Resource security matters for India
India's resource nexus: priorities for action
India's primary aim should be to reform global governance to align with its
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
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
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
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.