Mediterranean Economies 2023
DOI: 10.1401/9788815411167/c9
The fallout from
the war in Ukraine also affects other components of the WEF
nexus as the MENA is one of the world’s most water-scarce
regions. While its population represents about 6 per cent of the
world population, its share of freshwater is limited to only 2
per cent [IRENA 2015].
¶{p. 319}
Water scarcity,
associated with constraints on agriculture land and
productivity, makes the region one of the most food
import-dependent areas in the world. Indeed, MENA countries have
acutely felt the impact of disruption from the Ukraine conflict
to global food production and exports. However, fiscal
disparities between oil exporting and importing countries are
equally marked also in terms of food security, with oil-rich
states enjoying far greater purchasing power than their regional
peers. Although oil-rich countries, such as the Gulf States,
import between 80-90 per cent of all the calories they consume,
and in some food categories, like cereals, they import 100 per
cent of their needs, higher energy prices have largely cushioned
them from food price spikes, allowing them to buy agricultural
commodities at any cost, without placing an excessive burden on
public finances. In contrast, in the energy importers, dramatic
inflation in both their food and fuel import bills has penalized
them significantly in terms of food accessibility and
affordability [Saab 2017]. Not only do they have to pay for more
expensive food imports, but their heavy dependence on wheat
imports from Russia and Ukraine makes them especially vulnerable
to the collapse of food exports from the Black Sea region.
Before the war, Egypt, Lebanon and Tunisia imported respectively
80, 70 and 50 per cent of their wheat needs from Russia and
Ukraine [Laborde and Mamun 2022]. Other MENA countries that are
reliant on imports of key food products from Russia and Ukraine
include Turkey, Syria and Libya.
Although the MENA
countries are looking for alternative markets for their cereal
supply, particularly India, the USA, Canada, Argentina and
Uruguay, the shift is not immediate and free of costs due to
longer shipping distances and the rise in fuel prices.
Soaring costs for
food staples have threatened household-level food security in
several import-dependent MENA countries, putting people’s
resilience at «breaking point», as the UN’s World Food Programme
has pointed out [WFP 2022]. In Egypt, the world’s largest
importer of wheat, this is especially true. The country consumes
around 21 million tons of wheat every year, 13 million of which
are imported. Egypt heavily relies on wheat to provide
subsidized bread to more than 60 million people, and higher food
and energy prices undermine the government’s ability to pay for
the $5.5 bn in food subsidies that keep the price of bread
within the reach of Egypt’s poor [WFP 2022].
¶{p. 320}
Guaranteeing food
affordability is a matter of food security and political
stability since food subsidies have historically helped
governments strengthen the legitimacy of their rule in the
absence of meaningful political participation. Today, many
analysts fear current food inflation and the consequential
impact on the State’s budget risk destabilising the country, as
a considerable share of the population would be affected
directly or indirectly by higher prices.
With the global
food crisis set to worsen in 2023 and, above all, in a scenario
of increasing climate variability, which portends the spectre of
multiple breadbasket failures, MENA governments perceive the
dangers of the region’s dependence on food imports and the
urgency of adopting effective measures to address food
insecurity at its roots. In the first instance, this will
require diversifying away from a concentration of grain imports
from any single region, notably the Black Sea. Furthermore, in
response to food security concerns, several countries may be
driven to abandon a trade-based food security strategy by
increasing their share in food self-sufficiency, neglecting the
principles of environmental sustainability and amplifying the
trade-off within the WEF nexus.
4. WEF policy options to minimize repercussions in the Mediterranean region
As shown above, the
Ukraine war, associated with climate change impacts, is
significantly affecting energy and food security with direct and
indirect consequences also for water resources.
Several policy
responses to tackle the Ukraine crisis have contributed to
severe market distortions, exacerbating global price increase
and instability. Indeed, as countries take action to respond to
high prices and other fallout from the war, they should take
care to avoid exacerbating the impacts for others. As previous
food price spikes have taught us, the best way to deal with
market shocks is to allow markets to work by removing
distortions and support the most vulnerable countries and
households via social safety nets and, where most needed,
through humanitarian assistance.
Furthermore, since
water, energy and food security are inextricably linked and the
WEF nexus includes the sectors mostly affected by the Ukraine
war, policy response in «silo» to ensure
¶{p. 321}the supply of one nexus resource
without considering the interdependence of water, energy and
food security may amplify rather than reduce negative
externalities, risking fuelling a vicious circle that ends up
favouring trade-offs rather than amplifying synergies between
sectors. Consequently, effective solutions able to guarantee the
supply of such resources, minimizing repercussions throughout
the nexus, should be envisaged.
The MENA countries
have responded differently to the food security challenges posed
by the Russian-Ukraine war depending on existing environmental,
socio-economic and institutional contexts. In addition to some
of the instruments that have already been implemented, there are
additional short, mid, and long-term measures that countries
should consider both on the supply and demand sides.
