Biewald, A.

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Repositorium für Naturwissenschaften und Technik

of what it takes to use and develop “virtual water” as a consistentconcept from which it is possible to draw sensible conclusionsand policy advice.Getting the Definitions Straight The concept of virtual water and the water footprint are related,but they are not the same. In fact, there are three applicationswhich derive virtual water contents and relate them to interna -tion al trade. First, the concept of virtual water can be used for cal -culating how much water is saved (globally, nationally, or even lo-cally) by international trading of water-intensive produced goods.Second, it can be used to create awareness about water consump-tion by calculating a water footprint which embeds how muchwater was used for the production of the goods consumed by in-dividuals or nations. And third, it can be used to calculate virtualwater trade balances. There is one decisive difference between the first two applica -tions and the third: Whereas the water savings and the water foot-print do not reveal any information about where the virtual wa-ter consumed comes from and are therefore also not able to sayanything about whether the water comes from a water-abundantor water-scarce region or whether the water has been used sus-tainably or not, using virtual water trade balances makes it poten -tially possible to derive such information. Criticism of the wa-ter footprint should therefore not automatically be applied tothe idea of virtual water trade. In their article, Gawel andBernsen do not distinguish between the concept and theapplications of virtual water, but they treat all applica-tions of the virtual water concept – the water footprintas well as the other applications – the same, therebyignoring the important differences between theseapplications. In the following I will only react to the conceptof virtual water including those applications withinformation about the source of virtual water.www.oekom.de/gaia  | GAIA 20/3(2011): 168–170168rik Gawel and Kristina Bernsen set out to review critically theconcept of virtual water (2011, in this issue). They criticize theconcept of virtual water and consequently view the policy adviceand conclusions drawn in parts of the literature as problematic.The authors argue that the concept of virtual water is flawed fortwo reasons: first, because it does not contain important infor-mation on the traded virtual water (neither on the water scarci-ty of the exporting regions, nor on the sustainable use of the wa-ter used for production), and second, because the concept cannotbe used to deduce whether a flow of virtual water from a water-scarce to a water-abundant region (or vice versa) enhances wel-fare or not, since there are scarce resources other than water,such as, e. g., land, capital, or labor, which are decisive in theproduction process of goods.Since it is therefore problematic to say something about thequality and the welfare impact of trade of virtual water, Gawel andBernsen continue to argue that the conclusions and the result-ing policy advice of some authors cannot be trusted. The conclu -sions they criticize state, on the one hand, that trade of virtualwater is problematic (from developing countries to developedcountries and vice versa), and on the other hand, that the unequaldistribution of the “global public good” water leads to problems.Based on these conclusions, both strands of the criticized liter-ature call for trade barriers, either in the form of taxes or in theform of permits to prohibit virtual water trade.In the following I try to rehabilitate the concept of virtual wa-ter by arguing that – while conclusions drawn in some papersbased on the concept of virtual water trade might be misleading– the concept can still be useful. I also try to answer the questionContact: Dr. Anne Biewald | Potsdam Institute for Climate Impact Research(PIK) | Telegraphenberg A51 | 14473 Potsdam | Germany | Tel.: +49 3312882668 | E-Mail: biewald@pik-potsdam.de ©2011 A. Biewald; licensee oekom verlag.This is an article distributed under the terms of the Creative Commons Attribution License(http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution,and reproduction in any medium, provided the original work is properly cited.EGive Virtual Water a Chance! An Attempt to Rehabilitate the ConceptGAIA 20/3 (2011): 168–170 | Keywords: blue and green water, international trade, water scarcityGive Virtual Water a Chance!An Attempt to Rehabilitate the ConceptReaction to E.Gawel, K.Bernsen. 2011. Do We Really Need a Water Footprint?Global Trade,Water Scarcity and the LimitedRole of Virtual Water.GAIA 20/3:162 –167Anne Biewald168_170_Biewald  23.09.2011  19:17 Uhr  Seite 168The Distinction Between Green and Blue Water To make the most of the concept of virtual water another essen-tial piece of information about the traded virtual water is neces-sary: the distinction between “blue” (surface and ground water)and “green” water (rainwater stored in the soil). Whereas greenwater – as important as it might be for ecosystem services suchas carbon sequestration, biodiversity, or climate regulation – canonly be used for agricultural goods (and evaporates back intothe atmosphere after it has gone through the plant), blue water,which in the context of agriculture is mostly irrigation water, canalso be used for a multitude of other purposes (both industrialand domestic). Therefore, importing countries which, if they would not im-port, would produce agricultural goods with green water, do notactually save water when importing, as