Economic assessment of measures to improve water efficiency
in dairy supply chains
Paul Blokker1, Rudie Brok2 and Miranda P.M. Meuwissen1
1
Business Economics, Wageningen University, the Netherlands
2
The Friesian, Leeuwarden, the Netherlands
Abstract
Water is becoming scarce and is already entitled “the oil of the future”. Food supply chains
thus need to become more efficient in their water usage. This paper addresses the possibilities
of implementing water saving measures in dairy supply chains. More specifically, we address
the feed part of the chain, as this captures more than 98% of the water used. Key water saving
measures identified include drip irrigation, irrigation scheduling, GMO crops, salt tolerance,
drought resistance, crop variety, soil structure and ground mulch. Exact effects however are
relatively uncertain due to the multiple factors that play a role. These include among others air
temperature, humidity, crop type and various management factors. For the same reasons there
is substantial uncertainty with respect to the impact on yields, nutritional values of the crops
and e.g. the amount of herbicides saved. Results are therefore mostly reported in a qualitative
way. Findings enable decision makers to design robust chains with improved water efficiency.
Keywords: water footprint, uncertainty, costs and returns, animal feed production.
1. Introduction
In the coming decades fresh water scarcity will occur caused by, amongst others, increasing
food demand due to population growth and climate change (Lotze-Campen et al. 2008).
According to Rosegrant et al. (2002), the amount of fresh water needed will increase with
50% by 2025. By 2025, 33% of the world’s population will be living in a water-scarce area
(Fereres et al. 2011). It is expected that the Middle East, Asia and Africa will be mostly
affected by water scarcity, because of their population growth and climate (Rijsberman 2006).
Agriculture is the main consumer of fresh water. This sector is responsible for 75% of
the total fresh water utilization globally (Wallace 2000). It uses water for food production
such as meat, fruit, vegetables and dairy products. The utilization of water for livestock can
be divided into three groups, namely; the growing and processing of feed, the provision of
drinking water, and the cleaning of housing and equipment (Chapagain and Hoekstra 2003).
Within agriculture, which has a global fresh water usage of 8,317 Gm3 per year, 29% is used
for livestock production. Of this percentage, almost 98% is allocated to the production of
feed. Just 2% is allocated to drinking water and cleaning of housing and equipment. Within
the livestock sector, 469 Gm3 per year of fresh water is used for milk production, which is
19% of the total fresh water used for livestock production (Mekonnen and Hoekstra 2010).
Looking to the livestock products that consume water most, most water is needed for beef
meat (15,500 litre/kg meat), followed by respectively sheep, goat and chicken meat. After
meat, dairy products withdraw a lot of fresh water. For one litre of milk 790-1000 litre of
water is needed (Hoekstra and Chapagain 2007).
Much literature is already available on estimating the water footprint of food
commodities, see e.g. Hoekstra (2003) and Mekonnen and Hoekstra (2010). Literature with
respect to reducing the water footprint in milk production is however still lacking. In this
context, the objectives of this paper are (i) to identify potential measures to improve the water
1
efficiency along food supply chains; and (ii) to assess the expected amount of water saved as
well related costs and benefits. We focus on dairy supply chains. More specifically, we
address the feed (crops) part of the dairy chain, as this captures more than 98% of the water
used. Measures are assessed at the field level and consider the “water demanding”
perspective, i.e. we do not consider the supply part in which e.g. water is desalinized.
2. Water usage in milk production
In case of milk, the amount of water used to produce the product includes water used for the
production of feed, the cleaning and cooling of equipment, and the service of drinking water
to dairy cows (Mekonnen and Hoekstra 2010). Table 1 depicts the amount of water used in
various milk production systems, i.e. grazing farms, mixed farms and industrial systems. In a
number of studies, a distinction is made between water needed for feed, drinking water for the
cows and water needed for cleaning. Other studies only reported the aggregated figures. Also,
some authors differentiated between the types of water utilised, such as “developed water” in
case human effort is needed to use the water or “green water” for water from rainfall.
