The Nexus between Energy, Food, Land Use, and Water
Application of a Multi-Scale Integrated Approach

The Indian state of Punjab

  • The Nexus Assessment Project was commissioned by the Energy Team of the Climate, Energy and Tenure Division (NRC) of the UN Food and Agriculture Organisation (FAO)

    and sponsored by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ).

Punjab's Agriculture heavily depends on groundwater irrigation. Photo: PAU
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Punjab contributes about 45% of the wheat and 25% of the rice to India’s central food pool, which means a procurement of about 70% and 80%, respectively, of Punjab´s local production by the central government. These food flows play a key role in India’s food security and are not only enforced by law but also actively encouraged through subsidies on electricity for groundwater pumping and Minimum Support Price (MSP).

What is the actual performance of Punjab’s metabolic pattern in relation to different criteria of local sustainability (feasibility, viability and desirability)? What are the options for Punjab given existing trends in population growth and food prices and given a possible future reduction of subsidies for electricity use in agriculture?

Objectives

The objectives of this case study were to: (i) Characterize the actual performance of the metabolic pattern of the state of Punjab in relation to different criteria of local sustainability (feasibility, viability and desirability); (ii) explore the options for Punjab given existing trends in population growth and food prices and given a possible future reduction of subsidies for electricity use in agriculture, using three distinct perspectives: the household, the interface Punjab/India, and the interface India/international market.

Diagnostic step: Checking the severity of internal and external constraints

A summary of the characteristics of the metabolic pattern of Punjab is shown in Fig. 8. It is evident from this figure that the metabolic pattern of Punjab is closely tied to that of India, the larger socio-economic system of which Punjab is part. When adopting the conceptualization of metabolism, we can say that Punjab is an organ of India. Indeed, nearly all (95%) of the energy consumed in Punjab is imported (from India) and the vast majority of food produced in Punjab is procured for the Indian central pool (81% of the rice and 57% of wheat). As a consequence, a large part of the water use (68%) is destined for production of food consumed in the rest of India.

The relations between selected flow and fund elements in the economy of rural Punjab are illustrated in Fig. 9. This scheme highlights the internal and external constraints on the metabolic pattern of Punjab’s agricultural sector across different perspectives (household, interface Punjab/India, interface India/international market). Flow elements include monetary and food flows, and are represented by grey and green arrows respectively. The two pie charts in the centre of the figure represent the two fund elements human activity (left) and managed land (right). The pies represent the total size of the funds (total hours of human activity per year and total hectares of managed land in Punjab, respectively). These two fund elements are divided into lower-level compartments (relevant sectors – e.g. household sector HH, agriculture AG, and the rest of the economy PW*) and categories of land uses (rice, wheat and other crops), whose sizes are proportional to the relative allocation of the fund in question. Pink arrows represent the fund element human activity. The centre of the figure focuses on the rural community itself (labour supply for agriculture and food for self-consumption), while the bottom part of the graph shows the interface of the agricultural system with the ecological systems from which inputs are taken and where wastes are dumped. At the top we have the interface with the market, including export/import of agricultural commodities and monetary flows, and on the left side we have the interaction of the rural community with the local economy (off-farm jobs).

Analysis of internal constraints (viability) − In relation to the internal constraints this case study focused on the link between the flow of gross added value generated by the agricultural sector and per capita income in the rural areas of Punjab. In this context, the MuSIASEM accounting system made it possible to individuate a peculiarity in the metabolic pattern of households in Punjab. In spite of the fact that the contribution of agriculture to the state GDP is relatively high (more than 30%) compared to other Indian states – a bad sign for the vitality of the economy and income of rural households given that the economic labour productivity (ELP) of the agricultural sector is less than half that of the average of other economic sectors - the average per capita income in Punjab is medium high compared to other Indian states. This apparently anomalous situation can only be explained by other sources of monetary flows entering the local economy. Indeed, three main monetary flows enter the Punjab economy: (i) subsidies from India, (ii) minimum support price from India; and (iii) remittances from abroad. Especially important is the role of remittances, which accounted for more than 10% of the GDP of Punjab in the period 2000-2008; twice as high as for India as a whole. Thus, paradoxically, at present remittances are instrumental in guaranteeing the food security of India as they are essential for the viability of the metabolic pattern of rural Punjab at the household level. However, remittances are gradually decreasing (8% of state GDP in 2010), probably due to the economic crisis in the countries of origin, and this is likely to cause a difficult situation in Punjab (and in India!) in the near future.

Another key point identified by the analysis of internal constraints is the relation between subsidies for electricity from the central Indian government to encourage the intensification of agricultural production, and the consequent impact on underground aquifers and soil in Punjab. This relation is well known (e.g., Bhullar and Sidhu, 2007), but MuSIASEM enables us to deepen the insight in this relation by linking the factors involved to the viability of the system at the different levels of analysis.

