Investments aligned with this Strategic Goal aim to sustain ecosystems and maintain water quality by reducing the water polluted, used, and lost through agricultural practices.

The sections below include an overview of the strategy for achieving desired goals, supporting evidence, core metrics that help measure performance toward goals, and a curated list of resources to support collecting, reporting on, and using data for decision-making.

What

Dimensions of Impact: WHAT

Investors interested in deploying this strategy should consider the scale of the addressable problem, what positive outcomes might be, and how important the change would be to the people (or planet) experiencing it.

Key questions in this dimension include:

What problem does the investment aim to address? For the target stakeholders experiencing the problem, how important is this change?

Agriculture is a major cause of species loss around the world, driven mainly by the conversion of natural forests and grasslands to cultivated land (22). Expansion of agriculture is driven by food insecurity, which occurs in part as a result of low or diminished productivity on existing cropland. In thousands of rivers, lakes, and aquifers, more than three-quarters of the water that would be naturally replenished is consumed for human use, which limits the amount of water that supports existing ecosystems. Irrigated agriculture accounts for more than 70% of all water withdrawals globally (18). Irrigation-dependent arid and semi-arid regions face the effects of river depletion caused by the large-scale diversion of water to irrigated crops, with examples including the Colorado River, Yellow River, and the tributaries of the Aral Sea, along with many dwindling rivers in emerging markets (7).

What is the scale of the problem?

The agriculture sector is the primary consumptive user of water globally (7). Consumptive water use is when water withdrawn from rivers, lakes, and aquifers is not returned to the original source (18). The total amount of water withdrawn or extracted from freshwater systems has risen 35-fold over the past 300 years (20). Consumptive water use and infrastructure that makes water more available for human use (such as diversion channels, irrigation systems, drainage, and reservoirs) reduce the amount of water available to freshwater ecosystems (4). This level of use can endanger those ecosystems’ plants and animals, which are adapted to natural hydrologic patterns.

Around the world, agriculture relying on rain for water (“rain-fed agriculture”) is far more common than agriculture relying on irrigation. If poorly managed, rain-fed agriculture can be both unproductive and harmful to both land and water ecosystems (6). Poor agricultural practices can reduce the amount of water that passes from the ground surface into the soil, which can result insufficient water to refill groundwater aquifers and support crop growth. It can also increase surface runoff, which can lead to increased sediment in and altered flow patterns of rivers and streams (6). Indeed, agriculture is the main source of sediment that reaches the world’s surface waters and ultimately the ocean (17).

Investments into smart agricultural technologies and practices can drive impact by:

  • Providing more efficient irrigation systems and methods;
  • Encouraging cultivation of less water-intensive crops;
  • Avoiding excessive agro-chemical use;
  • Protecting freshwater systems from excessive flooding associated with agriculture and climate change;
  • Providing access to more efficient water-monitoring and water-management technology; and
  • Encouraging sustainable agriculture or regenerative agriculture practices that promote soil health and water infiltration, including precision agriculture.

These same investments can help to address both food and water insecurity for downstream, often urban, populations.

Who

Dimensions of Impact: WHO

Investors interested in deploying this strategy should consider whom they want to target, as almost every strategy has a host of potential beneficiaries. While some investors may target women of color living in a particular rural area, others may set targets more broadly, e.g., women. Investors interested in targeting particular populations should focus on strategies that have been shown to benefit those populations.

Key questions in this dimension include:

Who (people, planet, or both) is helped through investments aligned with this Strategic Goal?

Freshwater habitats and species: Animals and plants in streams, rivers, and lakes need certain water flows and levels. Investments that help reduce agricultural water abstraction and consumption can improve the health of freshwater ecosystems.

Rural communities, including farmers: Healthy freshwater ecosystems can provide food and fiber that sustain incomes and livelihoods, particularly for rural communities in developing countries (20). Improving infiltration and soil health through agricultural best practices, including irrigation, increases productivity for farmers and landowners. Combining irrigation with training, facilitation, and better market access can increase crop yields and encourage the cultivation of high-value crops while raising farmers’ incomes (11).