In the very short
run, protecting vulnerable households against food price hikes
is crucial. Social safety nets can be practical tools to support
low-income people against this crisis and several countries are
expanding existing social protection programmes to cover more
households [WFP 2022]. In particular, a cash transfer system to
poor households, which is proven to be effective and more
cost-efficient than food subsidies and in-kind food distribution
as successful Egypt’s Takaful and Karama programmes have shown,
should be reintroduced [Breisinger et al.
2018].
In the short term,
countries should diversify their wheat supply, carefully
weighing the costs and benefits of such an «insurance» mechanism
since wheat supply from the Black Sea usually comes at lower
costs compared to other regions such as Europe or the USA. In
Egypt, for example, the General Authority for Supply Commodities
(GASC) is actively exploring the diversification of import sources
[13]
. ¶{p. 322}
In the longer term,
countries need to explore food security strategies to balance
the benefits of trade openness with the potential costs of
vulnerability to trade shocks. In a scenario of increasing food
market instabilities, MENA governments may start to consider
greater levels of domestic food production as part of their
national aggregate food security policies. Although from a
political and strategic point of view such an approach may be
justified in that it can help stabilise domestic food prices and
reduce vulnerability to international markets and reliance on
other countries, it comes at an economic cost. This is because
the resource endowments of most MENA countries are not well
suited to food production, particularly cereal production, and
their comparative advantages lie in other economic activities.
To overcome such barriers, countries should focus on what could
be called «macro food sovereignty» by combining self-sufficiency
and trade-based food security strategies incentivizing the
cultivation of local species of crops more suited to their
geoclimatic condition [Quagliarotti 2023]. Countries could thus
help build more sustainable and diverse food systems, enhancing
levels of agrobiodiversity and improving nutritional outcomes
while helping diminish MENA region’s over-dependence on food
imports. However, boosting domestic crop production may be
challenging even in countries with opportunities to expand
arable areas because agricultural systems must adapt to address
water shortages and climate change. This suggests the need for
additional research and efforts to increase the production of
alternatives to wheat, including drought-tolerant sorghum,
millet and high value export crops, and to support
climate-resilient farming systems such as drip irrigation and
solar-powered irrigation systems [Abay et
al. 2023].
On the demand side,
there are important differences among countries in terms of
their potential to reduce reliance on wheat. Reducing the high
consumption of wheat has significant potential in Egypt where
the average annual consumption is about 145 kg per capita,
double the global average. Shifting consumption from wheat to a
more diverse set of food products can serve a dual purpose:
improving Egypt’s wheat self-sufficiency and addressing
malnutrition [FAO 2022]
[14]
. Another threat to food
¶{p. 323}security for the MENA region is food
loss and waste. Reducing food loss and waste across the entire
value chain, from the early stages (production, handling,
processing and distribution) to the consumer and retail levels,
would help reduce expensive food imports, freeing up fiscal
resources to fund social safety nets for the most vulnerable
households.
Since energy
represents both a critical input along different stages of the
water and food supply chain and the largest source of GHG
emissions, the energy transition should be considered the first
step towards sustainable integrated solutions able to enhance
security and sustainability across WEF sectors, while supporting
global climate ambitions. The joint development of
non-conventional water and energy sources, i.e., desalinated
water and renewable energy, could address water and energy
security challenges by combining economic efficiency and social
equity under the constraint of environmental protection
[Giordano and Quagliarotti 2020].
In the MENA
countries, renewable energy may provide access to a
cost-effective, secure and environmentally sustainable supply of
energy, simultaneously triggering spill-over effects throughout
the WEF nexus. The MENA region has a high potential in renewable
energy development, especially solar, due to the presence of
vast desert lands with a solar radiation density ranging between
1,300 and 2,500 kWh/m2 per year
[IRENA 2015]. Generally, renewable energy technologies are less
water-intensive than conventional options: water needs for solar
photovoltaics (PV) is negligible compared to conventional
thermoelectric generation, withdrawing up to 200 times less
water to produce the same amount of electricity [IRENA 2016]. In
addition to contributing to significant water savings, clean
energy can be used to increase non-conventional water supply
more sustainably, especially desalinated water, whose production
is still affected by high economic and environmental costs due
to the considerable amount of fossil energy required to feed the
reverse osmosis. Therefore, the use of renewables may not only
satisfy the energy demand of countries that do not have
sufficient oil reserves, but also improve the resilience and
adaptive capacity of those countries that, due to environmental
constraints and the scarcity of two strategic resources for
human well-being – water and food, are more vulnerable to the
impact of climate change.
¶{p. 324}
Note
[13] GASC is an Egyptian economic body affiliated to the Ministry of Supply and Home Trade established by Republican Decree No 1189/1968 to overcome the crises arising in the Egyptian market during 1967 and in subsequent years. It aims to activate the local and international market mechanism in order to procure the strategic commodities needed by the state so as to achieve the following targets: improve productivity and raise agricultural production efficiency; develop marketing and promotional services; establish strategic governmental food stocks; achieve structural suitability within the state marketing system; create competitiveness, prohibit monopoly and make the local market balanced (http://www.gasc.gov.eg).
[14] Egypt has high rates of overweight and obesity, which are linked to food subsidies and associated consumption of energy-dense foods.