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Hoekstra and Hung Virtual water trade

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VIRTUAL WATER TRADE AQUANTIFICATION OF VIRTUAL

WATER FLOWS BETWEEN NATIONS IN RELATION TO INTERNATIONAL CROP TRADE

A.Y. HOEKSTRA P.Q. HUNG

SEPTEMBER 2002

VALUE OF WATER RESEARCH REPORT SERIES NO. 11

IHE D ELFT P.O. B OX 3015 2601 DA D ELFT THE NETHERLANDS

Contact author: A.Y. Hoekstra Tel. +31 15 2151828 E-mail [email protected]

Value of Water Research Report Series1. Exploring methods to assess the value of water: A case study on the Zambezi basin. A.K. Chapagain February 2000 2. Water value flows: A case study on the Zambezi basin. A.Y. Hoekstra, H.H.G. Savenije and A.K. Chapagain March 2000 3. The water value-flow concept. I.M. Seyam and A.Y. Hoekstra December 2000 4. The value of irrigation water in Nyanyadzi smallholder irrigation scheme, Zimbabwe. G.T. Pazvakawambwa and P. van der Zaag January 2001 5. The economic valuation of water: Principles and methods J.I. Agudelo August 2001 6. The economic valuation of water for agriculture: A simple method applied to the eight Zambezi basin countries J.I. Agudelo and A.Y. Hoekstra August 2001 7. The value of freshwater wetlands in the Zambezi basin I.M. Seyam, A.Y. Hoekstra, G.S. Ngabirano and H.H.G. Savenije August 2001 8. Demand management and Water as an economic good: Paradigms with pitfalls H.H.G. Savenije and P. van der Zaag October 2001 9. Why water is not an ordinary economic good H.H.G. Savenije October 2001 10. Calculation methods to assess the value of upstream water flows and storage as a function of downstream benefits I.M. Seyam, A.Y. Hoekstra and H.H.G. Savenije October 2001 11. Virtual water trade: A quantification of virtual water flows between nations in relation to international crop trade A.Y. Hoekstra and P.Q. Hung September 2002

AcknowledgementThe work underlying this report has been sponsored by the National Institute of Public Health and the Environment (RIVM), Bilthoven, the Netherlands. The research is part of the research programme of Delft Cluster. We would like to thank Ton Bresser (RIVM) and Huub Savenije (IHE) for their valuable inputs.

Contents

Summary...................................................................................................................................................................................7 1. Introduction .........................................................................................................................................................................9 1.1. The economics of water use........................................................................................................................................9 1.2. Virtual water trade......................................................................................................................................................10 1.3. The objective of this study........................................................................................................................................11 2. Method................................................................................................................................................................................ 13 2.1. Calculation of specific water demand per crop type ............................................................................................13 2.2. Calculation of virtual water trade flows and the national virtual water trade balance....................................14 2.3. Calculation of a nations water footprint.............................................................................................................15 2.4. Calculation of national water scarcity, water dependency and water self-sufficiency ...................................16 3. Data sources ...................................................................................................................................................................... 19 4. Specific water demand per crop type per country................................................................................................. 23 5. Global trade in virtual water....................................................................................................................................... 25 5.1. International trade in virtual water...........................................................................................................................25 5.1.1. Overview of international virtual water trade.............................................................................................. 25 5.1.2. Virtual water trade balance per country....................................................................................................... 28 5.1.3. International virtual water trade by product................................................................................................ 34 5.2. Inter-regional trade in virtual water.........................................................................................................................35 5.2.1. Inter-regional virtual water trade relations................................................................................................. 35 5.2.2. Virtual water trade balance per world region ............................................................................................. 40 5.2.3. Gross virtual water trade between countries within regions..................................................................... 50 5.3. Intercontinental trade in virtual water.....................................................................................................................51 5.3.1. Intercontinental virtual water trade relations.............................................................................................. 51 5.3.2. Virtual water trade balance per continent.................................................................................................... 53 5.3.3. Gross virtual water trade between countries within continents................................................................ 54 6. Virtual water trade of nations in relation to national water needs and availability..................................... 55 6.1. Water footprints, water scarcity, water self-sufficiency and water dependency of nations ..........................55 6.2. The relation between water scarcity and water dependency ...............................................................................60 7. Concluding remarks....................................................................................................................................................... 63 References .............................................................................................................................................................................. 65

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Appendices Crop water requirements (m3 /ha) Actual crop yields (ton/ha) in 1999 Specific water demands (m3 /ton) in 1999 FAO guidelines on crop water requirements in mm [=10 m3 /ha] Gross virtual water import per country for the years 1995-1999 (106 m3 ) Gross virtual water export per country for the years 1995-1999 (106 m3 ) Net virtual water import per country for the years 1995-1999 (106 m3 ) Classification of countries into thirteen world regions Gross virtual water trade between and within regions (Gm3 )

I. II. III. IV. Va. Vb. Vc. VI. VII.

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SummaryThe water that is used in the production process of an agricultural or industrial product is called the 'virtual water' contained in the product. A water-scarce country might wish to import products that require a lot of water in their production (water-intensive products) and export products or services that require less water (waterextensive products). This implies net import of virtual water (as opposed to import of real water, which is generally too expensive) and will relieve the pressure on the nations own water resources. Until date little is known on the actual volumes of virtual water trade flows between countries.

The objective of this study is to quantify the volumes of all virtual water trade flows between nations in the period 1995-1999 and to put the virtual water trade balances of nations within the context of national water needs and water availability. The study has been limited to the quantification of virtual water trade flows related to international crop trade.

The basic approach has been to multiply international crop trade flows (ton/yr) by their associated virtual water content (m3 /ton). The required crop trade data have been taken from the United Nations Statistics Division in New York. The required data on virtual water content of crops originating from different countries have been estimated on the basis of various FAO databases (CropWat, ClimWat, FAOSTAT).

The calculations show that the global volume of crop-related virtual water trade between nations was 695 Gm3 /yr in average over the period 1995-1999. For comparison: the total water use by crops in the world has been estimated at 5400 Gm3 /yr (Rockstrm and Gordon, 2001). This means that 13% of the water used for crop production in the world is not used for domestic consumption but for export (in virtual form). This is the global percentage; the situation strongly varies between countries.

Considering the period 1995-1999, the countries with largest net virtual water export are: United States, Canada, Thailand, Argentina, and India. The countries with largest net virtual water import in the same period are: Sri Lanka, Japan, the Netherlands, the Republic of Korea, and China.

For each nation of the world a water footprint has been calculated (a term chosen on the analogy of the ecological footprint). The water footprint, equal to the sum of the domestic water use and net virtual water import, is proposed here as a measure of a nations actual app

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