Individuals relying on municipal water systems: Improved infiltration of water on agricultural lands can keep lands charged with water, avoiding erosion and providing access to more and cleaner water for users downstream. Cleaner water supplies reduce the costs of water treatment for human urban or domestic uses.

What are the geographic attributes of those who are affected?

The Asian continent represents just over 70% of the irrigation area worldwide, covering over 220 million hectares (9). Forty-two percent of the world irrigation total is in just two countries: China and India. Outside Asia, the countries with the largest irrigation areas are:

  • the United States of America (with 26.4 million hectares),
  • Italy (with 3.95 million hectares),
  • Egypt (with 3.65 million hectares), and
  • Australia (with 2.55 million hectares).

Sub-Saharan Africa is the region with the lowest portion of cultivated area that is irrigated (9).

Contribution

Dimensions of Impact: CONTRIBUTION

Investors considering investing in a company or portfolio aligned with this strategy should consider whether the effect they want to have compares to what is likely to happen anyway. Is the investment's contribution ‘likely better’ or ‘likely worse’ than what is likely to occur anyway across What, How much and Who?

Key questions in this dimension include:

How can investments in line with this Strategic Goal contribute to outcomes, and are these investments’ effects likely better, worse, or neutral than what would happen otherwise

Decreased rainfall, warmer temperatures, and increased drought frequency and duration are leading many farmers to either increase irrigation for their crops or begin irrigating for the first time (18). Drip irrigation can reduce the amount of water required to successfully irrigate, with the market for drip-irrigation systems expected to total USD 3.6 billion by 2020 (5). Other innovative water-conservation technologies include soil sensors and smart meters (5).

How Much

Dimensions of Impact: HOW MUCH

Investors deploying capital into investments aligned with this strategy should think about how significant the investment's effect might be. What is likely to be the change's breadth, depth, and duration?

Key questions in this dimension include:

How many target stakeholders can experience the outcome through investments aligned with this Strategic Goal?

Worldwide, in 2012, 4.9 billion hectares globally were under agricultural cultivation (9). Of those, more than 324 million hectares were equipped for irrigation, and about 275 million were actually irrigated (9). The Food and Agriculture Organization of the United Nations (FAO) has called for “sustainable intensification” of agricultural productivity through an investment of USD 1 trillion in irrigation water management alone by 2050, with an additional USD 160 billion for soil conservation and flood control (5). Any freshwater ecosystems located within the same catchments as irrigated land can benefit from reducing the water used and lost through agricultural practices.

How much change can target stakeholders experience through investments aligned with this Strategic Goal?

The amount of change experienced by any ecosystem will depend on:

  • which agricultural practices are currently used in a given catchment,
  • the scale of their implementation,
  • the biophysical context, and
  • whether the water pressures on ecosystems in that catchment are compounded other pressures, like pollution.

A 2018 World Economic Forum report estimated that if precision agriculture were adopted by 15% to 25% of farmers, freshwater withdrawals would decline by 2% to 5% and production would increase by up to 300 million metric tons (5).

Mitigating global water scarcity requires that increases in irrigation efficiency be accompanied by robust water accounting and measurement, a cap on extraction, and an assessment of uncertainties, trade-offs, and the incentives and behavior of irrigators (10). Water saved at the farm level via increased irrigation efficiency is rarely associated with reduced water consumption across a watershed or basin, because previously non-consumed water losses at a farm are recovered and reused across the watershed and basin (10). Potential benefits can also be measured and compared against their cost, including measures of agricultural water productivity. In India, agricultural improvements are the most cost-efficient water management solution: deploying the full suite could increase aggregate agricultural income by 2030 by USD 83 billion solely due to operational savings and increased revenue (1).

