The goal is to identify external interventions capable of reducing constraints to integrate poor farmers into modern supply chains (MSCs) and do so by experimenting with different combinations of public-private partnerships. We also will put into practice our belief that if small poor farmers are provided good information; strong incentives; and a favorable institutional environment, they can become viable MSC suppliers.

We do so in Senegal, Madagascar, India and China by:

• developing innovative ways to build private-public partnerships;
• providing farmers information, incentives and institutional support that they can use to become effective horticultural suppliers; and
• by using a unique experimental approach.

The project will offer farmers a way out of poverty and also will identify the constraints keeping farmers from connecting to MSCs. This information will let us create a set of Best-Practice Models. Our private partners will use these Best Practice Models to scale up across thousands of communities.

A concept note about setting up an international program for studying the effects of the emergence of biofuels on global poverty and food security. 

The recent global expansion of biofuels production is an intense topic of discussion in both the popular and academic press. Much of the debate surrounding biofuels has focused on narrow issues of energy efficiency and fossil fuel substitution, to the exclusion of broader questions concerning the effects of large-scale biofuels development on commodity markets, land use patterns, and the global poor. There is reason to think these effects will be very large. The majority of poor people living in chronic hunger are net consumers of staple food crops; poor households spend a large share of their budget on starchy staples; and as a result, price hikes for staple agricultural commodities have the largest impact on poor consumers. For example, the rapidly growing use of corn for ethanol in the U.S. has recently sent corn prices soaring, boosting farmer incomes domestically but causing riots in the streets of Mexico City over tortilla prices. Preliminary analysis suggests that such price movements, which directly threaten hundreds of millions of households around the world, could be more than a passing phenomenon. Rapid biofuels development is occurring throughout the developed and developing world, transforming commodity markets and increasingly linking food prices to a volatile energy sector. Yet there remains little understanding of how these changes will affect global poverty and food security, and an apprehension on the part of many governments as to whether and how to participate in the biofuels revolution.

We propose an international collaborative effort to:

• Understand and quantify the effects of expanding biofuels production on agricultural commodity markets, food security, and poverty;
• Develop training programs and policy tools to harness the benefits and mitigate the damages from such expansion on both local and global scales; and
• Build an international network of scholars and government officials devoted to studying and managing biofuels development and its social consequences

This paper explains the puzzling fact that in organizing the management of surface water, village leaders have provided incentives to canal managers in some areas, but not in all. Our study indicates that the optimal contractual choice depends on the relative abilities of the leader and the manager, the design of the cultivated land, the characteristics of the canal system and the opportunity costs of the leader and the pool of managerial candidates. The unifying mechanism is the relative change in the ability of the leader and manager to perform the unmarketable activities that are needed to provide irrigation services.

In this paper we are pursuing the following objectives:

1. document the existing water management institutional forms throughout China, their evolution over time and across provinces;
2. describe the actors and their roles and other governance issues in WUAs and compare them to traditional collectively managed irrigation systems and other types of reform-oriented irrigation institutions (especially contracting);
3. analyze the determinants of the emergence of these institutions throughout China in order to understand the role of scarcity of water resources; the size of the community's irrigation system, policy and other village characteristics in their emergence.

To meet these objectives, the rest of the paper is organized as follows.

First, we will discuss the dilemma of China's surface water policy. Because of the nature of China's farming practices - since almost all of China's agriculture is based smallholders who farm small, dispersed plots, it is hard to use water pricing policy in surface water areas. This makes irrigation management reform important and it is with this motivation that we launch our study of WUAs and other water management reforms, their governance and determinants.

In the second section we discuss the data. In the following two sections, the spread of WUAs, their governance and their other characteristics are examined - first descriptively and then with multivariate analysis. The final section concludes.

