Lake Naivasha is a freshwater lake in the Kenyan Rift Valley. It is unique in that it is home to both an internationally renowned environmental treasure as well as a blossoming agriculture industry that exports high value fresh vegetables and cut flowers to European and English markets.
The Lake is currently under intensive scrutiny over concerns about how its environmental integrity can be maintained whilst still supporting a valuable and growing economy and society. Agricultural activity in the basin has expanded dramatically in terms of both the rural smallholder farmers in the upper catchment and the high value exported commercial horticulture around the Lake and this sector anchors a local economy that supports almost 650 000 people.
The two most valuable crops in the Naivasha basin are cut flowers and vegetables. The vegetables grown in Lake Naivasha contribute approximately KSh6.65 billion ($95 million) to the Kenyan economy. Whilst predominantly focused on producing for the local market, smallholders are increasingly able to access high value export markets through their association as “out growers” with the commercial vegetable farms.
Kenya is also one of the world’s largest exporters of cut-flowers and Lake Naivasha is at the heart of the nation’s floriculture industry, accounting to over 50% (App 30 billion) of the country’s cut flower exports. The Naivasha basin involves a broad group of stakeholders including large horticulture companies and their employees, the out growers and small holders, local government and basin inhabitants, and those dependent on the broader Kenyan economy and trade.
For an agriculture-based economy that is completely dependent on its water resources for economic production, the social, economic, financial (investment), regulatory and reputational risks associated with a deteriorating biophysical environment are significant. Given its linkages to the national economy and the international export markets, these risks are not localized within the basin but extend through to the rest of Kenya.
One must ask what risks are for each of these groups and also highlight the commonalities between them, or in other works the shared risks between corporate, government and civil society stakeholders.
In so doing, these stakeholders can recognize the incentive for a common consensus in mapping out a path to achieving improved water resource management in the basin and the future economic and environmental sustainability of Lake Naivasha.
It is important to recognize that the shared risk framework is not linear and does not fall within a conventional quantifiable costbenefit metric. A reduction in abstraction for commercial farmers has knock effects in terms of employment; export earnings, livelihoods and social tensions. The manifestation of these risks is highly uncertain, but the implications are potentially significant.
Despite past severe droughts, it is unlikely that the water resources situation would cause such severe and sustained physical deterioration that major irrevocable economic impacts will be experienced in the local economy or that individual companies will fail financially, in the short term.
However, it is highly likely that some level of local economic and corporate financial impacts will occur during crisis periods of drought, water quality deterioration and/or wetland degradation.
In the future, increasing urban – agricultural abstraction and increasing temperature – climate variability, is highly likely to impact on the recurrence and severity of crisis periods. Similarly, the already significant developmental pressures on this area will increase over time, due to population pressure and economic growth in the country as a whole.
Lake Naivasha provides an important opportunity to support social and economic development in Kenya in an ecologically sustainable manner, but these opportunities may be squandered without adequate engagement of the risks. Three areas of focus may be identified in responding to these risks and opportunities: Risk mitigation requires improved institutional arrangements, to support a clear definition and management of the availability of water and the rules for its use in the different parts of the catchment. Innovative partnerships between government, private sector and/or civil society organisations should be fostered to address problems in and around the lake.
Progressive horticulture companies should develop Naivasha specific water stewardship standards and gain both competitive distinction and reputational “immunisation” by gaining accreditation by a recognised body.
Cut-flower farming
The flower farms surrounding the Lake growing approximately 1,200 hectares of cut-flower of which approximately 800 are grown in greenhouses. Roses make up about 75% of Kenya’s annual agricultural production, followed by mixed flowers (8%), hypericums (3%) and carnations (2%). The Naivasha basin accounts for 40% of Kenya’s cut flower exports and generates approximately 9% of Kenya’s total foreign exchange revenue.
It is estimated that 45% of the revenue generated by a typical cut flower farm is spent on production costs at the farm. This would imply that the contribution of the floriculture industry to Lake Naivasha’s local economy is approximately KSh 12.6 billion ($180 million). It is estimated that the flower industry employs approximately 40 000 people in Naivasha directly and over 350,000 indirectly.
Institutional Arrangements
Through a combination of consumer and buyer pressures, the private sector has made some significant strides in self-regulating water use in commercial farming operations. The Lake Naivasha Growers Group (LNGG) is a commercial farming body that has its own code of practice relating to water use and environmental impacts that its members have to follow.