Risk

Dimensions of Impact: RISK

Key questions in this dimension include:

What impact risks do investments aligned with this Strategic Goal run? How can investments mitigate them?

Investors aiming to improve agricultural use of water may consider the following impact risks: 

  • External Risk: Aging or inadequate water infrastructure to supply water to agricultural sites could counter any water use and waste improvements, as water infrastructure is massively underfunded in both developed and developing countries (2). Also, climate change and extreme weather, such as droughts, hurricanes, floods, and changing weather patterns, can fundamentally alter what can be grown where (2). Finally, despite the potential local benefits, community and political pushback can arise from concerns about economic change: while well-managed irrigation systems can increase yield, the average costs of the required infrastructure and services may be unaffordable for smallholder farmers (21).

  • Drop-off Risk: The needs of included freshwater systems (minimum water quantity and quality) should be identified for catchments receiving investment. Increased efficiency in agricultural practice may free up water, but this water may be consumed for purposes besides restoring or maintaining freshwater systems (e.g., expanding acres under cultivation or redirecting to municipal or household use). This is also known as the “paradox of irrigation efficiency” (10). Legal, regulatory, contractual, or other mechanisms can maintain minimum water flows within freshwater systems once water use has been reduced at agricultural sites.

What are likely consequences of these impact risk factors?

These risks can leave freshwater systems without water of sufficient quality or quantity even once agricultural water use and waste are reduced at investment sites. Climate change could also affect the overall long-term viability of certain agricultural enterprises in certain locations. Compared with the baseline, climate change is expected to result in declining agricultural production in large parts of Africa, the Middle East, and South and Southeast Asia, according to the FAO (8).

Illustrative Investment

Through its Seamans Private Series Fund I, Seamans Capital Management invested in Aequion, a water technology company that solves issues of water scarcity in agriculture and reduces water and air pollution arising from the dairy industry. Aequion’s proprietary technology uses magnetic fields and oxygen to reduce the amount of water required to grow crops by up to 20% without using chemicals or electricity. The magnetic fields charge water molecules so that they line up and penetrate soil, driving water to the roots instead of allowing it to pool and evaporate above ground. Key impact outcomes from the investment include significant reductions in water consumption and fewer lost almond trees. Because tree roots grow to where the water is and Aequion-treated water penetrates the soil more deeply, the resulting greater root depth supports almond trees on windy days, leading to fewer lost.

The McKnight Foundation uses its USD 200 million impact investment portfolio, a carve-out of its USD 2.3 billion endowment, to improve water quality in the Mississippi River, accelerate the change to a low-carbon economy, and contribute to local economic development. In 2016, McKnight made an equity investment into Midwestern BioAg, a Wisconsin-based soil services company that works with organic and large-scale commercial farmers. Its biological farming techniques increase soil health, enhancing profitability while simultaneously reducing water pollution from agricultural runoff. Key impact outcomes in 2018 include 242,000 acres under the fertility program and 17 million fewer pounds of nitrogen applied (which could have been lost from the farm, contributing to water pollution). Midwestern BioAg’s Indiana facility also began steady production of its standardized retail fertilizer, TerraNu™. Co-located with an operating biodigester, this production is the final step in a circular process that turns animal waste first into energy and then into a soil-enhancing organic fertilizer.

Have an investment we should include here? Let us know.

Draw on Evidence

This mapped evidence shows what outcomes and impacts this strategy can have, based on academic and field research.

NESTA: 3
Changes in agricultural intensity and river health along a river continuum

Harding, JoN S., Roger G. Young, JohN W. Hayes, Karen A. Shearer, and JohN D. Stark. “Changes in agricultural intensity and river health along a river continuum.” Freshwater biology 42, no. 2 (1999): 345-357.