As water becomes scarcer in northern China, designing policies that can induce water users to save water has become one of the most important tasks facing China's leader. Past water policies may not be a solution for the water scarcity problem in the long run. This paper looks at a new water policy: increasing water prices so as to provide water users with direct incentives to save water. Using a methodology that allows us to incorporate the resource constraints, we are able to recover the true price of water with a set of plot level data. Our results show that farmers are quite responsive if the correct price signal is used, unlike estimates of price elasticities that are based on traditional methods. Our estimation results show that water is severely under priced in our sample areas in China. As a result, water users are not likely to respond to increases in water prices. Thus as the first step to establishing an effective water pricing policy, policy makers must increase water price to the level of VMP so that water price reflects the true value of water, the correct price signal. Increases in water prices once they are set at the level of VMP, however, can lead to significant water savings. However, our analysis also shows that higher water prices also affect other aspects of the rural sector. Higher irrigation costs will lower the production of all crops, in general, and that of grain crops, in particular. Furthermore, when facing higher irrigation costs, households suffer income losses. Crop income distribution also worsens with increases in water prices.

In summary, our paper provides both good news and bad news to policy makers. On the one hand, water pricing policies obviously have great potential for curbing demand and helping policy makers address the emerging water crisis. On the other hand, dealing with the negative production and income impacts of higher irrigation cost will pose a number of challenges to policy makers. In other words, if China's leaders plan to increase water prices to address the nation's water crisis, an integrated package of policies will be needed to achieve water savings without hurting rural incomes or national food security.

Water scarcity is one of the key problems that affect northern China, an area that covers 40 percent of the nation's cultivated area and houses almost half of the population. The water availability per capita in North China is only around 300 m3 per capita, which is less than one seventh of the national average. At the same time, expanding irrigated cultivated area, the rapidly growing industrial sector and an increasingly wealthy urban population demand rising volumes of water. As a result, groundwater resources are diminishing in large areas of northern China. For example, between 1958 and 1998, groundwater levels in the Hai River Basin fell by up to 50 meters in some shallow aquifers and by more than 95 meters in some deep aquifers.

Past water policies have not been effective in solving water scarcity problems. China's leaders have put priorities on increasing water supply through developing more canal networks or building more reservoirs. In 2001, the State Council started the South-to-North Water Transfer Project. However, these supply-side approaches cannot meet the increasing demand for water from all of the different sectors and cannot solve water scarcity problems in the long run.

The dramatic transition from Communism to market economies across Asia and Europe started in the Chinese countryside in the 1970s. Since then more than a billion of people, many of them very poor, have been affected by radical reforms in agriculture. However, there are enormous differences in the reform strategies that countries have chosen. This paper presents a set of arguments to explain why countries have chosen different reform policies.

In a book assessing the development of China during the People's Republic era, it is of interest to know how well agriculture has performed and the role that it has played in the development process. Has China produced food and other commodities that have contributed to China's growth? Has it been successful supplying labor to the off farm sector? How has agriculture contributed to the rise in rural incomes and growth, in general? In short, one of the overall goals of this chapter is to document the performance of the agricultural sector and use the criteria of Johnston and Mellor to assess how well the agricultural sector has done.

This chapter, however, seeks to go further than describing the achievements and shortfalls of China's agricultural economy; we also aim to identify the factors, both domestic policies and economic events as well as foreign initiatives, that have induced the performance that we observe. To create an agricultural economy that can feed the population, supply industry with labor and raw materials, earn foreign exchange and produce income for those the live and work in the sector and allow them to be a part of the nation's structural transformation requires a combination of massive investments and well-managed policy effort. The process can only proceed smoothly if an environment is created within which producers can generate output efficiently and earn a profit that can contribute to household income. Policies are required to facilitate the development of markets or other effective institutions of exchange. Although the sector is expected to contribute to the nation's development and allow for substantial extractions of labor and other resources, large volumes of investment also are needed. Investment in education, training, health and social services are needed to increase the productivity of the labor force when they arrive in the factories. Investment is needed in agriculture to improve productivity to keep food prices low, allow farmers to adopt new technologies and farming practice as markets change, and to raise incomes of those that are still in farming. Investment is needed in technology, land, water and other key inputs that are in short supply. In this chapter we seek to point out both policies that have facilitated the performance of the agricultural sector and those that have constrained it.

The purpose of this executive summary is to provide a concise statement about what we have learned about investment into China's rural environment. The overall purpose is to help the Bank understand what is happening in rural China, what farmer's are thinking about the current trends and what they are hoping will happen in the future (if they had a say). One of the most important questions is answer what should the role of the state be.