However, the table does not make this distinction.
Table 1: Reported water usage in various milk production systems1.
Source
Country
Variables
Farming system (litre water / kg milk)
Renault and Wallender (2000)
California
Feed
-
-
-
Not
specified
790
Oki et al. (2003)
Japan
Feed
-
-
-
560
Chapagain and Hoekstra (2003)
Global mean
Drinking
9
5
4
-
Cleaning
1
1
1
-
Feed
2451
1056
748
-
Drinking
7
5
6
-
Cleaning
6
4
5
-
Feed
641
484
557
-
Drinking
-
-
-
1142
Mekonnen and Hoekstra (2010)
Drastig et al. (2010)
Netherlands
Germany
Grazing
Mixed
Industrial
1
G: grazing farm; M: mixed farm; I: industrial system; N: not specified.
Litre water per cow per day.
2
The table clearly shows that differences exist between farming systems. For instance, dairy
farms with grazing systems in the Netherlands use more water than mixed farms. From a
water usage perspective grazing systems seem less favourable than the other two systems.
However, industrial and mixed systems are not applicable everywhere. At hillsides, for
instance, grazing is the only system that can be executed (Hellegers 2011). Most striking
result from the table however is the obviously large amount of water needed for producing
feed, including roughage and compound feed.
Water that can be obtained by crops, is not only used by the crop itself; only 1-2% of
available water is used for crop development. The two main factors regarding the outflow of
water are evaporation and transpiration (jointly called “evapotranspiration”), which are
responsible for >95% of the water outflow. Evaporation is a process whereby water is
vaporized and removed from the evaporating surface. The main determinant of vaporizing
from a surface into the atmosphere is the saturated level of the surrounding atmosphere. When
the surrounding atmosphere becomes saturated with vapour or moisture, evaporation from a
surface will slow down or even stop. So, the replacement of this saturated air with drier air is
2
binding and depends mostly on wind speed. Further, solar radiation, air temperature and air
humidity are climatological parameters which influence the evaporation level of a surface. In
case of crop cultivation, the degree of shading of a crop and the amount of available water at
the evaporating surface are also factors that influence the evaporation level (Allen et al. 1998).
Transpiration is the process whereby liquid water which is embedded in the plant vaporizes
into the atmosphere. This takes predominately place through the stomata. Nearly all water that
is taken up by the plant goes via transpiration into the atmosphere. Only a small (1-2%)
amount of water that is absorbed is used within the plant. Transpiration, like evaporation,
depends on the energy supply and saturate level of the atmosphere. Typical influences for
transpiration are crop characteristics, environmental aspects and cultivation practices (Allen et
al. 1998). Table 2 summarises factors affecting the evapotranspiration of crops, subdivided
into weather, crop and management and environmental parameters.
Table 2: Factors affecting evapotranspiration of crops.
Weather
Crop
Management and environment
- Radiation
- Crop type
- Soil salinity
- Air temperature
- Variety
- Land fertility
- Humidity
- Development stage
- Availability of fertilizer
- Wind speed
- Resistance to transpiration
- Soil structure
- Crop height
- Diseases and pest control
- Crop roughness
- Soil management
- Reflection
- Plant density
- Ground cover
- Soil water content
- Crop rooting
Derived from Allen et al. (1998).
The combined effect of all of these factors affects the eventual water footprint of feed
commodities. Table 3 shows the total water footprint for a number of feed commodities,
mainly measured for German circumstances over the period 1996-2005 (Mekonnen and
Hoekstra 2010), (Mekonnen and Hoekstra 2011).
Table 3: Water footprint of a number of feed commodities (m3 water/ton product).
Roughage
By-products
Ingredients of compound feed
Pasture: 131
Sugar beet: 84
Maize: 578
Fodder crops: 161
Potato: 119
Triticale: 691
CCM: 566
Wheat: 786
Barley (brewers): 702
Soy bean: 1,567
Peas: 735
Rape meal: 1,415
Based on Mekonnen and Hoekstra (2010).
