other water-related hazards, as well as the production of national water risk assessments that integrate climate variability and longer-term change in ways tailored to agricultural decision making. In increasingly interconnected food systems, governments also have a responsibility to assess imported water risks, systematically analysing exposure embedded in food and feed imports as part of broader national food security assessments.

Governance and co-ordination

Clear governance and co-ordination mechanisms are essential to ensure that risk information informs action rather than remaining purely diagnostic. Experience shows that governance structures are most effective when they are established well before a crisis occurs. When roles, responsibilities and lines of authority are clearly defined and understood by all stakeholders prior to a drought or flood event, the likelihood that early-warning information and risk assessments are acted upon in a timely manner is significantly higher.

The public sector has a critical convening role in bringing together a broad range of stakeholders and breaking down institutional and knowledge silos. This includes coordinating across ministries with potentially competing objectives (such as agriculture, energy, environment or regional development) as well as facilitating dialogue among competing water users and sectors. Spain’s National Irrigation Board provides an example of multi-level co-ordination. This national coordination and advisory body attached to the Ministry of Agriculture brings together central and regional administrations and stakeholders to improve the governance of irrigated agriculture. Strengthening collaboration between meteorological services, water agencies and agricultural institutions would help integrate agronomic, hydrological and meteorological knowledge. Government leadership is also indispensable for addressing transboundary water risks, where no single actor has the mandate to act alone.

Governance challenges are also becoming more complex. Rising interdependence between water and other policy domains (i.e. the water-energy-food- nature nexus), greater uncertainty linked to climate variability and socio-economic change, as well as diversity in actors and governance levels demand innovative governance approaches. For example, in contexts where an increasing share of irrigation investment is private sector-led, additional efforts will be required to promote the public goods of sustainable water use and long-term food security, especially for groundwater, where monitoring and enforcement are more difficult. In this context, effective agricultural water governance will increasingly need to rely on convening all relevant stakeholders to build trust and understanding of the context specificities and stakeholder needs and incentives. Solutions are likely to be as much social and economic as they are technical. For example, the concept of a “social licence to irrigate” may become increasingly important as water use by agriculture and the impacts of agriculture on water quality raise concerns around resource sustainability and public health (Shepheard and Martin, 2008[117]).

Knowledge and technology transfer

Knowledge transfer is a critical link between risk assessment and application, particularly in agriculture, where decisions are made under uncertainty and where many farmers, especially small producers, lack access to sophisticated analytical tools. Farmers need to be able to access relevant risk information, interpret it and apply it to day-to-day farm management decisions. Designing user-friendly, accessible tool interfaces is an important first step in translating complex analysis into real-world decision making.

Public authorities play a key role in communicating water risk information in usable and actionable formats. Advisory and extension systems are central to this effort. In Spain, irrigator advisory offices, the vast majority of which are linked to SiAR, disseminate and use data on crop water requirements and irrigation scheduling in all autonomous communities. Similarly, Italy’s IRRINET platform provides farmers with tailored irrigation advice through a publicly supported digital service. Knowledge transfer strategies must also take behavioural and social factors into account. Cultural values linked to land and water use, resistance to change and limited awareness of water risks or available adaptation options can all constrain acting on risk information. In this context, improving awareness of water risks and the benefits of innovative practices is as important as improving the technical quality and usability of tools themselves.

Intermediary institutions are essential to this process. Basin organisations, irrigation districts and extension services are often well placed to interpret water risk information and tailor it to local conditions, while also building trust with farmers. In some contexts, universities and research institutes can act as credible knowledge brokers, supporting dialogue between scientists, policymakers and practitioners.

Governments can encourage farmers and other risk managers to adopt tools. Well-designed financial incentives, behavioural nudges and tailored accompaniment can be necessary to overcome adoption barriers. For example, Ouvrard et al (2023[118]) tested different policy instruments designed to foster farmers’ voluntary adoption of smart water meters that automatically transmit real-time water usage to authorities, finding that a conditional subsidy combined with a nudge encouraged their adoption. Furthermore, the use of certain tools depends on adequate infrastructure. For instance, precision irrigation requires modern irrigation systems. In Spain, investment in irrigation infrastructure since 2000 has supported the adoption of tools to better anticipate and monitor water scarcity risks. Finally, farmers and local actors may benefit from capacity building to use risk assessment tools effectively and integrate them into routine management practices.