Environmental Engineering Reference
In-Depth Information
productivities, availability of land, domestic subsidies to agriculture, import taxes, pro-
duction surpluses and associated export subsidies, etc. It will be hard to
fi
nd evidence that
regional water abundance bene
ts the export of water-intensive commodities and that
regional water scarcity promotes the import of water-intensive commodities.
According to international trade theory that goes back to Ricardo ([1817] 2006),
nations can gain from trade if they specialize in the production of goods and services in
which they have a comparative advantage, while importing goods and services in which
they have a comparative disadvantage. The meaning of the principle for the
fi
fi
eld of water
resources has been elaborated by Wichelns (2004). The economic e
ciency of trade in a
water-intensive commodity between two countries should be evaluated based on a com-
parison of the opportunity costs of producing the commodity in each of the trading
nations. Export of a water-intensive commodity is attractive if the opportunity cost of
producing the commodity is comparatively low. This is the case when there is a relatively
high production potential for the water-intensive commodity due to, for example, relative
abundance of water and/or a relatively high water productivity (yield per unit of water
input) in the country. Import of a water-intensive commodity (instead of producing it
domestically) is attractive if the opportunity cost of producing the commodity is com-
paratively high, for example because water is relatively scarce and/or water productivity
in the country is low.
The most convincing research providing evidence that water availability in
uences
international trade has been carried out by Yang et al. (2003; 2007). As they have quanti-
tatively shown, cereal imports have played a crucial role in compensating water de
fl
cits in
various water-scarce countries. They demonstrate that below a certain threshold in water
availability, an inverse relationship can be identi
fi
ed between a country's cereal import and
its per capita renewable water resources. In the early 1980s the threshold was at about 2000
m
3
per capita per year. At the end of the 1990s it had declined to about 1500 m
3
per capita
per year. Countries with less water than the threshold cannot do without the import of
staple foods. The threshold has declined over the past couple of decades due to the
improvement in water productivities and the expansion of irrigated areas.
There is clear evidence that the trade balance of countries with very low water avail-
ability (per capita) is partly determined by the fact that those countries have a compara-
tive disadvantage in producing water-intensive products. One does not need to be an
economist to see that; the available water resources simply fall short in some countries to
produce the food to survive. Most international trade in the world, however, has little to
do with the intentional trade in water-intensive commodities to countries with low water
availability from countries with higher water availability. The driving force behind inter-
national trade in water-intensive products may be water scarcity in the importing coun-
tries, but more often other factors play a decisive role (Yang et al., 2003; De Fraiture et al.,
2004).
International trade in agricultural commodities depends on many more factors than
fi
di
ff
erences in water scarcity in the trading nations, including di
ff
erences in availability of
land, labor, knowledge and capital, and di
erences in economic productivities in various
sectors. The existence of domestic subsidies, export subsidies, or import taxes in the
trading nations will also in
ff
uence the trade pattern. As a consequence, international
virtual-water transfers usually cannot - or can only partly - be explained on the basis of
di
fl
ff
erences in water availability and productivity.
