Water Trade Research Articles

An attempt to develop a policy framework for the global sustainability of freshwater resources in the virtual water trade

International trade in agricultural products transfers significant virtual water flow between countries. However, it must be clarified whether countries or trade agreements take virtual water in products and goods that are traded into account. Despite unprecedented worldwide attention paid to water status, there is currently no framework for virtual water usage that may serve as the basis for global virtual water administration. The primary objective of this study is to address this research gap. This study attempted to develop an international policy framework in which political actors, governments, and private companies create shared responsibility agreements regarding water as the most fundamental natural resource for sustainable use. In this study, we performed a global assessment of the virtual water trade (VWT) of wheat from 2002 to 2021. Although previous research has hypothesized that will use the world's freshwater resources sustainably by transferring virtual water from water-abundant to water-deficient countries, However, based on the developed policy framework, we discovered that there is no positive correlation between the water abundance of virtual water exporting countries and the global sustainability of freshwater resources. A total of 68.3 % of the global VWT for wheat is unsustainable. Water-abundant countries, such as the United States, Australia, and the Russian Federation, are responsible for the greatest unsustainability in the VWT of wheat. Our results could contribute to developing decision-making tools for the global sustainability of freshwater resources used in VWT.

Understanding grain virtual water flux dynamics and drivers from a socio-ecohydrological perspective: A case study of landlocked developing countries of Africa

The virtual water (VW) approach offers a crucial heuristic tool to analyze water and food security by considering the water embedded in grain during the whole production process. African landlocked developing countries (LLDCs) continually suffer from an escalating food crisis and water resources and socioeconomic policy and water conservation strategy derived from the water-food nexus of virtual water trade (VWT) systems and resources may be the solution. Using a trade gravity model and multilateral data, this study evaluated grain VW flux patterns and 11 main drivers of VWT between 16 African LLDCs and their partners. Besides, the feedback path of VW flows corresponding to the socio-ecohydrological variability was studied using the impulse response function. The findings revealed that net virtual water import (VWI) varied across all 16 African LLDCs, ranging from 1.67 Bm3 to 10.28 Bm3 during 2000 and 2020, with an estimated yearly grain VWI of 105.61 Bm3. Green, blue, and grey water accounted for about 79.3%, 14.7%, and 5.98% of the total grain VWI, respectively. Ethiopia had the highest grain VWI among the African LLDCs. Grain VWI fluxes were significantly and positively driven by population growth and per capita GDP, which were expected to continue in the future. It was concluded that the quantitative analysis of grain VWT patterns and driving forces using the VW theory for LLDCs can be instrumental for guiding the socioeconomic policy and water conservation strategy. To effectively achieve sustainable water security and grain production, earmarked future VW strategy is required. Decision-makers should incorporate rational VW strategies and socio-ecohydrological factors into the monitoring system from a multidisciplinary perspective.

Responsibility for sustainable water consumption in the global supply chains

Freshwater, a limited natural resource, is unevenly distributed worldwide; this limited availability necessitates the virtual water trade in global supply chains, which may induce freshwater overconsumption (beyond carrying capacities). The dependency on remote water resources is imperceptible and barely recognized by consumers indirectly inducing water consumption. Here, we highlight the significance of remotely induced water consumption through supply chains and considerations for assessing and managing the sustainability of water resources through a case study of the Japanese national water footprint. The blue water consumption induced by the Japanese final demand (53.2 Billion m3) is approximately three times the volume saved through virtual water trade. For the compatible achievement of global and local sustainability of freshwater use, the hotspots in the global supply chains must be identified by considering three additional aspects in parallel, i.e., the concentration of overconsumption, pressure of overconsumption, and proportion to the local total overconsumption amount.

