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Virtual Water Trade and Savings in Agriculture

Increasing environmental pressures have prompted countries to seek ways of saving domestic water resources by utilizing virtual water imports. Overall, national water savings can lead to a reduction in water consumption at a global stage when areas with high water production direct their resources to areas with low water production. Consequently, there is a general reduction in water footprint in both high and low water production areas. The effects of a shift to local food production on global water savings would be significant. For instance, local food production would exert a water consumption demand of approximately 2400 billion cubic meters per year on a global scale. However, virtual water imports have enabled global water consumption to fall to about 2035 billion cubic meters per year, thereby saving the vital resource by about 365 billion cubic meters per year (Kadlec and Wallace 119). These savings in water footprint are crucial to the sustenance of agricultural production and the survival of global ecosystems.

Nevertheless, there is a tendency for policymakers to concentrate on domestic virtual water dynamics instead of global savings in water consumption. This means that most water-scarce countries do their best to conserve their resources by turning to global virtual water trade. Virtual water trade occurs when countries reduce water consumption by importing goods that require a lot of water to produce. This essay discusses the savings that are associated with virtual water trade in agriculture. The essay also touches on the effects of a shift to local agricultural production on global water savings.

Either by nature or by design, virtual water trade between countries has provided means of conserving water resources worldwide. The theoretical approach to this phenomenon proposes three levels in the course of water efficiency (Hoekstra and Hung 45). There is a local level of water consumption and efficiency, and the pricing of water-based resources often controls it. This first level of efficiency is responsible for promoting innovations that lead to water savings and creating awareness among consumers. The second level of efficiency occurs at the river basin or catchment level, and it involves redirecting water resources to the uses that have the highest output. The third level is the global level, and it involves countries gauging their competitive position in terms of water needs. Therefore, countries can harness their comparative advantage/disadvantage when it comes to water accessibility with the view of encouraging or discouraging domestic usage. Most stakeholders have concentrated their efforts on virtual water trading to the river basin levels and not the global stage. For example, virtual water research with respect to China and European river basins has been extended, while similar studies on intercontinental trades are rare.

When it comes to virtual water trade, the basic principle is that each country should concentrate on producing commodities that come with a substantial comparative advantage. Consequently, such a country would realize savings in terms of the cost and resource-based advantages that come with importing virtual water. However, “it is still important for a country to weigh the advantages and disadvantages of the virtual water trade, including the opportunity cost of its water resources” (Wichelns 52). In some instances, certain virtual water trades might be more useful than others because they include higher opportunity costs regarding water savings. For example, the element of green or blue water is a central premise in the virtual water trade. The green water represents rainfall utilization in crop production, while blue water involves a higher opportunity cost in ventures such as irrigation. On the other hand, utilizing green water gives countries a considerable comparative advantage because it comes with a lower opportunity cost.

The water savings associated with virtual water imports imply that certain resources are saved while others are lost. For instance, when water is used to produce goods consumed in other countries, this implies that the resource is ‘lost.’ However, losses in virtual water resources are only economically negative when “their benefits in terms of foreign earning do not outweigh the costs in terms of opportunity cost and the negative effects that are realized at the production site” (Vanham and Bidoglio 65). In this regard, recent research findings indicate that some of the countries with the most significant net water losses are the United States, Argentina, Australia, Canada, Thailand, and Brazil (Oki and Kanae 1068). Water losses are realized because of several factors when it comes to agricultural production. For example, in the United States, virtual water losses are realized where agricultural production is concentrated on oil-bearing and cereal crops because these products require both green and blue water. It is important to note that environmental costs are often not factored in the overall costs of exports. Most countries only concentrate on gross monetary savings in regards to virtual water imports or exports.

Crop and livestock products make up at least 408 products, all of which form part of the virtual water trade. Researchers use these estimates to put the yearly global water savings at approximately 30% of the total international virtual water flows concerning agricultural products (Vanham and Bidoglio 65). Research indicates that virtual water trades between Japan and the USA, on the one hand, and Mexico and the USA, on the other hand, contribute to the biggest global water savings. Furthermore, cereal crops are the major contributors to global water savings.

A shift to local food production is set to have a myriad of effects on global water resources. On the national front, local food production puts pressure on other resources such as land, environment, and water. Local food production increases dependency on irrigated land and leads to wastage in resource-rich water basins. Another possible effect of shifting to local production is that this trend tends to pressure blue waters while underutilizing green water. Virtual water trade has the potential to improve the efficiency of agricultural production and save global water resources. However, local food production is an imbalanced system that pushes the local agenda and puts pressure on global water resources. Another glaring problem in the quest for local food production is climate change. Research indicates that there are definite cycles regarding water usage and crop production (Hanjra and Qureshi, 368). Trade interconnections are a reality globally, and a shift in local food production does not make sense in the context of globalization.

Water savings of approximately 14% are realized in the course of virtual water trade. The globalization of the water trade also enables stakeholders to balance local and imported food production without an incursion into natural resources. Nevertheless, it is important to note that while water savings are deliberate at the local level, there is a lack of solid plans for managing water consumption at the international level.

Works Cited

Hanjra, Munir, and Ejaz Qureshi. “Global Water Crisis and Future Food Security in an Era of Climate Change.” Food Policy, vol. 35, no. 5, 2010, pp. 365-377.

Hoekstra, Arjen, and Pham Hung. “Globalisation of Water Resources: International Virtual Water Flows in Relation to Crop Trade.” Global Environmental Change, vol. 15, no. 1, 2005, pp. 45-56.

Kadlec, Robert, and Scott Wallace. Treatment Wetlands. CRC press, 2008.

Oki, Taikan, and Shinjiro Kanae. “Global Hydrological Cycles and World Water Resources.” Science, vol. 313, no. 5790, 2006, pp. 1068-1072.

Ruddell, Benjamin, et al. “Embedded Resource Accounting for Coupled Natural‐Human Systems: An Application to Water Resource Impacts of the Western US Electrical Energy Trade.” Water Resources Research, vol. 50, no.10, 2014, pp. 7957-7972.

Vanham, Daniel, and Gerald Bidoglio. “The Water Footprint of Agricultural Products in European River Basins.” Environmental Research Letter, vol. 9, no. 6, 2014, pp. 64-67.

Wichelns, Dennis. “The Policy Relevance of Virtual Water can be Enhanced by Considering Comparative Advantages.” Agricultural Water Management, vol. 66, no. 1, 2004, pp. 49-63.

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