Water footprints in Table 3 show the large diversity of water needs across crops, caused by
factors, such as mentioned in Table 2, but also due to differences in crop productivity. For
instance, soy beans are relatively inefficient leading to large amounts of crops needed to
harvest one ton of product.
3. Materials and methods
3
In order to elicit and quantify relevant measures to reduce the water footprint of dairy supply
chains we follow three steps. First, expert elicitation is used to identify which measures are
potentially relevant. Experts are from research institutes, universities and technology business
and cover a wide range of expertise including innovative irrigation technologies, gmo plants
and salt resistant plants. Interviews are carried out in a semi-structured manner by clearly
indicating the problem statement and objectives of the research but not by hinting on concrete
solutions. These were “discovered” during the interview itself.
In the second step, possible effects of measures are listed in a qualitative way based on
literature review. Literature was reviewed with respect to a range of issues including among
others direct costs of equipment, amount of fresh water saved and impact on yields.
In the third phase, effects of measures are quantified, both with respect to direct and
indirect costs incurred as well as the amount of fresh water saved. With regard to the costs we
follow a partial budgeting approach, i.e. costs and benefits are expressed as extra costs, costs
saved, additional returns and returns forgone. As there is relatively much uncertainty about the
effects of water saving measures on the exact amount of water saved and the expected crop
yields and costs, expert were not always able to indicate quantitative figures. In these cases
only qualitative assessments are included. Results from the literature reviews (second step)
were used as a starting point for the interviews. Most experts consulted in this phase were also
involved in the first phase of the study.
Throughout the analyses we focus on the feed part (crop cultivation) of dairy supply
chains as this part captures more than 98% of the water used.
4. Results
4.1 Measures to reduce water usage
Reduction of water usage is only relevant when water is a binding factor. Binding in this case
means when water needs to be exerted by human effort. In areas with sufficient water through
rainfall, water is not scarce and thus “no problem”. Areas such as the Middle East, Asia and
Africa are affected by shortness of water via rainfall. So in these areas water is a binding
factor (Rijsberman 2006). Table 4 shows the measures perceived to be relevant for reducing
water usage in crop, i.e. feed, cultivation. Measures are explained below.
Table 4: Elicited measures to reduce water usage in feed production
Measure
Relevant crops
Relevant production circumstances
1. Drip irrigation
All
Arid areas
2. Irrigation scheduling
All
Areas with irrigation
3. GMO
Maize, cotton, soy bean
All
4. Salt tolerance
All
Water-scarce areas
5. Drought resistance
All
Arid areas
6. Crop variety
Grass, maize
Hot, arid areas
7. Soil structure
All
All
8. Ground mulch
Maize
All
-
Drip Irrigation. Drip irrigation is most efficient with respect to water (Raes et al. 2009;
Zeinstra 2011). According to (Casino Reno 2009), drip irrigation is well known in fruit
4
-
-
-
-
and vegetable cultivation. With drip irrigation water is brought into the rhizosphere of the
soil where the roots of the plant are. This is done via tubes with little outlets every 20-30
centimetre. By this system, water cannot not vaporize directly into the atmosphere which
is the case by e.g. a pivot. By fruit and vegetable cultivation, the plants are grown in rows
whereby drip irrigation is easy to implement. However, also maize is cultivated in rows,
which makes this crop suitable for this system as well. In case of mass production such as
grass and alfalfa it will be more difficult to install such a system. A step further might be
deficit irrigation in which water is only supplied when the plant is in germination,
flowering or graining stage. It will lead to a lower yield per unit, but the yield per unit of
irrigated water is expected to be higher.
Irrigation scheduling. Currently, irrigation scheduling is generally based on the
experience of the farmer. This often results in over-irrigation to ensure that water is no
limiting factor in crop or plant production. Due to this too much water is used. This results
in extra energy costs for pumping up the water, more valuable water than necessary is
spoilt, reduced growth and leaching of nutrients. Instead of using only their experience,
farmers can make use of scientifically based irrigation scheduling (precision agriculture).