A Full-Scale Optimization of a Crop Spatial Planting Structure and its Associated Effects

Driven by the concept of agricultural sustainable development, crop planting structure optimization (CPSO) has become an effective measure to reduce regional crop water demand, ensure food security, and protect the environment. However, traditional optimization of crop planting structures often ignores the impact on regional food supply–demand relations and interprovincial food trading. Therefore, using a system analysis concept and taking virtual water output as the connecting point, this study proposes a theoretical CPSO framework based on a multi-aspect and full-scale evaluation index system. To this end, a water footprint (WF) simulation module denoted as soil and water assessment tool–water footprint (SWAT-WF) is constructed to simulate the amount and components of regional crop WFs. A multi-objective spatial CPSO model with the objectives of maximizing the regional economic water productivity (EWP), minimizing the blue water dependency (BWFrate), and minimizing the grey water footprint (GWFgrey) is established to achieve an optimal planting layout. Considering various benefits, a full-scale evaluation index system based on region, province, and country scales is constructed. Through an entropy weight technique for order preference by similarity to an ideal solution (TOPSIS) comprehensive evaluation model, the optimal plan is selected from a variety of CPSO plans. The proposed framework is then verified through a case study of the upper–middle reaches of the Heihe River Basin in Gansu province, China. By combining the theory of virtual water trading with system analysis, the optimal planting structure is found. While sacrificing reasonable regional economic benefits, the optimization of the planting structure significantly improves the regional water resource benefits and ecological benefits at different scales.

Investigating the potential of groundwater recycling as an alternative to groundwater trading in terms of resource efficiency

Water and in particular groundwater is undoubtedly a natural resource of fundamental importance to humanity. However, their limited availability and the large increase in demand observed in recent years call for its optimal management. In this context, tradable water rights systems and the circular economy of water, which promotes water recycling, are two concepts on which management policies towards sustainable and efficient water management can be based. This paper attempts to highlight the potential that a management policy based on the circular economy of water can have against a policy based on tradable water rights in terms of economic efficiency of the resource. Thus, the research hypothesis of this paper is that under certain conditions water recycling can lead to higher economic efficiency for the resource than water trading can. For this purpose, two time-dynamic models are formulated, one for each different management policy, concerning the pumping of water from an aquifer by two different categories of users, and the corresponding optimal control problems are solved. The results of the simulations based on hydro-economic data of a region in Northern Greece show that there is a high dependence of the efficiency of the water recycling system on the recycled water tariff. Thus, it is concluded that for charging prices up to and beyond 0.20€/m3 a management policy of an aquifer based on the concept of circular economy can lead to a higher economic efficiency of water.

Unravelling Chinese industrial structure optimization paths within Regional Comprehensive Economic Partnership considering the virtual trade of water and water pollutants

AbstractMassive commodity transactions lead to enormous virtual water and water pollution transfer; this phenomenon will be intensified within the process of Regional Comprehensive Economic Partnership (RCEP) enforcement. This study applied multi‐regional input–output and scenario simulation approach to reveal the virtual water elements flow, while exploring the trade structure optimisation roadmap for China. Results unveiled that China was a virtual water net exporter (9.17 billion tons), also the largest importer of water pollutants (N 622456 tons and P 136110 tons) among RCEP countries in 2015. In order to alleviate the water pressure in China, the textiles and other manufacturing industries should be limited, while the service industry is encouraged. Optimal scenario can realize 29.8% water conservation and 8% water pollutants reduction and also achieve a 36.5 million dollars trade volume increase. This research improves trade‐off balance between water environment and economy at multi‐regional level and accelerates green trade in economic partnerships globally.

Temporal dynamics, driving factor and mutual relationship analysis for the holistic virtual water trade network in China (2002–2017)

The virtual water trade network that comes along with commodities trade has become increasingly critical for achieving sustainable development goals in the hydropenic and populous China. However, its holistic patterns, temporal dynamic and interrelation associated with complex interactions among regions and sectors have rarely been systematically characterized. Here, we constructed a transboundary and intersectoral virtual water trade network for China and applied MRIO model with newly developed time-series datasets (2002–2017) that derived from an internally consistent approach to capture its panorama, dynamic characteristics, driving factors and mutual relationship. Results show that China's total virtual water embodied in trade has increased by approximately 64% during the studied period primarily due to the rapid increasing demand; whilst the figure has decreased by nearly 4% in 2012–2017 contributed by the optimization of production structure and improvement of water use efficiency. The most prominent strand by sector was always the flow from Agriculture to Food, and the remarkable growth was observed in Construction resulting from their enhancive demands. Furthermore, the flows from Xinjiang and Heilongjiang to the Yangtze River Delta gradually dominated, and the three largest urban agglomerations have absorbed extensive virtual water for meeting their demands along with their vast population and diversified consumptions. The relationship in sectoral networks tended to be more mutual benefit, while in regional networks cooperative and competitive relationships increase simultaneously. Finally, we proposed some policy suggestions to take advantages of virtual water theory.

