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The Role of Scarcity in Global Virtual Water Flows

ZEF - Discussion Papers on Development Policy No. 169

28 Pages Posted: 20 Sep 2012  

Manfred Lenzen

The University of Sydney - Center for Integrated Sustainability Analysis (ISA)

Anik Bhaduri

University of Bonn - Center for Development Research (ZEF)

Daniel D. Moran

Norwegian University of Science and Technology (NTNU)

Keiichiro Kanemoto

Shinshu University

Maksud Bekchanov

Universitaet Bonn

Arne Geschke

The University of Sydney - Center for Integrated Sustainability Analysis (ISA)

Barney Foran

affiliation not provided to SSRN

Date Written: September 18, 2012

Abstract

Recent analyses of the evolution and structure of trade in virtual water revealed that the number of trade connections and volume of virtual water trade have more than doubled over the past two decades, and that developed countries increasingly draw on the rest of the world to alleviate the pressure on their domestic water resources. Our work builds on these studies, but fills three important gaps in the research on global virtual water trade. First, we note that in previous studies virtual water volumes are lumped together from countries experiencing vastly different degrees of water scarcity. We therefore incorporate water scarcity into assessments of virtual water flows. Second, we note that some previous studies assess virtual water networks only in terms of immediate water used for food production, but omit indirect virtual water used throughout the supply chains underlying all traded goods. In our analysis we therefore use input-output analysis to also include indirect virtual water. We note existing conflicting views about whether trade in virtual water can lead to overall savings in global water resources. We re-visit the Heckscher-Ohlin Theorem in the context of direct as well as indirect virtual water in order to determine whether international trade can be seen as a feasible demand management instrument in alleviating water scarcity. We find that the structure of global virtual water networks changes significantly after adjusting for water scarcity. In addition, when indirect virtual water is appraised the Heckscher-Ohlin Theorem can be validated.

Keywords: Virtual water, multi-region input-output analysis, regional aggregation, scarcity, international trade

Suggested Citation

Lenzen, Manfred and Bhaduri, Anik and Moran, Daniel D. and Kanemoto, Keiichiro and Bekchanov, Maksud and Geschke, Arne and Foran, Barney, The Role of Scarcity in Global Virtual Water Flows (September 18, 2012). ZEF - Discussion Papers on Development Policy No. 169. Available at SSRN: https://ssrn.com/abstract=2148413

Manfred Lenzen (Contact Author)

The University of Sydney - Center for Integrated Sustainability Analysis (ISA)

School of Physics, A28
The University of Sydney
Sydney, NSW 2006
Australia

Anik Bhaduri

University of Bonn - Center for Development Research (ZEF) ( email )

Walter-Flex-Str. 3
Bonn, NRW 53113
Germany

Daniel D. Moran

Norwegian University of Science and Technology (NTNU) ( email )

Trondheim NO-7491
Norway

Keiichiro Kanemoto

Shinshu University ( email )

Nagano, 390-8621
Japan

Maksud Bekchanov

Universitaet Bonn ( email )

Regina-Pacis-Weg 3
Postfach 2220
Bonn, D-53012
Germany

Arne Geschke

The University of Sydney - Center for Integrated Sustainability Analysis (ISA)

School of Physics, A28
The University of Sydney
Sydney, NSW 2006
Australia

Barney Foran

affiliation not provided to SSRN ( email )

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