the green water not usedfor agriculture evaporates back into the atmosphere. On the oth-er hand, countries exporting virtual blue water cannot use thiswater for industrial or domestic purposes.Ten percent of the wa-ter used for agricultural production is irrigation water (Hoff et al.2010). This might not seem a lot, but it has to be considered thatagriculture in water-scarce regions relies on blue water, becausethese are often regions with frequent dry periods in which noother source of water is available, and that these are the regionswhere overexploitation and unsustainable use of blue water isa problem. It therefore can be stated that only by distinguish ingbetween green and blue water in the concept of virtual water itis possible to define the problematic or positive effects of virtu-al water trade. Everything Comes Down to the Right PricingI totally agree that trade flows of virtual water cannot and shouldnot always reflect water scarcity or abundance, since there areother scarce resources involved in the production of water-inten -sive goods, and it might very well maximize total welfare for wa-ter-abundant regions to import virtual water, while equally it mightbenefit all that water-scarce regions export virtual water. Our in-terest should be directed towards regions where water is scarceand is not used sustainably, and which still export virtual water,because these are the regions where trade has the potential toaggravate water scarcity and to worsen local living conditions.GAIA 20/3(2011): 168–170 | www.oekom.de/gaia169FORUMAs Gawel and Bernsen correctly point out, the unsustainableuse of a scarce resource, whether to produce a commodity for ex-port or for domestic uses, lies in the fact that the pricing of thescarce resource in question is wrong: water, for example, mightbe subsidized, and external effects such as the unsustainable useof ground water are not included in the price. Although it is truethat water scarcity problems are local (and would not exist if theprices were right), the reasons for their appearance or worseningare driven not only by local management, but also by an externaldemand for agricultural goods. Understanding the effect interna -tional trade has on local water scarcity problems might thereforealso help to solve problems of wrong water use on a local level.On the other hand, there are regions which are water-scarce andimport virtual water. These regions are interesting, since they re-veal the effectiveness of international virtual water trade. The Derived Policy Advice Might Be Wrong,the Concept Is NotIn the light of the above arguments, the adaptation of a limitedconcept of virtual water to conclude the necessity of trade barri -ers for virtual water can lead to economically unsound policy ad-vice. But the result should not be to condemn the concept, but tocombine it with information on the water scarcity of the export-ing region, the sustainability of its use and its “color”. It shouldof course also be taken into account that the flow of the virtualwater cannot solely be explained by comparative advantages, be-cause there are other scarce resources which determine whethera good is produced for domestic use, export, or import. While bearing in mind the potentially problematic economicinterpretation of virtual water trade, this information could beintegrated more effectively (e.g., complemented by informationon other scarce resources such as land). This in turn could helpquantify the effect of virtual water trade on local water scarcity,and be useful in deriving careful local policy advice, for exampleon the appropriate pricing of irrigation water in order to preventoverexploitation of ground water, or to help farmers in water-scarce regions switch from low-value to high-value crops in or-der to use scarce water resources more economically.The theory of virtual water is relatively young: Allan (1996) in-troduced the term “virtual water” in order to describe the water >Since international flows of virtual water are likely to increase, and water availability in many regions is predicted to decrease as a consequence of global climate change, it seems important not to dismiss a tool which could be helpful in understanding and interpreting the flows of virtual water and the effects these flows have on local water conditions.168_170_Biewald  23.09.2011  19:17 Uhr  Seite 169www.oekom.de/gaia  | GAIA 20/3(2011): 168–170170 Anne BiewaldFORUMused to produce crops traded in international markets.Hoekstraand Hung extended the theory by estimating the “flows of virtu -al water” between countries and by developing the concept of the“water footprint” (Hoekstra and Hung 2002). A few years later thetheory was again refined by distinguishing between the blue andthe green components (Chapagain et al. 2006, Yang et al. 2006,Yang and Zehnder 2007), acknowledging that blue water used forirrigation is the part of the virtual water that is responsible forlocal water scarcity. Chapagain and Hoekstra then joined forcesto improve the theory further by developing a water footprintwhich distinguishes between an internal water footprint (volumeof water used from domestic water resources) and an external wa-ter footprint (volume of water used in other countries to producegoods and services), thus gaining the important information onhow much water has been used in the production of a good. Re-cently, they combined the additional information on external andinternal water footprints with the information on blue and greenwater for the production of rice and thus achieved an even moreaccurate indicator of the impact the production