Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/84821
Authors: 
Lenzen, Manfred
Bhaduri, Anik
Moran, Daniel
Kanemoto, Keiichiro
Bekchanov, Maksud
Year of Publication: 
2012
Series/Report no.: 
ZEF Discussion Papers on Development Policy 169
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.
Subjects: 
Virtual water
multi-region input-output analysis
regional aggregation
scarcity
international trade
Document Type: 
Working Paper

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