Virtual Water Trade: Revisiting the Assessments to Incorporate Regional Water Stress
Abstract
Virtual water (VW) refers to the volume of freshwater embedded in the production and shipment of a commodity, which can include agricultural or industrial products, and the trade of commodities can then be viewed as the trade of one region's water resources to another. The premise behind this trade is that countries with a comparative water advantage may choose to export crops, and countries with scarce water resources may focus economic activity on non-water intensive sectors. However, this assumption is not always true given food self-sufficiency policies; water scarce regions often choose to unsustainably mine aquifers for irrigation. Recent studies have shown no correlation between dependency on VW imports and water scarcity for nations, suggesting that politico-economic considerations rather than resource scarcity considerations may dominate the current VW dynamics. Existing VW computations do not take into account water-scarcity value or the full-cost pricing of commodities. This study aims to fill in this gap by focusing on three countries - the United States, India, and Japan - and their production, imports and exports of crop, livestock and industrial commodities. These countries offer three different perspectives on virtual water, with Japan as a net importer of agriculture virtual water and a major industrial nation. The United States, on the other hand, exports significant quantities of grain. India is a developing country with a strong focus on food self-sufficiency. We first quantify the amount of water used in the production of each commodity and then examine the virtual water trade balance for each country, examining the tradeoffs each country has made between agriculture and industrial water use; given that water resources are finite. To examine the interplay between virtual water trade and water scarcity, we focus on two sub-regions, the Ogallala Aquifer in the US and the Punjab region in India, both of which have significant agricultural economies and are knowingly depleting their groundwater resources. We estimate the direct and indirect cost of water in each region and evaluate the economic trade-offs these regions are making.
- Publication:
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AGU Fall Meeting Abstracts
- Pub Date:
- December 2011
- Bibcode:
- 2011AGUFMGC13A0969P
- Keywords:
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- 1880 HYDROLOGY / Water management