and trade of vir-tual water has on local water resources (Chapagain and Hoekstra2011). Although this new water footprint is already a decisive stepin the right direction, it still does not reveal whether the waterused for producing export goods aggravates water scarcity prob-lems locally. Two recent studies try to approach this problem bydeveloping indexes which incorporate water scarcity locally: Rid-outt and Pfister (2010) developed a stress-weighted water footprintwhere they combine the volumetric impact on blue water avail-ability with local water stress for two individual products; Biewaldet al. (2011) use water shadow prices as water scarcity indica torsand combine them with virtual blue water used for the produc-tion of export food crops to develop an indicator of the signifi-cance of water saving. These examples show that latest research has made immenseprogress in improving the concept of virtual water trade as wellas the concept of the water footprint. Although the new water foot-prints and indexes already deliver a lot of important information– blue or green water used, production in water scarce or waterabundant regions –, information which could be very useful whentrying to improve the concept concerning the sustainable use ofthe blue water has not yet been approached explicitly. Developingan index for virtual water trade that contains information on thesustainability of the blue water use is therefore an effort that hasstill to be made in the scientific community.The theory of virtual water has been criticized for developingtrading strategies which are not consistent with the concept ofcomparative advantages, the most prominent critic being DennisWichelns (Wichelns 2004,2010). Trying to explain export and im-port of virtual water only on the basis of comparative advantages,or trying to build policy advice on these findings is bound to fail,since there is not only one scarce resource which is decisive forthe production and trading decision. But taking the multitude ofdrivers of trade into account, one can still derive valuable infor-mation on how trade affects blue water used for production byusing the virtual water trade and looking at the local conditionsof resources. Since international flows ofvirtual water are likely to increase (Rami -rez-Vallejo and Rogers 2004), and wateravailability in many regions is predictedto decrease as a consequence of globalclimate change (Bates et al. 2008), itseems important not to dismiss a toolwhich could be helpful in understand-ing and interpreting the flows of virtu-al water and the effects these flows haveon local water conditions. ReferencesAllan, J.A. 1996. Water use and development in arid regions: Environment,economic development and water resource politics and policy. Review ofEuropean Community & International Environmental Law 5/2: 107–115. Bates, B.C. et al. 2008. Climate change and water. Technical paper of theIntergovern mental Panel on Climate Change (IPCC). Geneva: IPCC.Biewald, A. et al. 2011. The impact of trade on local green and blue waterscarcity. Paper accepted  at the 14th Annual Conference on Global EconomicAnalysis. Venice, June 16–18. Chapagain, A.K. et al. 2006. The water footprint of cotton consumption: An assessment of the impact of worldwide consumption of cotton products on the water resources in the cotton producing countries. Ecological Economics 60/1: 186–203.Chapagain, A.K., A.Y. Hoekstra. 2011. The blue, green and grey water footprint of rice from production and consumption perspectives. Ecological Economics 70/4: 749–758. Gawel, E., K. Bernsen. 2011. Do we really need a water footprint? Global trade,water scarcity and the limited role of virtual water. GAIA 20/3: 162–167.Hoekstra, A., P. Hung. 2002. Virtual water trade: A quantification of virtual water flows between nations in relation to international crop trade. Value ofWater Research Report Series 11. Delft, NL: Institute for Water Education.Hoff, H. et al. 2010. Greening the global water system. Journal of Hydrology384/3– 4: 177–186. Ramirez-Vallejo, J., P. Rogers. 2004. Virtual water flows and trade liberalization.Water Science and Technology 49/7: 25–32. Ridoutt, B., S. Pfister. 2010. A revised approach to water footprinting to make transparent the impacts of consumption and production on global freshwater scarcity. Global Environmental Change 20/1: 113–120. Wichelns, D. 2004. The policy relevance of virtual water can be enhanced byconsidering comparative advantages. Agricultural Water Management66/1: 49–63. Wichelns, D. 2010. Virtual water: A helpful perspective, but not a sufficientpolicy criterion. Water Resources Management 24/10: 2203–2219.Yang, H. et al. 2006. Virtual water trade: An assessment of water use efficiency in the international food trade. Hydrology and Earth System Sciences 10/3: 443– 454. Yang, H., A. Zehnder. 2007. Virtual water: An unfolding concept in integrated wa-ter resources management. Water Resources Research 43/12: W12301–W12311.Submitted April 28, 2011; revised version accepted July 13, 2011.Anne Biewald Born 1977 in Jena. Studies in landscape ecology in Greifs wald. PhD 2009 in economics at the University ofPotsdam. Since 2009 post-doc at the Potsdam Institute forClimate Impact Research (PIK). Since 2010 leader of theproject Sustainable Water Management in a Globalized World. 168_170_Biewald  23.09.2011  19:17 Uhr  Seite 170

Give virtual water a chance! An attempt to rehabilitate the concept

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Give virtual water a chance! An attempt to rehabilitate the concept

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