At the local level, the livelihood of rural households is mainly determined by the flow of money entering into the household from agricultural activities. With a monetary flow of 260 billion INR into the sector of grain production from the central procurement of 20 million tonnes of grain and 7 billion labour hours in the sector (Fig. 9),  we find an economic labour productivity (ELP) of 37 INR/hour. This value is less than half of the ELP in the other sectors of the economy (100 INR/hour) (Fig. 9). This low value of ELP translates into a low remuneration of labour and it explains why remittances and subsidies are essential in maintaining the economic viability of rural households. In particular, subsidies for electricity (making the pumping of underground water for irrigation economically feasible) can be considered a key factor in keeping high the biophysical productivity in grain production.

Looking at a historic view of water consumption in Punjab (surface versus underground water), it is evident that availability of water is not the only factor determining the level of its use. In fact, when heavy monsoons made available plenty of water in the region (1989/1990), the overall consumption of water for irrigation did not increase. On the contrary, the introduction of subsidies for the use of electricity for irrigation (1996/1997), alleviating the internal constraint represented by the excessive cost of electricity for farmers, generated an immediate shift from surface water to underground water utilization (reducing the labour requirement in irrigation).

Analysis of external constraints (feasibility of the metabolic pattern) − The partition of Punjab in 1947 between India and Pakistan left uncovered the issue of surface water share in the Indus River Basin. The Indian Punjab restructuration of 1966 foresaw a diversion of water that has resulted in actual Punjab having access to only 25% of its surface water resources. Therefore, most of the water for irrigation is extracted from the aquifers with the support of electric pumps and has resulted in an overexploitation of 150% of renewable groundwater resources. Intensely-irrigated agriculture covers about 80% of the land, against 2% of rain fed agriculture, and is responsible for the degradation of soil fertility.

It is clear from our diagnostic analysis that the specialization of Punjab’s agriculture in grains is a consequence of food security policies imposed by the central government of India and not of the economic return that this activity provides to the state. This causes a lock-in of the system, preventing the economy of Punjabis from diversifying not only its economic activities (outside agriculture) but also the types of crops cultivated (in the agricultural sector). This situation is tolerated because a relatively high per capita income is achieved in the state (compared to other Indian states) with remittances and subsidies complementing the direct return of agricultural activities. These two monetary flows entering Punjab from India and from abroad are essential for maintaining the system economically viable but at the same time promote a progressive environmental degradation. This process makes agricultural production in Punjab environmentally unfeasible in the long term. This situation is eroding the resilience of the socio-ecological system and Punjab’s precarious equilibrium is becoming increasingly unstable. A significant decrease in subsidies and/or remittances is likely to have devastating effects on the viability of the metabolic pattern of Punjab, and, as a consequence, also on the food security of India.

Scenarios: Exploring consequences of existing trends

At the level of the household in relation to the interface Punjab/India − Trends in the contribution of remittances and population growth are discouraging. Moreover, the policy of heavy subsidies to electricity use in rural areas is growing increasingly unsustainable because of the negative side effects it is creating (Buhllar and Sidhu, 2003), so we should expect a future decrease also for this second source of monetary flow. Looking at the factors determining the economic viability of rural households in Punjab (local level of analysis) we see that the combination of decreasing remittances and a reduction in the subsidies for electricity in agriculture would pose a serious risk to rural livelihood. As a matter of fact, just to maintain the actual levels of agricultural production more electricity will have to be consumed to pump water from lowering water tables. This additional consumption of electricity, if not compensated by subsidies, will further lower the already low economic labour productivity, at the very same moment in which institutional settings prevent diversification of economic activities in rural Punjab.

At the level of India in relation to the interface India/international markets − Looking at the factors affecting the viability of the metabolic pattern of India as a whole (national level of analysis) we find equally worrisome trends. In fact, we may reasonably expect in the future a constant increase in the international price of energy (energy is needed at the local scale for irrigation and at the Indian scale for making fertilizers) and, as a consequence, in the international grain prices. An increase in international prices will make it more difficult for India to import grains from abroad and as a consequence it is likely to increase pressure for a further intensification of grain production in Punjab. If the “fair price” of grain procurement from Punjab farmers by the central government is to be linked to changes in international prices, as often claimed in official policies, India will have to accept a proportional increase in the cost of the internal supply of grain that will reflect, sooner or later, the increases in the international price. However, if an increase in international food prices coupled to an economic crisis of India will force the country to: (i) reduce subsidies; (ii) adopt procurement prices lower than international prices, and (iii) prevent Punjab from exporting its food production abroad, then it is reasonable to expect strong social tensions in the state of Punjab.

At the interface between societal metabolism and ecosystem metabolism − As regards the ecological compatibility of the metabolic pattern of rural Punjab, so far the socio-economic tensions within Punjab and between Punjab and India have been externalized to local ecosystems in the form of overexploitation of aquifers and soil degradation. The big question is for how long these tensions - which are expected to keep growing in the future - can be mitigated by further externalization to local ecosystems before a dramatic negative feed-back will cause the entire agricultural system to collapse.