Dr. Sa’d Shannak
Special to The Times Kuwait
The development of the agricultural sector is vital for any country for several reasons, such as food security, reducing urbanization, and environmental protection. It is particularly important for economies dependent on natural resources (such as oil and gas) including Gulf Cooperation Council countries as they diversify their non-resource sector to maintain long term sustainable development.
Unlike in other countries, agriculture in desert climate regions co-exists with the harsh climatic conditions (very high daytime temperature and solar irradiance, an abrupt temperature drop at night, and very low annual rainfall) coupled with very limited arable land area. This makes it extremely challenging to cultivate crops without significant government support. The abundance of oil and its export provided GCC countries with significant revenues, which helped in the development process of all sectors of the economy to a great extent.
However, a volatile nature of the oil price environment, coupled with restructuring the global economy in the post-COVID-19 period, and now a war in Ukraine – the fifth largest exporter of wheat in the world – all create challenges for oil-exporting economies. These countries are looking for alternative supply sources, while at the same time building further their foreign reserves.
These reasons, combined with the domestic energy price reforms, would make it challenging to support the development of agriculture. In this backdrop, assessing the impact of increased energy prices on the agriculture sector as one of the policy options to sustain the sector becomes an important question. This would help policymakers implement better plans for energy price reforms and the development of the agriculture sector.
Water-Energy demand management, using price measures such as electricity prices, should be an essential policy in the agricultural sector as it aids significant changes in resource use and distribution. Gradual removal of energy incentives by setting gradually higher electricity prices is very reasonable and also advisable. This policy would allow for a smooth transition with the least possible disruption and allow time for the agriculture sectors to absorb new changes related to an electricity price increase.
Reforming electricity prices in the sector will create additional revenue for the government. These additional resources can be allocated for strengthening the fiscal position of the government, improving the socio-economic context, and supporting technological programs to facilitate the energy transition. For example, solar energy is one of the promising energy alternative options in most of the GCC countries, given the geographical location and solar irradiation the region receives. Supporting and financing technological development in this field using the additional revenues of phasing out electricity subsidies would be beneficial and relevant.
Electricity prices with high incentives could encourage extensive use of groundwater and result in generating additional electricity and therefore more carbon emissions. Therefore, removing electricity incentives could preserve these natural resources, reduce the carbon footprint, and achieve one of the strategic goals for a resilient and sustainable economy. On the other hand, electricity prices in the agriculture sector must be designed with caution given the sensitivity of the sector and its vulnerability due to harsh climatic conditions.
Furthermore, the positive environmental outcomes of removing the energy incentives could outweigh any depressive effects on the agriculture sector. As electricity prices increase, crop imports will also increase. Although raised import costs could outstrip any gains in electricity revenue, it would encourage farmers to use resources more sustainably and direct their farming activities to where there is a sustainable competitive advantage. Thus, farmers could increase the efficiency in the management of agricultural production inputs and reduce waste. This can also help to achieve domestically and internationally committed environmental mitigation targets.
These, and other alternative approaches such as planning crop mix and pattern, should provide useful regional knowledge and experience in managing agricultural practices. As GCC countries cover a large area of desert, it is essential to focus on crops that are less water-intensive or invest more in alternative innovative methods such as vertical farming and hydroponics as means to reduce the pressure on the country’s water resources. Equally important, defining crops that are more cost-effective to produce locally from those that can be imported is a strategic mandate to sustain water, energy, and land resources.
Maintaining the share of the agriculture sector in the national economy is crucial to ensure the availability and accessibility of food to inhabitants, raise farmers’ income and reduce migration from rural to urban areas. Furthermore, the development of the sector by efficiently using energy and water resources to meet the domestic demand would also contribute to the concept of Circular Carbon Economy that is considered a key strategy for environmental protection.
The complex interactions and dynamics between water, energy, and food resources form a huge need to develop multisectoral and intersectoral approaches while breaking down organizational silos. Different organizations managing these resources have strong internal differentiation and heterogeneity and creating a common equivalent basis for comparing these resources is the first step towards developing sustainable natural resources plans and effective policy recommendations.
At Qatar Environment and Energy Research Institute (QEERI), part of Hamad Bin Khalifa University, a member of Qatar Foundation (QF), several projects and initiatives based on evidence-informed policymaking approach were launched to ensure that policymaking is well-informed by the best available research evidence. The outcomes of this research work will provide policymakers with a set of possible options and measures that can improve the design and performance of knowledge systems on natural resource management.
Late last year, QEERI released the first issue of a new sustainability e-newsletter in its efforts to showcase the contribution of the research conducted at the institute to address pressing sustainability issues in Qatar. In this e-newsletter, researchers highlighted the importance of aligning objectives across the different sectors at local, regional, and international levels to achieve a sustainable food system along several important factors.
Dr. Sa’d Shannak is a scientist at Qatar Environment and Energy Research Institute (QEERI), part of Hamad Bin Khalifa University, a member of Qatar Foundation (QF). The views expressed in this article are the author’s own and do not necessarily reflect HBKU’s official stance.