NESTA: 3
Impacts and sustainability of irrigation in Rwanda

Kondylis, F., M.R. Jones, J. Magruder, & J. Loeser. (2018). Impacts and sustainability of irrigation in Rwanda. International Growth Centre: Rwanda. https://www.theigc.org/wp-content/uploads/2018/08/Rwanda-38313.pdf

NESTA: 3
Longitudinal changes in biota along four New Zealand streams: declines and improvements in stream health related to land use

Niyogi, Dev K., Mark Koren, Chris J. Arbuckle, and Colin R. Townsend. “Longitudinal changes in biota along four New Zealand streams: declines and improvements in stream health related to land use.” New Zealand Journal of Marine and Freshwater Research 41, no. 1 (2007): 63-75.

NESTA: 3
Optimization of conservation practice implementation strategies in the context of stream health

Herman, Matthew R., A. Pouyan Nejadhashemi, Fariborz Daneshvar, Dennis M. Ross, Sean A. Woznicki, Zhen Zhang, and Abdol-Hossein Esfahanian. “Optimization of conservation practice implementation strategies in the context of stream health.” Ecological Engineering 84 (2015): 1-12.

NESTA: 2
Can drip irrigation technology be socially beneficial? Evidence from Southern India

Suresh Kumar, D., and K. Palanisami. “Can drip irrigation technology be socially beneficial? Evidence from Southern India.” Water Policy 13, no. 4 (2011): 571-587.

NESTA: 2
Deficit irrigation for reducing agricultural water use

Fereres, Elias, and Maria Auxiliadora Soriano. “Deficit irrigation for reducing agricultural water use.” Journal of experimental botany 58, no. 2 (2006): 147-159.

NESTA: 2
Drip irrigation for small farmers: a new initiative to alleviate hunger and poverty

Postel, Sandra, Paul Polak, Fernando Gonzales, and Jack Keller. “Drip irrigation for small farmers: A new initiative to alleviate hunger and poverty.” Water International 26, no. 1 (2001): 3-13.

NESTA: 2
Drip irrigation in India: can it solve water scarcity?

Narayanamoorthy, A. “Drip irrigation in India: can it solve water scarcity?.” Water Policy 6, no. 2 (2004): 117-130.

NESTA: 2
Economic adjustments to groundwater depletion in the high plains: do water saving irrigation systems save water?

Peterson, Jeffrey M., and Ya Ding. “Economic adjustments to groundwater depletion in the high plains: Do water-saving irrigation systems save water?.” American Journal of Agricultural Economics 87, no. 1 (2005): 147-159.

NESTA: 2
Economics of Agricultural Water Conservation: Empirical Analysis and Policy Implications

Dagnino, Macarena, and Frank A. Ward. “Economics of agricultural water conservation: empirical analysis and policy implications.” International Journal of Water Resources Development 28, no. 4 (2012): 577-600.

NESTA: 2
Freshwater protected areas: strategies for conservation

Saunders, D. L., J. J. Meeuwig, and A. C. J. Vincent. “Freshwater protected areas: strategies for conservation.” Conservation Biology 16, no. 1 (2002): 30-41.

NESTA: 2
Green and blue water footprint reduction in irrigated agriculture: effect of irrigation techniques, irrigation strategies and mulching

Chukalla, Abebe Demissie, Martinus S. Krol, and Arjen Ysbert Hoekstra. “Green and blue water footprint reduction in irrigated agriculture: effect of irrigation techniques, irrigation strategies and mulching.” Hydrology and earth system sciences 19, no. 12 (2015): 4877-4891.

NESTA: 2
Increasing productivity in irrigated agriculture: agronomic constraints and hydrological realities

Perry, Chris, Pasquale Steduto, Richard G. Allen, and Charles M. Burt. “Increasing productivity in irrigated agriculture: Agronomic constraints and hydrological realities.” Agricultural Water Management 96, no. 11 (2009): 1517-1524.

NESTA: 2
Threats to the running water ecosystems of the world

Malmqvist, Björn, and Simon Rundle. “Threats to the running water ecosystems of the world.” Environmental conservation 29, no. 2 (2002): 134-153.

