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03/02/2010 |
Water Valuation |
Water has always been and will continue to be, a valuable resource worldwide. It impacts on human life, global industry, politics (hydropolitics) and economy and, on an environmental footing, effects vital eco systems.
Fresh water in the UK is now more precious than ever in our history for its extensive use in:
• Agriculture
• Increased human consumption
• High-tech manufacturing; and
• Energy production.
Water is increasingly prioritised by the UK Government and the EU as a resource requiring better management and sustainable use. In light of this, water should no longer be perceived as just a commodity, but needs to be assessed with an enlightened view as to its economical and commercial value.
The World Water Development Report predicts, in the next 20 years the quantity of water available will decrease by 30% and world demand for water will double every 21 years.
When this is reviewed along with population growth, household growth, climate change and cultural diversification, water takes on a long term economic and intrinsic value that needs to be properly appraised and valued by all industry sectors.
Water Efficiency and Conservation in Agriculture
Though efficiency and conservation are often used interchangeably, there is a difference between them. Water efficiency differs from water conservation in that it focuses on reducing waste.
The key for efficiency is reducing waste, not restricting use. Users in all sectors can influence water efficiency by making small behavioral changes to reduce water wastage and by choosing more water efficient products and processes.
In agriculture the obvious example is irrigation. Irrigation water demand alone will reach 250 million m3 by 2021, an increase of 53% on 1995. In light of predicted water shortages, the amount of water used, and promoting more efficient methods of irrigation needs to be individually examined by the agricultural sector.
Valuable lessons can be learnt in the UK from the adaptive approach Australia has taken to diminishing water resources and its effect on agriculture. If you watched Jimmy’s Global Harvest on BBC2 on 14 January, it was a great 60 minute insight into how shortage forces innovative change.
Australia is the driest inhabited continent on earth, as well as being amongst the world’s highest consumer of water.
The programme identifies that Australia has been forced to address water resource issues in a variety of farming practices. A startling example was salinity in the soil, which rendered affected land completely barren and useable. This is a stark reality of the future of Australian agricultural production.
To counteract the effects of water shortages and protect their land, farmers are beginning to use land more efficiently. In the wheat belt, a practice of planting native Acacia Trees that adapt to the salinity in the soil and supplementing with Sandlewood trees which provide a cash crop is an example of the innovative farming practices needed to sustain the industry.
In other areas of agriculture, pioneering irrigation techniques are being promoted to maximise the use of water. This includes the practice of ‘partial root zone drying’ which involves alternating irrigation periods, from the right to left side of the plant. In the majority of cases this increases yield and return, whilst conserving the use water resources.
The UK in the year 2010 is not facing the same degree of water resource problems as Australia. However, by the year 2050 if climate change analysis is correct, the UK will be dryer, hotter; more populated. UK Agriculture needs to take stock of its existing resource, recognise its increasing value, and ensure that it manages to secure the resource into the future.
However at the current time, neither the valuation profession, nor the market place, has properly gripped the issue of water valuation. There is a recognition that the water resource has a value, but we don’t have a clear and transparent methodology for its calculation. There is far too much “sticking your finger in the air” and potentially negligent valuation!
For example, take two 500 acre blocks of free draining light land one with a 25,000 m3 reservoir, one with no irrigation. How does access to water affect their relative values? Or consider two identical dairy farms each with a 500 cow herd. One has private water via a borehole, the other can only source water from the mains.
For valuers, the acid test, must be whether they are confident that this would stand up to rigorous examination in a court of law. Equally the government needs a clear understanding and methodology when introducing legislation.
For the future, UK farmers need to understand this value, where the water is a vital part of their business or indeed whether it is a potential resource that they should be utilising. An understanding as to how that resource can and should be managed in order to both preserve and grow value, will be an important part of success of their businesses over the next 20 years.
George F. White has offices in Alnwick and Tyne Valley in Northumberland, Wolsingham and Barnard Castle in County Durham, Bedale and Shiptonthorpe in North Yorkshire and Park Lane in London www.georgefwhite.co.uk.
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