In crop farming, moisture sensors are emerging (Thompson et al., 2007). These sensors
measure the moister content in different layers of the soil and especially in the top layer.
Combined with a software program this method gives information whether a farmer has to
irrigate or not and how much water he/she has to irrigate. This combination is called
irrigation scheduling.
GMO. The easiest way to improve water efficiency might be by enhancing the output of
dry matter per hectare. Enhancing the yield per unit (output) can be realized via various
ways. Genetically modified crops (GMO) is such a solution for enhancing the yield per
unit. GMO crops have a recombinant DNA which is mainly done to reduce production
costs and increase the yield per unit. Reducing production costs via GMO is mainly
attributed by modifying DNA that increases a resistance against pests. The technique of
modifying DNA of crops is used for two decades already (Singh et al. 2006). Using GMO
in case of maize is expected to increase biomass by 73%. Another benefit of GMO in this
case was a higher drought tolerance, i.e. maize plants that were inoculated with A.
Brasilense were better able to deal with droughts (Rodríguez-Salazar et al. 2009). Next to
maize, GMO is also commonly used in soy beans (Singh et al. 2006). Unfortunately,
literature does not describe whether this technique is used for grass production.
Furthermore, the problem with GMO is that it is not widely accepted.
Salt tolerance. Due to the increasing water scarcity, saline irrigation water is going to be
used for irrigation. Globally, already 800 million hectare is salt-effected. Therefore the
need for crops with a higher salt tolerance is emerging. Crops which are selected based on
a salt tolerance are better able to absorb saline water. Due to their tolerance these plants
will have lesser yield losses compared to a plant with a lower tolerance. It seems that
plants which have a higher salt tolerance are also better able to react to droughts.
However, much is still unknown.
Drought resistance. Since water becomes scarce, droughts will probably occur more often.
Within a dry period, especially plants for agricultural purposes are affected. A dry period
will cause irreversible damage to their photosynthetic ability. Therefore signals of
irreversible damage needs to be seen in an early stage. Redox signals are signals that are
warning for this kind of damage. Plants with a higher drought resistance can help to
decrease the volume of irrigation. Moreover, plants that are native from drought climates
5
are able to acclimate to drought circumstances. Hence to this, these plants are more water
efficient (Chaves and Oliveira 2004).
- Crop variety. Plants that are native to a dry climate will better adapt to periods of drought.
C4 plants have a better mechanism to adjust to droughts compared to C3 plants which do
not have such a mechanism. The difference between these two types of plants is their
efficiency in these specific circumstances. C4 plants have a very high water-use efficiency
compared to C3 plants. However, in a shady and cool environment the C4 plants are less
efficient than the C3. C3 plants have a metabolic pathway that is more energy efficient.
Globally 95% of the plants are C3 and approximately 1-5% are C4. Maize and some types
of grass are C4 plants (Bahar et al 2005; Lunt et al 2007). It can be concluded that in arid
areas C4 plants are more suitable than C3 plants.
- Soil structure. Runoff of rain, surface and ground water is causing inefficiency in water
usage within a certain area. Soil structure is highly influencing the volume of runoff water,
or, in other words, the extent to which the soil is able to store water. A good soil structure
does not only influence the water holding capacity, it also benefits nutrient recycling,
prevention of erosion, crop yields, root penetration and crusting.
- Ground mulch. Ground mulch does not affect the water needs of a plant but does reduce
evaporation (Raes et al., 2009). According to Zegada-Lizarazu and Berliner (2011), who
carried out an experiment in Israel, polyethylene mulch can lead to an increase in water
efficiency of 64%. Another benefit was the production increase of 34%. In the experiment
they covered 90% of the surface in a maize field with polyethylene mulch. They compared
this field with a control group which was not mulched. Both groups were drip irrigated.
