Water as a binding constraint for agriculture

 source:  

The State of the World’s Land and Water Resources for     Food land    Agriculture

Hubert George, Parvis Koohafkan and Yuji Niino

Session 5: The Future of I&D Design and Development

Water is the binding constraint on agriculture supply. While there have been natural disasters from extreme weather events which have shocks agriculture prices, the longest lasting and most important problem in agriculture over the last few years have been the lack of water. Drought has been the major cause of supply shocks over the last decade. This proclamation is generally not a bold statement because weather has always been a binding constraint, but if there is any shortfall in irrigation and there is lower inventory to use numbers, water will serve as a more important driver in price.

The graph shows the amount of cropland per person is falling and the amount that needs to be irrigated is increasing. This means that if there is no fresh water, supply will be curtailed.  The land coming out of production in the US is mainly in the major farm belt. Land that is used on the margin to add supply is at the extremes in rainfalls so water is all the more important.