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Resource security matters for India

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  • karmayog - tanya
    http://www.livemint.com/Opinion/zAOvm6gwBKa6Bzr9DfSyxN/Indias-resource-nexus-priorities-for-action.html India s resource nexus: priorities for action India s
    Message 1 of 1 , Apr 10, 2013

      India's resource nexus: priorities for action

      India's primary aim should be to reform global governance to align with its
      development needs

      Arunabha Ghosh

      First Published: Tue, Apr 09 2013. 07 20 PM IST

      Resource security matters for India. It has to simultaneously secure energy,
      water and other minerals to support economic growth; meet basic needs for
      food, fuel and water for a growing population; and manage the environmental
      constraints and consequences of increased resource use. It has to compete in
      international resource markets even as global energy and food prices have
      become more volatile in recent years.

      Energy, food, water and climate form a resource nexus, affecting each other.
      Consider energy's impact on food, water and climate. In agriculture, oil
      accounts for 42% of energy use, so high or volatile crude oil prices drive
      food inflation and impact the fiscal balance if subsidies cushion some of
      the shock. With subsidized but poor quality electricity, farmers
      over-extract groundwater for irrigation from more than 16 million
      electrified pumpsets, leading to both water and energy shortages, and land
      degradation. The climate is affected by fossil fuel demand in India and
      elsewhere. Natural gas could partially mitigate the impact but its use would
      depend on pricing decisions, infrastructure, and bilateral agreements to
      import gas.

      Food markets, in turn, are affected if crops are diverted to produce
      biofuels. Inefficient subsidies elsewhere, such as for corn-based ethanol in
      the US, impact global prices for major crops. Cropping patterns also affect
      water use efficiency. If food security is largely measured by rising stocks
      of foodgrains, then continued production of water-intensive crops, such as
      rice, in our northern states will further deplete water tables.

      Water is central to food production (more than 80% is used in agriculture
      with groundwater taking a majority share). As groundwater levels fall
      rapidly, food output will be adversely affected unless demand-side
      efficiency measures are adopted. This will, in turn, raise food prices,
      undermine food security and threaten farmers' incomes over the long term.

      Water is also critical for energy. Thermal power plants use nearly 88% of
      water used in industry. More than 70% of existing and planned thermal and
      hydropower capacity is located or expected in water-scarce or water-stressed
      areas. Some types of renewable energy, such as concentrated solar power,
      also need water for cooling.

      Trade in agricultural commodities embeds water which has been used in their
      production. If water stress increases, virtual water could be imported. But
      it would also involve risks associated with commodity price fluctuations,
      foreign exchange pressures, vulnerability to extreme weather events in food
      exporting countries and threats to farmers' livelihoods in India.

      In response to this resource nexus, India has to act at home and on
      reforming global governance of resources. Five priority actions are
      paramount, three against supply constraints and two regarding demand

      First, develop infrastructure for importing and transporting resources.
      India will be reliant on energy imports, so it should build infrastructure
      commensurate with long-term resource needs. This means greater capacity for
      coal imports on the western coast, more oil and natural gas terminals in the
      east, larger strategic reserves of oil, and greater inland freight and
      pipeline capacity.

      Second, promote distributed energy infrastructure. A blend of different
      renewable energy sources via smart microgrids could reduce the grid load,
      offer energy access solutions, and allow for productive uses of renewable
      energy. Distributed energy could also lower the risks for energy
      infrastructure should the grid collapse or come under any attack.

      Global energy markets are constantly changing. For the first time since
      1995, US domestic crude oil production will exceed its imports by end-2013.
      China has already become the world's largest oil importer. This has profound
      implications for global security, protection of sea-lanes, interventions in
      oil rich but politically fragile states, and the role of markets versus
      resource nationalism.

      Therefore, third, India should actively work with other second-tier energy
      demanders to develop regional and multilateral energy regimes. Such a forum
      could emphasize the importance of markets, reduce threats of sudden
      disruptions of supply, protect overseas investments, increase transparency,
      and arbitrate on energy-related disputes.

      Fourth, on the demand side, promote water use efficiency in agriculture.
      This is a complex task, involving energy policy reform, use of latest
      technologies, improved cropping practices, and participatory irrigation
      management along with farmers. But the National Water Mission could catalyse
      action (just as the solar mission has done for solar energy) with targets;
      timelines, transparently selected project interventions, and associated
      incentives to change behaviour. Water use efficiency in agriculture will
      have positive spillover effects on energy demand and food security.

      Finally, from a global resource demand perspective, India must emphasize
      basic needs against mercantilist negotiating positions. For other major
      economies, mercantilist interests predominate. India, too, needs
      technologies and markets. But its primary aim should be to reform global
      governance to align with its development needs. For instance, it has more in
      common with smaller developing countries than China in climate negotiations.
      A global atmospheric space carved up by the US, China and Europe will leave
      little for India and others. India needs to find new allies in climate

      Arunabha Ghosh is CEO, Council on Energy, Environment and Water, an
      independent policy research institution.
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