When a World Bank employee went in April to investigate complaints
that loans made by its private sector arm had hastened the drying up of the Ica
aquifer, he was shot at by gunmen after he spotted land pockmarked by
clandestine wells.
Though the World Bank and its International Finance Corporation
have been involved in a more sustainable project in northern Peru that uses
water from the Amazon to irrigate fields, its work with well water in Ica has
put it in the middle of a vexing problem.
Peru is South America's third-largest country and a top exporter
of high-value specialty crops like asparagus. Farmers say it could become a
breadbasket like Brazil or Argentina, well-positioned to feed a growing global
population.
But it suffers from acute water shortages on its Pacific Ocean
coast and they are expected to worsen as its ice fields in the Andes, the world's
largest collection of tropical glaciers, melt because of climate change.
In Ica, where there is little control over who pumps water, the
aquifer could dry up before the government comes up with a plan to pipe in
rainwater from the Andes or the Amazon as it has done in northern Peru.
"People talk about the land and how valuable it is. But
it's the water," says Jorge Checa, who co-manages Agricola Athos, a
600-hectare asparagus and grape farm in Ica.
Because Ica sits next to the Pacific Ocean, the risks of overpumping
are severe as saltwater could leach into the aquifer and, like in fertile parts
of California, spoil the farmland.
Demand for water has intensified as Peru, long a leading minerals
exporter, has sought to diversify its economy. Peru's export council, ADEX,
says the country has ideal temperatures and soils along its coast.
Peru is already the world's top asparagus exporter, shipping
$389 million in 2009, and the third-largest producer of artichokes. Its farm
sector, which has attracted a wave of foreign investment, has grown rapidly,
helped by laws allowing bigger land holdings and free trade agreements with the
United States and Asian countries.
What's lacking is water. The coast's main source of fresh water,
Andean glaciers, are quickly retreating and big investments in farming are
"asymmetrical" with available water, said Raul Roca Pinto, a director
in the agriculture ministry.
The towering
sand dunes in Ica, 185 miles (300 km) south of the capital Lima, belie a
lucrative agricultural export industry that has grown fourfold in a decade.
One of Peru's biggest asparagus producers is Agrokasa, which
in 15 years and with $23 million in loans from the IFC has spread over 4,900
acres (2,000 hectares) of arid desert.
The IFC is now conducting an audit of its loans in Ica and an
internal ethics investigation after Agrokasa was poised to be approved for a
fourth loan despite the objections of the lender's environmental review staff.
It is also investigating whether there was a conflict of interest
in making the loans to Agrokasa, since the company's president is married to a
World Bank employee.
Just days after Agrokasa approached the IFC in mid-2009 for a
$10 million loan, an IFC ombudsman began receiving complaints that its loan
would exacerbate the Ica water shortage.
Agrokasa's chief executive Jose Chlimper said the proposal, to
build an underground tunnel to transfer water from the wells on one of its
farms to a farm seven miles away whose wells were running dry, would ease the
stress on the Ica aquifer. It would also expand the company's innovative drip
irrigation system.
Jose Luis Rueda, an IFC sustainable agriculture consultant, visited
Ica to assess Agrokasa's proposal and then recommended scrapping the loan, but
he was soon removed from the team and the project was approved anyway, a World
Bank source said.
After months of controversy, Agrokasa withdrew its request for
funding in September. The IFC internal inquiry is ongoing.
"We are on the frontier of science but because of this
IFC issue, we've become the icon of water misuse in Ica," Chlimper said.
"I don't care. I don't need the IFC's money." For Federico Vaccari,
the president of one of Ica's water use associations, the hullabaloo over the
Agrokasa project was reminiscent of Ica's water wars in the 1950s, when the
aquifer supporting big cotton farms temporarily went dry.
"Fifty years ago, people here killed for water, and
unless we do something, that is where we are headed," said Vaccari.
"Our development could be the cause of our
downfall." David Bayer, an environmental activist and a former USAID administrative
officer in Lima, predicts Ica's aquifer will dry up within a decade. He says
Ica's six largest growers — which consume 78 percent of Ica's groundwater — should
take half their lands out of production.
"The water crisis is real, and small and mid-size
farmers are being nudged out," Bayer said.
Ica's water deficit is in part due to inefficient irrigation
systems and Peru's government says most small farmers cannot afford drip
irrigation.
"If you use new technologies like this drip system, it
can buy you some time," said Lonnie Thompson, a Ohio State University
professor who has been tracking Peru's ice caps since the 1970s.
Farmers say the only long-term solution for Ica is to have the
government sponsor a massive irrigation project, like Chavimochic or Olmos in
northern Peru, that pipes in water from rivers in the Andes or the Amazon basin.
World Bank loans helped plug seeping canals and repair dilapidated
irrigation systems for the Chavimochic project, which broadened access to
water, raised farm workers' average incomes and attracted billions of dollars
in investment.
Some 370,000 acres (150,000 hectares) of desert have been converted
into farmland and 200,000 new jobs were created in Chavimochic, according to
Peru's export council. The World Bank says that expanding irrigation and
labor-intensive farming best meet its mandate of creating jobs.
The Olmos project, which critics have decried as too costly,
aims to avoid any reliance on glacial melt. Instead, Brazil's Odebrecht, which
won the concession, will bore a 20-km tunnel through the Andes and bring water
from the Amazon Basin to irrigate about 247,000 acres (100,000 hectares) of
coastal land. It plans to sell the land and the water in package deals to
farmers starting in 2012.