Novel concept for water scarcity quantification considering nonconventional and virtual water resources in arid countries: Application in Gulf Cooperation Council countries

The lack of perennial streams or surface water in most arid countries necessitates input modification and water scarcity/security equation calculation as per the water resource systems and physiographic conditions in these countries. The contributions of nonconventional and virtual water resources to water security have been disregarded or undervalued in previous research on global water scarcity. This study addresses this knowledge gap by developing a new framework for estimating water scarcity/security. The proposed framework considers the contributions of unconventional and virtual water resources and the roles of economics, technology, water availability, service accessibility, water safety and quality, water management, and resilience to threats on water and food security, and considers institutional changes required to adjust to water scarcity. To manage water demand, the new framework incorporates metrics for all categories of water resources. Although the framework was specifically designed for arid regions, particularly the Gulf Cooperation Council (GCC) countries, it is applicable to non-arid nations too. The framework was implemented in GCC countries, which are suitable examples of arid countries with notable virtual commerce. The ratio of abstraction from freshwater resources to renewability from conventional water sources was calculated to determine the extent of water stress in each country. The values obtained from measurement varied from 0.4 (the optimal threshold level for Bahrain) to 22 (severe water stress/low water security in Kuwait). Considering the nonconventional and abstracted nonrenewable groundwater volumes from the total water demand in the GCC, the minimum water stress value measured was 0.13 in Kuwait, suggesting considerable reliance on nonconventional water resources along with little domestic food production to achieve water security. The novel water scarcity/stress index framework was found to be appropriate for arid and hyper-arid regions, such as the GCC, where virtual water trade has a major positive impact on water security.

Assessment of Virtual Water Flows in Morocco’s Foreign Trade of Crop Products

As a semi-arid/arid country located in the northwest of Africa, Morocco is facing serious water scarcity driven by the dual stresses of decreasing availability of water resources and increasing water demands. Virtual water trade could be an effective tool to alleviate water scarcity. The paper presents an analysis of the relationships between agrarian productions, foreign trade, and the water sector in Morocco by deriving a comprehensive estimate of virtual water export and import in Morocco’s foreign trade of 40 crop products during the period from 2000 to 2017. Our objectives include determining the intensity of water consumption of exported and imported crop products and quantifying the water consumed and saved, respectively, by locally producing and importing these products. To this end, FAO’s Penman-Monteith climate model was used to estimate crop water requirements based on data on meteorological factors. The results show that Morocco was a net virtual water importer during the study period. The deficit was 595.74 Gm3. The tendency of total virtual water export was on a rising trend, while the total virtual water import was on a downward trend. The main exported virtual water was from vegetables (68.87 Gm3, 72.47%) and the main imported virtual water was from cereals (679.68 Gm3, 98.4%). Regarding crop product’s water intensity, we found that the exported crop products were excessively concentrated on water-intensive products such as mandarins and clementines, figs, oranges, apricots, plums, citrus fruits, olives, tomatoes, asparagus, peas, and artichokes. On the other hand, the agricultural policy of 2009–2020 increased the production of water-intensive products. This finding seems to be going against the virtual water trade theory, which states that water-poor countries should import water-intensive products and produce local products with lower water requirements.

Sustainability assessment of virtual water flows through cereal and milled grain trade among US counties

Transference of the embedded water, so-called virtual water, in the trade of crops among regions within a country is often neglected, leading to no information about the impacts on the water resources of exporting regions, especially if those regions are water-stressed or, worse, water-scarce. Virtual water trade, if not considered through the lens of sustainability, could lead to adverse effects on the water resources of an exporting region. Previous related studies have quantified virtual water trade among the states in the United States providing valuable insights; however, information for specific crop trade among counties, its water footprint (WF) at the county scale, the resultant virtual water flow among counties, and the sustainability assessment of those virtual water flows are lacking. In this study, we calculate the green and blue WF of cereal and milled grain products at the county level and then, using trade data, calculate the virtual water flows among the counties. Then, we assess the sustainability of the import by introducing unsustainable import fraction (UIF), which is the ratio of virtual water imported from water-scarce counties to that of total virtual water imported in the form of cereal and milled grains. Finally, we quantify the change in UIF from the 2007–2017 period. A few of the significant insights discovered through this analysis include: (i) most of the cereal and milled grains trade is occurring among neighboring counties; ii) one-third of US counties import 75% or more virtual water from water scarce regions; (iii) in 2017, Texas and Missouri were the largest importer and exporter, respectively; and (iv) the number of counties importing cereals and milled grains from water-scarce counties increased from 2007 to 2017. Recommendations on alleviating the negative effects of the unsustainable import of cereal and milled grain are provided toward the end of the discussion.