The first two measures, i.e. drip irrigation and irrigation scheduling, can be categorised as
“technical measures”. GMO, salt tolerance, drought resistance and crop variety are plant
related measures. Finally, soil structure and ground mulch can be classified as “soil
measures”.
4.2 Impact of water reducing measures
Table 5 summarises the results of the literature review and expert elicitation. Quantitative
estimations are mostly from expert elicitation (see footnotes) and refer to (a number of items
of) drip irrigation, irrigation scheduling, breeding/GMO and salt tolerance. The table shows
that water savings have various causes, ranging from higher efficiency to less water needed.
Extra costs occur due to investments in equipment, such as in case of drip irrigation, higher
seed prices (GMO, salt tolerance and drought resistance) or e.g. the additional need for
organic matter (soil structure). Cost savings can be due to less herbicides needed, e.g. in case
of ground mulch, or reduced need for repetitive seeding (e.g. in case of growing crops that are
more drought resistant. For a number of measures literature and experts also expect extra
returns due to higher yields, e.g. with drip irrigation. Possible returns forgone can occur due to
lower nutrional values (drought resistant crops), reduced commodity prices (GMO) and/or
lower yields (crop variety).
6
Table 5: Impact of water-saving measures on amount of water saved and costs incurred.
Water Saved
Costs
Returns
Extra
Saved
Extra
Forgone
Depreciation,
maintenance,
insurance,
energy, hardware
[€800/ha/y]1
Depreciation,
maintenance,
insurance,
software
[€1600/ha/y]3
Higher seed price
[€210-225/ha/y]5
Herbicides
[-40%]2
Higher yields
-
Irrigation costs
Higher yields
-
Herbicides
Higher yields
Possibly lower
commodity
prices
-
Drip
Irrigation
Higher efficiency
Irrigation
scheduling
Less evaporation,
less overirrigation
[-5% to -40%]3,4
Breeding/
GMO
Higher efficiency
Salt
tolerance
Less fresh water
needed
Higher seed price [€210-225/ha/y]5
Possible higher
yield
Drought
resistance
Less water
needed
Higher seed price Repetitive
seeding
-
Crop
variety
Less water
needed, less
transpiration
-
Repetitive
seeding
-
Soil
structure
Less irrigation
water needed
Organic matter,
labour, machines
Tillage, labour
Higher yields
Possibly lower
nutritional value,
possibly lower
yield
Possibly lower
nutritional value,
possibly lower
yield
-
Ground
mulch
Less evaporation
Ground cover,
labour,
installation
machine
Irrigation,
herbicides
Higher yields
Yields6
1
Wichelns (2007).
Boesveld (2012).
3
Medema (2011).
4
Hoving (2012).
5
For maize (Dijkhuizen, 2012).
6
Only in case of organic mulch.
2
5. Conclusions and discussion
Supply chains in food and agribusiness are increasingly confronted with resource scarcity due
to increasing world population and competing claims for limited natural resources. Water is
one of the natural resources that is considered to be scarce. It is even entitled “the oil of the
future”. In this context, robust supply chains must be designed that can cope with (temporary)
drops in the availability of water, or that need less water altogether. This paper addresses the
possibilities of implementing water saving measures in order to make supply chains more
robust for water-scarcity. We took dairy supply chains as an example. More specifically we
addressed the feed part of the chain, as crop cultivation captures more than 98% of the water
used. Results of the paper show that various opportunities exist to increase the efficiency of
7
the water used. Key measures include drip irrigation, irrigation scheduling, GMO crops, salt
tolerance, drought resistance, crop variety, soil structure and ground cover. At the same time
however results also show that exact impacts are influenced by a large number of factors, such
as crop height, soil management, land fertility and air temperature. Precise effects are
therefore difficult to estimate. The same holds for the impact of the measures on yield levels,
the amount of herbicides, and e.g. reduced nutritional values of the crops grown. Results can
be used by decision makers along the supply chain in order to steer water efficiency along
supply chains. Methods may also become useful in the near future if water efficiency becomes
an integral part of sustainability assessments.
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