NESTA: 2
Water productivity in rain-fed agriculture: challenges and opportunities for smallholder farmers in drought-prone tropical agroecosystems

Rockström, John, Jennie Barron, and Patrick Fox. “Water productivity in rain-fed agriculture: challenges and opportunities for smallholder farmers in drought-prone tropical agroecosystems.” Water productivity in agriculture: Limits and opportunities for improvement 85, no. 669 (2003): 1-8.

NESTA: 2
Wetlands at your service: reducing impacts of agriculture at the watershed scale

Zedler, Joy B. “Wetlands at your service: reducing impacts of agriculture at the watershed scale.” Frontiers in Ecology and the Environment 1, no. 2 (2003): 65-72.

NESTA: 1
A conceptual framework for the improvement of crop water productivity at differential spatial scales

Bouman, B. A. M. “A conceptual framework for the improvement of crop water productivity at different spatial scales.” Agricultural systems 93, no. 1-3 (2007): 43-60.

NESTA: 1
Accounting for water use: terminology and implications for saving water and increasing production

Perry, Chris. “Accounting for water use: Terminology and implications for saving water and increasing production.” Agricultural Water Management 98, no. 12 (2011): 1840-1846.

NESTA: 1
Biological effects of fine sediment in the lotic environment

Wood, Paul J., and Patrick D. Armitage. “Biological effects of fine sediment in the lotic environment.” Environmental management 21, no. 2 (1997): 203-217.

NESTA: 1
Drip irrigation: evaluating returns

Dhawan, B. D. “Drip irrigation: Evaluating returns.” Economic and Political Weekly (2000): 3775-3780.

NESTA: 1
Improving water productivity in agriculture: editor's overview

Kijne, Jacob W., Randolph Barker, and David Molden. “Improving water productivity in agriculture: editors’ overview.” Water productivity in agriculture: Limits and opportunities for improvement (2003).

NESTA: 1
Managing water in rainfed agriculture - the need for a paradigm shift

Rockström, Johan, Louise Karlberg, Suhas P. Wani, Jennie Barron, Nuhu Hatibu, Theib Oweis, Adriana Bruggeman, Jalali Farahani, and Zhu Qiang. “Managing water in rainfed agriculture—The need for a paradigm shift.” Agricultural Water Management 97, no. 4 (2010): 543-550.

NESTA: 1
Pricing irrigation water: a review of theory and practice

Johansson, Robert C., Yacov Tsur, Terry L. Roe, Rachid Doukkali, and Ariel Dinar. “Pricing irrigation water: a review of theory and practice.” Water policy 4, no. 2 (2002): 173-199.

NESTA: 1
Running dry: freshwater biodiversity, protected areas and climate change

Pittock, Jamie, Lara J. Hansen, and Robin Abell. “Running dry: freshwater biodiversity, protected areas and climate change.” Biodiversity 9, no. 3-4 (2008): 30-38.

NESTA: 1
The allocative effeciency and conservation potential of water laws encouraging investments in on-farm irrigation technology

Huffaker, Ray, and Norman Whittlesey. “The allocative efficiency and conservation potential of water laws encouraging investments in on‐farm irrigation technology.” Agricultural Economics 24, no. 1 (2000): 47-60.

NESTA: 1
World's top 10 rivers at risk

Wong, C. M., C. E. Williams, U. Collier, P. Schelle, and J. Pittock. “World’s top 10 rivers at risk.” esocialsciences. com Working Papers (2007).

Each resource is assigned a rating of rigor according to the NESTA Standards of Evidence.

Define Metrics

Core Metrics

This starter set of core metrics — chosen from the IRIS catalog with the input of impact investors who work in this area — indicate performance toward objectives within this strategy. They can help with setting targets, tracking performance, and managing toward success.

Additional Metrics

While the above core metrics provide a starter set of measurements that can show outcomes of a portfolio targeted toward this goal, the additional metrics below — or others from the IRIS catalog — can provide more nuance and depth to understanding your impact.