Hostname: page-component-848d4c4894-v5vhk Total loading time: 0 Render date: 2024-07-05T11:31:52.118Z Has data issue: false hasContentIssue false
  • English
  • Français

Virtual water and the inequality in water content of consumption

Published online by Cambridge University Press:  21 March 2022

Mohamad Afkhami ,
Thomas Bassetti ,
Hamed Ghoddusi  and
Filippo Pavesi Open the ORCID record for Filippo Pavesi [Opens in a new window]
Mohamad Afkhami
Affiliation:
Blend 360, Columbia, MD, USA
Thomas Bassetti
Affiliation:
Department of Economics and Management “Marco Fanno”, University of Padova, Padova, Italy
Hamed Ghoddusi
Affiliation:
Orfalea College of Business, California Polytechnic State University, San Luis Obispo, CA, USA
Filippo Pavesi*
Affiliation:
Carlo Cattaneo University (LIUC), Castellanza, VA, Italy Stevens Institute of Technology, Hoboken, NJ, USA
*
*Corresponding author. E-mail: fpavesi@liuc.it
Get access Rights & Permissions [Opens in a new window]

Abstract

We present evidence that international trade may exacerbate the initial unequal distribution of hydric resources. This result is driven by the fact that countries exporting agricultural goods are relatively abundant (with respect to capital) in the combined availability of water and arable land but, in absolute terms, scarce in capital and not richer in water in comparison to more developed ones. Due to both the scarcity of capital and the lower relative price of natural resources with respect to capital, the total value of production in these developing countries is modest, implying that international trade can lead to a less even distribution of the water content of consumption. Policies sustaining water prices and, more generally, those of natural resources (or lower capital costs) may contribute to offsetting this effect and allow for trade to play a positive role in reducing the uneven distribution of water endowments.

Keywords

global water tradeHeckscher-Ohlininternational tradevirtual waterwater crisiswater inequality

JEL classification

O13: Agriculture • Natural Resources • Energy • Environment • Other Primary Products Q56: Environment and Development • Environment and Trade • Sustainability • Environmental Accounts and Accounting • Environmental Equity • Population Growth Q25: Water Q27: Issues in International Trade F14: Empirical Studies of Trade F18: Trade and Environment
Type
Research Article
Information
Environment and Development Economics , Volume 27 , Issue 5 , October 2022 , pp. 470 - 490
Copyright
Copyright © The Author(s), 2022. Published by Cambridge University Press

