Agriculture and Water Use in Central America

Although Central America has traditionally been an agricultural region, in the last 20 years it has witnessed a process of diversification and increased wealth generation from other sectors such as industry, high technology and services. In spite of this, agriculture continues to generate an important part (14.8%) of the total gross domestic product (GDP) and has continued to expand, at 2.3% between 1995 and 2002 (CEPAL, 2003). Nicaragua is the country most dependent on agriculture. There the sector contributes one-third of total GDP, with contributions coming particularly from the export of coffee ($98.3 million) and sugar ($33.4 million).

In Guatemala, where 75% of families live in extreme poverty, agriculture is the most productive sector and provides 25% of the GDP. It is also the most important activity for the people who live in the high central plateau, and creates jobs and income for 68% of the population. The export products are principally coffee and cotton, while maize, beans, wheat, vegetables and fruit are produced for domestic consumption.

Countries such as Costa Rica and Panama have diversified their exports by producing high-tech goods followed by seafood products. This has reduced the agricultural sector's proportion of the GDP from 11% to 7% in both countries, although they still export products such as bananas, coffee, sugar, pineapple and melon. However, this relatively low contribution of agriculture remains high, even in the case of Panama, when compared with that of developed countries. We must remember that the region's economies are still highly dependent on agriculture. This discussion and the figures shown in Table 6.1 highlight that even though agriculture may be declining as percentage of output, it is still important for the overall economy and for water use in particular.

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