Water trading by Aboriginal organisations in NSW, Australia

Markets are a contentious way to manage demand for water because they can produce or exacerbate inequities for small and more vulnerable water holders, including Indigenous peoples. In Australia, which has the world's largest water market in the Murray-Darling Basin (MDB), settler-colonial governments have transformed water law and policy to enable water trading with negligible consideration of the effects on Aboriginal peoples. We present the first Australian study of Aboriginal peoples' interactions with rural water markets, the possibilities, and pitfalls of market participation, enabling and limiting factors, and the power relations underpinning the establishment and ongoing operation of this water allocation mechanism. From interviews with representatives of 13 Aboriginal organisations who held water entitlements, including ten that participated in MDB water markets during 2004–2018, we found that water trade activity and the number of individual Aboriginal water sales generally increased. Organisations traded as sellers on the (temporary) allocation market, generating revenue that was valued because it was relatively easy to obtain, with fewer external restrictions than income from government grants. Aboriginal organisations aspired to use their water on their own estates and for their own purposes, however, due to what we term a ‘water trading trap’, this was rarely feasible. In addition to increasing the water holdings of Aboriginal organisations, water rights restitution programs and policies need to address the lack of capital (including productive land and infrastructure) and capacity that prevents Aboriginal organisations from using their water to pursue wider aspirations, including building an asset base or using water for environmental and cultural purposes.

An Economic Model of Spatial and Temporal Water Trade in the Australian Southern Murray‐Darling Basin

AbstractWithin the Australian southern Murray‐Darling Basin (sMDB) water markets have become a key institutional response to water scarcity and environmental problems. These markets facilitate trading of water among many users and across multiple connected regions. Increasingly, these markets also support intertemporal transfers via the carryover of user water allocations within public water storages. While trading can improve the spatial allocation of water, carryover can improve the temporal allocation by ensuring storage reserves reflect prevailing user preferences. This paper presents an economic model of water markets and irrigated agriculture in the sMDB. A reduced‐form statistical model of water demand is estimated using historical irrigation and water market data. This statistical model is placed within an economic partial‐equilibrium framework accounting for both interregional trade and interyear carryover. The model is solved numerically for a dynamic market equilibrium given assumptions over future stochastic water supplies. Out‐of‐sample tests show the model can realistically simulate water market prices and irrigation activity across the basin. The model is applied to estimate the economic benefits of interregional water trading and interyear carryover. Results show around a third of the economic benefits of water markets in the region can be attributed to interyear carryover.

International corporations trading Brazilian soy are keystone actors for water stewardship

Transnational corporations play a major, but poorly constrained, role in reallocating global water resources. Here, we couple high-resolution, company-specific trade data with hydrological and crop models to estimate the virtual water trade of the top 9 transnational corporations that trade Brazilian soy. We identify 4429 virtual water flows connecting 1620 Brazilian municipalities with the top-10 soy importing countries and find that the total virtual water flow increased from 43 billion m3 to 100 billion m3 between 2004 and 2018. We find that the largest soy traders displace on average twice as much virtual water as top-importing countries, excluding China. For example, in 2018 one transnational corporation exported 15 Gm3, almost tripling the Netherlands’s virtual water import (the second largest importer at about 5 Gm3). Our findings highlight the importance of transnational corporations for achieving water stewardship and sustainable supply chains to support water resource security at municipal and international scales.