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Acemoglu, D (1996) A microfoundation for social increasing returns in human capital accumulation. Quarterly Journal of Economics 111, 779–804.CrossRefGoogle Scholar
Allan, JA (1997) ‘Virtual water’: a long term solution for water short Middle Eastern economies? Water Issues Group, School of Oriental & African Studies, University of London. Available at https://www.soas.ac.uk/water/publications/papers/file38347.pdf.Google Scholar
Allan, JA (1998) Virtual water: a strategic resource. Ground water 36, 545–547.CrossRefGoogle Scholar
Allan, JA (2003) Virtual water – the water, food, and trade nexus: useful concept or misleading metaphor? Water International 28, 106–113.CrossRefGoogle Scholar
Ansink, E (2010) Refuting two claims about virtual water trade. Ecological Economics 69, 2027–2032.CrossRefGoogle Scholar
Antonelli, M and Sartori, M (2015) Unfolding the potential of the virtual water concept. What is still under debate? Environmental Science & Policy 50, 240–251.CrossRefGoogle Scholar
Antweiler, W and Trefler, D (2002) Increasing returns and all that: a view from trade. American Economic Review 92, 93–119.CrossRefGoogle Scholar
Aw, B-Y (1983) The interpretation of cross-section regression tests of the heckscher-ohlin theorem with many goods and factors. Journal of International Economics 14, 163–167.CrossRefGoogle Scholar
Bae, J and Dall'Erba, S (2018) Crop production, export of virtual water and water-saving strategies in arizona. Ecological Economics 146, 148–156.CrossRefGoogle Scholar
Barnett, T, Adam, J and Lettenmaier, D (2005) Potential impacts of a warming climate on water availability in snow-dominated regions. Nature 438, 303–309.CrossRefGoogle ScholarPubMed
Bartlesman, E and Gray, WB (1996) The NBER manufacturing productivity database. Technical Working Paper 205, National Bureau of Economic Research, Cambridge, MA.CrossRefGoogle Scholar
Carr, J, Seekell, DA and D'Odorico, P (2015) Inequality or injustice in water use for food? Environmental Research Letters 10, 024013.CrossRefGoogle Scholar
Deardorff, AV (1982) The general validity of the heckscher-ohlin theorem. The American Economic Review 72, 683–694.Google Scholar
Debaere, P (2014) The global economics of water: is water a source of comparative advantage? American Economic Journal: Applied Economics 6, 32–48.Google Scholar
Dietzenbacher, E and Velázquez, E (2007) Analysing andalusian virtual water trade in an input–output framework. Regional Studies 41, 185–196.CrossRefGoogle Scholar
D'Odorico, P, Carr, JA, Laio, F, Ridolfi, L and Schleussne, SV (2014) Feeding humanity through global food trade. Earth's Future 2, 468–469.CrossRefGoogle Scholar
Famiglietti, JS (2014) The global groundwater crisis. Nature Climate Change 4, 945–948.CrossRefGoogle Scholar
Feenstra, RC, Lipsey, RE and Bowen, HP (1997) World trade flows, 1970–1992, with production and tariff data. Technical Report 5910, National Bureau of Economic Research, Cambridge, MA.CrossRefGoogle Scholar
Feng, K, Siu, YL, Guan, D and Hubacek, K (2012) Assessing regional virtual water flows and water footprints in the Yellow River basin, China: a consumption based approach. Applied Geography 32, 691–701.CrossRefGoogle Scholar
Forstner, H (1985) A note on the general validity of the Heckscher-Ohlin theorem. The American Economic Review 75, 844–849.Google Scholar
Fracasso, A (2014) A gravity model of virtual water trade. Ecological Economics 108, 215–228.CrossRefGoogle Scholar
Fracasso, A, Sartori, M and Schiavo, S (2016) Determinants of virtual water flows in the Mediterranean. Science of the Total Environment 543, 1054–1062.CrossRefGoogle ScholarPubMed
Galor, O and Moav, O (2004) From physical to human capital accumulation: inequality and the process of development. The Review of Economic Studies 71, 1001–1026.CrossRefGoogle Scholar
Gleick, PH (2014) Water, drought, climate change, and conflict in Syria. Weather, Climate, and Society 6, 331–340.CrossRefGoogle Scholar
Gleick, PH, Cooley, H, Morikawa, M, Morrison, J and Cohen, MJ (2009) The World's Water 2008–2009: The Biennial Report on Freshwater Resources, Vol. 6. Washington, DC: Island Press.Google Scholar
Guan, D and Hubacek, K (2007) Assessment of regional trade and virtual water flows in China. Ecological Economics 61, 159–170.CrossRefGoogle Scholar
Hanjra, MA and Qureshi, ME (2010) Global water crisis and future food security in an era of climate change. Food Policy 35, 365–377.CrossRefGoogle Scholar
Harkness, J (1983) The factor-proportions model with many nations, goods and factors: theory and evidence. The Review of Economics and Statistics 65, 298–305.CrossRefGoogle Scholar
