A shortage of arable land on the Pacific coast presents a major challenge to the continued growth of Peru’s agricultural industry. As a result, over the course of the past five years efforts to bring more fertile land into commission have seen an increase in arable land of 10% from 2.93m ha in 2005 to 3.23m ha in 2010, according to figures from the Ministry of Agriculture ( Ministerio de Agricultura, MINAG).

IN DEMAND: Economic growth has led to an increased thirst for water supplies across a range of sectors. Mining and energy, both extremely active over the past decade, have attracted much attention due to protests against an assortment of projects that local communities and non-governmental organisations believe are siphoning water. In March of 2008 the government established the National Water Authority (Autoridad Nacional del Agua, ANA) under MINAG through legislative decree No. 997. The ANA was charged with acting across local and regional governments as well as various social and economic parties to resolve disputes.

While water resources are required by a variety of industries as well as for personal consumption, irrigating agricultural projects demands the vast majority of supplies. According to the ANA, around 80% of demand for water stems from the agricultural sector.

SUPPLY & DISTRIBUTION: Water supply becoming so controversial is regrettable since domestic resources are vast – they equate to 71,000 cu metres per person per year, according to the ANA. The problem stems from the distribution of water resources and population. The coastal region, including the densely packed capital, Lima, and several other major cities, accounts for more than two-thirds of Peru’s population yet it contains less than 2% of the water supply. Conversely, the Amazon basin contains the largest volumes of water in the country, yet it is the least densely populated area.

Due to the Pacific coast’s fertile (albeit dry) land, population density and infrastructure development, this region has attracted the majority of public and private investment in irrigation recently. Meanwhile, the highland and jungle regions enjoy an abundance of water resources yet very little in the way of developed infrastructure and irrigation.

Due to increasing temperatures, glaciers located high in the Andes have retreated, reducing water supplies dependent on glacial melt and creating localised shortages. Thus far, irrigation projects bringing water from the highlands and Amazon basin have been working.

MAJOR DEVELOPMENTS: Several major irrigation projects bringing water from east to west from the slopes of the Andes, as well as from neighbouring basins, are already currently under way, with the initial stages in varying degrees of completion. National investment promotion agency Proinversión will award concessions related to four major irrigation projects in 2012, including Chavimochic and Mages Siguas II, totalling $1.97bn.

A good example is that of the Chavimochic irrigation canal in northern Peru, a primarily government-sponsored project bringing water to the northern coastal region from the Santa River basin. The first two stages of the project were funded by the regional and federal government, while the $424m third stage, which has been co-financed by the public and private sector, will be constructed from 2013.

The initial stages of the project have already converted a total of 17,000 ha of desert into fertile land for the agriculture sector while improving the fertility of an additional 28,000 ha in the valleys of Chao, Virú and Moche. They attracted $300m in investment and created 40,000 new jobs. The third phase of Chavimochic, which consists of the construction of the Palo Redondo dam near Chicama, an additional 113-km canal from Moche-Chicama-Urricape and the third line crossing the River Virú, will irrigate an additional 53,000 new acres of land and water 48,000 acres in the Chicama Valley. Chavimochic will provide 200,000 new direct jobs and increase value-added agricultural exports by $1.2bn.

Peru’s Camposol, which has become the world’s leading exporter of asparagus in just over decade, is just one of many companies to have benefitted from the canal. Camposol is incidentally involved in a large private irrigation programme, the Yakuy Minka project, which will be completed in two phases initially bringing 1500 and later an additional 2000 ha into use.

Another major development is the Olmos irrigation project, developed by H20lmos, the Peruvian subsidiary of Brazilian infrastructure giant Odebrecht, which is located in northern Peru, specifically in the Lambayeque region. The project will bring water from the Huancamba River through a 20-km tunnel passing through the Andes Mountains and is scheduled for completion in the first half of 2012. Olmos will irrigate roughly 43,500 ha of desert land and create up to 100,000 jobs.

Mages-Siguas II is yet one more large-scale irrigation project aimed at attracting investment, particularly from export-oriented businesses. The scheme has a total cost of $400m, with $200m co-financed by the Peruvian government and the remaining investment coming from the developing consortium AngosturaSiguas. Mages-Siguas II will transform 38,500 ha of desert in Pampas de Siguas and an additional 8100 ha in Pampas de Majes into arable farmland. When completed, the project is expected to create 120,000 direct jobs and a further 150,000 indirect jobs.

The consortium Angostura-Siguas, a joint venture between Spanish firm Cobra Instalaciones y Servicios and Peru’s Cosapi, was awarded the irrigation concession in 2010. Similarly to the Olmos project, MajesSiguas II will feature an 18-km trans-Andean tunnel, as well as the Angostura dam and eventually a 500-MW, two-station hydroelectric power plant. When completed, Mages Siguas will enable the irrigation of up to 60,000 ha of new land reclaimed from the desert.

While extractive industries have the allure of foreign exchange earnings, agriculture offers significantly more tangible benefits for job creation in poorer communities. As such the government should continue prioritising agriculture in water distribution, perhaps with greater care given to environmental impact studies.

SEARCHING FOR SOLUTIONS: Searching for alternative solutions to the issue of water supply for irrigation in early 2011, the ANA announced a $43m plan for improving water distribution throughout Peru by modernising six hydrologic basins over the next five years. Depending on the success of the project, it could eventually be replicated in all of Peru’s 159 hydrologic basins.

Adolfo Valle, general manager of Univeg, told OBG, “The solution must be a multi-faceted approach involving desalinisation plants, new irrigation techniques, and a series of dams and reservoirs.” Dams and reservoirs are of particular importance to sustaining productivity through dry seasons. Valle also advocates an expansion of agricultural insurance programmes. Others have pushed for privatisation, with the idea of assigning a value to water – the argument being that markets are more adept at prioritising and organising distribution. Even if true, this is highly unlikely to happen. The most probable solution seems to be a multifaceted approach, from the channelling of water from the Amazon to the desert coast to the establishment of desalinisation plants and drip-irrigation technology.