Driving forces and variation in water footprint before and after the COVID-19 lockdown in Fujian Province of China

The COVID-19 outbreak has injured the global industrial supply chain, especially China as the world's largest manufacturing base. Since 2020, China has implemented a rigorous lockdown policy, which has sternly damaged sectoral trade in export-oriented coastal areas. Fujian Province, which mainly processes imported materials, has a more profound influence. Although the COVID-19 lockdown has had some detrimental consequences on the world economy, it also had some favorable benefits on the global ecology. Previous studies have shown that the lockdown has altered the physical water quantity and quality, but the lack of total, virtual, and physical water research that combines water quantity and water quality simultaneously to pinpoint the subject and responsibility of water resources consumption and pollution. This research quantified the physical, virtual, and total water consumption and water pollution among 30 sectors in Fujian Province based on the theory of water footprint and the Economic Input-Output Life Cycle Assessment model. SDA model was then used to investigate the socioeconomic elements that underpin variations in the water footprint. The results show that after the lockdown, the physical water quantity and the physical grey WF in Fujian Province decreased by 2.6 Gm3 (−6.7%) and 0.4 Gm3 (−1.3%) respectively. The virtual water quantity decreased by 2.3 Gm3 (−4.5%), whereas the virtual grey WF rose by 1.5 Gm3 (4.3%). The total water quantity dropped by 3.3 Gm3 (−4.9%), while the grey WF increased by 1.2 Gm3 (2.5%), i.e. the COVID-19 lockdown decreases physical water quantity and improves local water quality. More than 50% of the water comes from virtual water trade outside the province (virtual water is highly dependent on external), and around 60% of the grey WF comes from physical sewage in the province. The COVID-19 lockdown reduced water outsourcing across the province (paid nonlocally decrease) but increased pollution outsourcing (paid nonlocally increase). And gross capital formation's contribution to the growth in water footprint will continue to rise. As a result, this study suggested that Fujian should take advantage of sectoral trade network to enhance the transaction of green water-intensive intermediate products, reduce the physical water consumption of blue water-intensive sectors, and reduce the external dependence on water consumption. Achieving the shared responsibility of upstream and downstream water consumption and reducing the external dependence on water in water-rich regions is crucial to solving the world's water problems. This research provides empirical evidence for the long-term effects of COVID-19 lockdown on the physical and virtual water environment.

Research on the association of China-US virtual water trade based on hypothesis extraction method.

Based on the EORA input-output tables from 2006 to 2016, this paper divided 189 countries in the world into three economies (China, the USA, and other countries) and used the hypothetical extraction method to calculate the virtual water trade volume of the three economies in the Sino-US bilateral trade. Combining with the analysis of the global value chain, the following conclusions were drawn: (1) the virtual water trade volume exported by China and the USA showed an overall increasing trend. The virtual water trade volume exported by the USA was far less than that of China, but more virtual water was transferred through trade. (2) Compared with intermediate products, China's virtual water exports of final products were larger, but the USA was the opposite. (3) Among the three major industrial sectors, the secondary sector was the largest virtual water export sector in China, but it was the primary sector in the USA that had the largest volume of. (4) Bilateral trade had brought environmental disadvantages to China, but this situation was gradually improving.

Risk of stream loss from changing irrigation, climate and groundwater extraction on the southern riverine plain of the Murray-Darling Basin in south-eastern Australia

ABSTRACTThe rivers of the south-eastern Murray-Darling Basin (MDB) and the associated irrigation areas of the southern riverine plain (SRP) in south-eastern Australia have undergone major hydrological changes over the last 30 years. These include a period of lower rainfall; a rebalance of surface water diversions between consumptive and environmental water uses under the MDB Basin Plan, improvements in water infrastructure; water trade out of the region; and falling groundwater levels. All these changes increase losses from streams to groundwater systems; potentially leading to the need for greater releases from dams to maintain baseflow in the major rivers. Baseflow is important for conveyance of water, water quality and baseflow-dependent ecosystems during dry periods. Hydrological changes in the SRP will reduce the streamflow by 2029–30 by an estimated 80 to 320 GL/yr. Further hydrological changes by 2029–30 will reduce the streamflow by another 50 GL/yr in the following decade. This is the first assessment of the cumulative stream impacts of the SRP and is relatively lower than previous assessments for single drivers. The current approach of mitigating unexpected losses is to increase conveyance loss budgets as required. This could be extended to mitigate the lower end of potential impacts; but further steps to reduce losses may be required towards the upper end. Further actions include a review of extraction limits for surface water and groundwater, trigger levels, and a greater shift towards conjunctive water management. Groundwater extraction, which has dominated impacts, is increasing from a relatively low proportion of the extraction limit in Goulburn-Murray Sedimentary Plain and shallow aquifers of the SRP. Over time, climate change will become more dominant as a driver. Most monitoring required to support mitigation already exists, but data is not collated or reported in a form relevant for stream impacts. Modelling also needs to be updated with reporting of more relevant outputs.