Johnson, N, Revenga, C and Echeverria, J (2001) Managing water for people and nature. Science (New York, N.Y.) 292, 1071–1072.CrossRefGoogle ScholarPubMed
Jury, WA and Vaux, HJ Jr (2007) The emerging global water crisis: managing scarcity and conflict between water users. Advances in Agronomy 95, 1–76.CrossRefGoogle Scholar
Kumar, MD and Singh, OP (2005) Virtual water in global food and water policy making: is there a need for rethinking? Water Resources Management 19, 759–789.CrossRefGoogle Scholar
Leamer, EE and Bowen, HP (1981) Cross-section tests of the Heckscher-Ohlin theorem: comment. The American Economic Review 71, 1040–1043.Google Scholar
Lee, AB, Nandler, B and Wasserman, L (2008) Treelets – an adaptive multi-scale basis for sparse unordered data. Discussions. The Annals of Applied Statistics 2, 435–500.Google Scholar
Lenzen, M, Moran, D, Bhaduri, A, Kanemoto, K, Bekchanov, M, Geschke, A and Foran, B (2013) International trade of scarce water. Ecological Economics 94, 78–85.CrossRefGoogle Scholar
Levchenko, AA (2007) Institutional quality and international trade. The Review of Economic Studies 74, 791–819.CrossRefGoogle Scholar
Mehta, L (2014) Water and human development. World Development 59, 59–69.CrossRefGoogle Scholar
Mekonnen, MM and Hoekstra, AY (2011) National water footprint accounts: the green, blue and grey water footprint of production and consumption. Value of Water Research Report Series 50, Delft: UNESCO-IHE Institute for Water Education.CrossRefGoogle Scholar
Merett, S (2003) Virtual water and occam's razor. Water International 28, 103–105.CrossRefGoogle Scholar
Misra, A (2014) Climate change and challenges of water and food security. International Journal of Sustainable Built Environment 3, 153–165.CrossRefGoogle Scholar
Naghavi, A (2010) Trade sanctions and green trade liberalization. Environment and Development Economics 15, 379–394.CrossRefGoogle Scholar
Nunn, N (2007) Relationship-specificity, incomplete contracts, and the pattern of trade. The Quarterly Journal of Economics 122, 569–600.CrossRefGoogle Scholar
Perry, C (2014) Water footprints: path to enlightenment, or false trail? Agricultural Water Management 134, 119–125.CrossRefGoogle Scholar
Porkka, M, Guillaume, JH, Siebert, S, Schaphoff, S and Kummu, M (2017) The use of food imports to overcome local limits to growth. Earth's Future 5, 393–407.CrossRefGoogle Scholar
Reimer, JJ (2012) On the economics of virtual water trade. Ecological Economics 75, 135–139.CrossRefGoogle Scholar
Romalis, J (2004) Factor proportions and the structure of commodity trade. The American Economic Review 94, 67–97.CrossRefGoogle Scholar
Rosa, L, Rulli, MC, Davis, KF, Chiarelli, DD, Passera, C and D'Odorico, P (2018) Closing the yield gap while ensuring water sustainability. Environmental Research Letters 13, 104002.CrossRefGoogle Scholar
Sayan, S (2003) H-O for H2O: can the Heckscher-Ohlin framework explain the role of free trade in distributing scarce water resources around the Middle East? Review of Middle East Economics and Finance 1, 215–230.CrossRefGoogle Scholar
Schleussner, C-F, Donges, JF, Donner, RV and Schellnhuber, HJ (2016) Armed-conflict risks enhanced by climate-related disasters in ethnically fractionalized countries. Proceedings of the National Academy of Sciences 113, 9216–9221.CrossRefGoogle ScholarPubMed
Seekell, D, D'Odorico, P and Pace, M (2011) Virtual water transfers unlikely to redress inequality in global water use. Environmental Research Letters 6, 024017.CrossRefGoogle Scholar
Suweis, S, Konar, M, Dalin, C, Hanasaki, N, Rinaldo, A and Rodriguez-Iturbe, I (2011) Structure and controls of the global virtual water trade network. Geophysical Research Letters 38, L10403.CrossRefGoogle Scholar
Taylor, MS (2005) Unbundling the pollution haven hypothesis. Advances in Economic Analysis & Policy 4, 1–28.Google Scholar
Wichelns, D (2010) Virtual water: a helpful perspective, but not a sufficient policy criterion. Water Resources Management 24, 2203–2219.CrossRefGoogle Scholar
Yang, H and Zehnder, AJ (2002) Water scarcity and food import: a case study for southern Mediterranean countries. World Development 30, 1413–1430.CrossRefGoogle Scholar
Yang, H and Zehnder, AJ (2007) Virtual water: an unfolding concept in integrated water resources management. Water Resources Research 43, W12301.CrossRefGoogle Scholar
Supplementary material: PDF

Afkhami et al. supplementary material

Afkhami et al. supplementary material

Download Afkhami et al. supplementary material(PDF)
PDF 348.3 KB