Virtual carbon and water flows embodied in international trade: a review on consumption-based analysis

Abstract

In the globalised world greenhouse gas (GHG) emissions and water consumption are becoming increasingly important indicators for policy and decision making. Development of footprint assessment techniques over the last decade has provided a set of tools for monitoring CO2 emissions and water flows in the world. An overview of the virtual CO2 emissions and virtual water flow trends in the international trade based on consumption perspective is performed in the current work. The review of the recent literature indicates that: (1) Producers and consumers are located at various places in different parts of the world, and consequently they are significant differences in virtual GHG (Greenhouse gases) emissions. (2) The US and the EU have high absolute net CO2 imports. (3) China and some other fast developing countries as India, Brazil, and others are exporting countries and increasingly carry the load of exports of virtual GHG including CO2 emissions and virtual water that are triggered due to consumption of the related goods in the importing countries. (4) By importing products produced with lower carbon emission intensity and less water consumption than in the domestic industry, international trade can reduce global environmental pressure. Results from analysis indicate that future actions should be focused onto two main areas: (i) To steer regions towards self-sufficiency based on more efficient processes and by combining production of surrounding countries. (ii) To develop a mechanism with shared market of virtual carbon and virtual water between trading partners regionally and internationally.