Telecoupling China's City-Level Water Withdrawal with Distant Consumption.

Trade causes the geospatial separation of production and consumption, which drives telecoupling between resource utilization and distant consumption. While benefiting the economy, trade can also exacerbate resource use inequality among regions. Here, we propose telecoupled water withdrawal (TWW) to examine the impact of distant consumption on local water resources, defined as local water withdrawal driven remotely by consumption in other regions. We characterize the TWW in China in 2015 at the city level (350 cities) using a nested multiregional input-output model. We find that approximately 20% of TWW is linked to foreign consumption, more than a quarter of which is driven by the United States. Moreover, cities with high TWW are concentrated on the Southeast coast and in Northwest China. Cities in Xinjiang province (Northwest China) account for 12% of the national TWW but only 0.7% of China's GDP. Our findings shed light on the telecoupling of pressure on local water resources in China cities and distant consumption at the global scale, calling for joint efforts by the contributors and beneficiaries of TWW to ensure the synergistic sustainability of water resources and trade.

Analysis of Virtual Water Flow Patterns and Their Drivers in the Yellow River Basin

Virtual water flows have a profound impact on the natural water system of a country or region, and they may help conserve local water resources or exacerbate water scarcity in some areas. However, current research has only focused on the measurement of virtual water flows, without analysis of the causes of virtual water flow patterns. This study first obtained virtual water flow patterns across provinces by constructing a multi-regional input–-output (MRIO) model of the Yellow River basin in 2012 and 2017, and then analyzed its driving factors by applying the extended STIRPAT model to provide directions for using virtual water trade to alleviate water shortages in water-scarce areas of the basin. We found the following: (1) The Yellow River basin as a whole had a net virtual water inflow in 2012 and 2017, and the net inflow has increased from 2.14 billion m3 to 33.67 billion m3. (2) Different provinces or regions assume different roles in the virtual water trade within the basin. (3) There is an obvious regional heterogeneity in the virtual water flows in different subsectors. (4) Per capita GDP, tertiary industry contribution rate, consumer price index, and water scarcity are the main positive drivers of virtual water inflow in the Yellow River Basin provinces, while primary industry contribution rate, per capita water resources, and water use per unit arable area promote virtual water outflow. The results of this paper present useful information for understanding the driving factors of virtual water flow, which could promote the optimal allocation of water resources in the Yellow River basin and achieve ecological protection and high-quality development in this area.

An economic assessment of options for operating within plantation forestry water entitlements and tightening cap and trade policy

AbstractThe Green Triangle (GT) region of southern Australia is one of only two jurisdictions globally to licence plantation forestry's groundwater use. In response to declines in groundwater resources caused by historical plantation expansion, reductions in forest water allocations (~50%) are likely for some parts of the region, presenting novel challenges for forest managers in maintaining revenues and timber flows. This article presents a mathematical programming model evaluation of water trade opportunities for plantation forest owners to adapt to reduced water entitlements and explores how tightening groundwater policy could affect forestry returns and land use mix for the region. Results suggest that even absent opportunity to sell water, relatively limited 11% reduction in return could be expected for a large (−50%) water entitlement and (−48%) land‐use change out of forestry. Results suggest that opportunities for forestry companies to sell water entitlements may allow them to maintain or even increase combined returns from forestry and water sales. Whilst the results highlight the adaptive capacity of the plantation forestry sector to operate within reduced water entitlement, a significant sectoral and regional economy adjustment would be likely. The discussion focusses on the potential to realise optimisation model‐identified adaptation opportunities accounting for real‐world thin markets, transaction costs and market friction.

Water trading as a tool to combat economic losses in agriculture under climate change

Water trading as a tool to combat economic losses in agriculture under climate change