trends and future of sustainable development - TransEco

The virtual water ‘flows’ embedded in the agro-food produce sourced from leased land mostly inAfrica, South-East Asia and South America by foreign state-led enterprises are even more difficult tocalculate. However, evidence is growing stronger that water is often the ultimate driver for theinvestments, as the investing countries, particularly China, Saudi-Arabia and Arab Emirates, India andSouth-Korea do not suffer from lack of land for cultivation but from lack of water for irrigation and inrainfall (Brown 2011; Sojamo et al. forthcoming). Sourcing the resources outside the water-stressedhome basins is in a shorter term cheaper than investing in water efficiency and productivity measures insitu (Woodhouse and Ganho 2011). Nevertheless, the target regions of the land and water investmentsoften suffer from lack of just regulatory frameworks on trade, land tenure and water use and fromunderdeveloped water management systems, putting the local water and food security of especially thepoorest at risk (Bues 2011; de Schutter 2010; World Bank 2010).On the organisational level, the power of the largest corporations and state-led enterprises affectsboth the value chain dynamics and the wider dynamics of the networks of the world water and foodsecurity regime.When looking at water security as a driver in the agro-food value chain dynamics, different pictureemerges on the role of the corporations and state-led enterprises depending on whether their strategicpreferences are looked at in the shorter or longer term or in value- or volume-driven markets. On onehand, concentration and consolidation especially in the US and UK retail sector and among the brandnamefirms focusing on design and marketing dictates the global demand (UNCTAD 2009; Gereffi et al.2005; OECD 2001). Accordingly, increasingly environmentally aware consumer could thus push thevalue chains towards more sustainable water use practices. On the other hand, concentration andconsolidation among the ”high volume, low value” agribusiness lead by the largest corporations andstate-led enterprises enforces a countering supplier-driven system (Heffernan and Hendrickson 2002;Hendrickson and Heffernan 2002). According to the interviews conducted for the study, the largesttrading corporations, especially privately owned Cargill, do not at the moment see much value involuntary sustainability measures and corporate accountability as they have hardly visible brands andface little shareholder, governmental and non-governmental movement pressure. Instead, if a companywith a visible brand supplies from the corporations produce that turns out to be unethically sourced, thereputational risks are on the company with the brand, not on the invisible supplier behind it. The globalsuppliers do not need to change their practices due to the chain pressure as they can sell their produce toalternative emerging Asian markets where the voluntary and legal standards are lower. Hence, a keyquestion is whether and when the Asian markets will start to favour sustainability. The state-ledenterprises leasing foreign land for produce mostly consumed in Asia are increasingly being criticized fortheir lack of sustainability in land and water use, which has prompted calls for international guidelinesand regulatory frameworks, but the planning and implementation process is severely lacking behind therealities on the ground (Bues 2011; Kaufman 2011; Sojamo et al. forthcoming; Woodhouse and Ganho2011; World Bank 2010). Furthermore, transnational markets can bypass national regulatoryrestrictions by simply moving the operations elsewhere (Kaufman 2011). Whether water security in theglobal context is prioritized in the corporate and state-led enterprise agendas depends on the pressurefrom the investors, initiative of the corporate boards and CEOs or alternatively political will, which againgenerally depends on strong market signals. However, in imperfect market conditions pressure has tocome from the wider network of stakeholders.164