Posted on October, 18, 2023 at 09:15 am
Every manifestation of the dangerous weather wreaking havoc around the world has one thing in common: water. As the Earth’s climate changes, the lack of water, or its sudden abundance, is reshaping the global economy and international trade. From prolonged drought slowing down ships in the Panama Canal to deluges halting industrial production in Japan, it’s one of the most obvious ways that rising temperatures are affecting businesses.
Increasingly acute scarcity has forced cities, countries and companies to purchase much more water from farther-away places than before. Water deliveries are a growing industry, and not just in places with unreliable freshwater supplies. Tanker trucks loaded with the life-giving liquid have become necessary even in developed nations enduring multiyear droughts. At the same time, marketplaces where water rights are bought and sold have become more volatile in parts of Australia, Chile, Spain and the US.
But that trade of H₂0 pales in comparison to another, invisible way that water moves around the globe. Because it’s needed to make almost every raw material and product that humans consume, the trillions of dollars in commodities and goods exchanged every year also ultimately represent an exchange of water.
Tony Allan, a British geographer, coined the term “virtual water” in the 1990s to describe the unseen trade that happens every day — as opposed to the “physical water” that’s bought and sold through pipelines, bottles and contracts. Food imports, he argued, served as an indicator of the scale of an economy’s water deficit. High levels of food imports showed that a nation didn’t have enough water to grow its own food; low levels suggested the opposite. It was a good thing that such a market developed organically, as it helped mitigate shortages and tensions over scarcity.
“Everywhere there are examples of conflict over water being avoided,” Allan wrote in his first paper on the issue in 1993. “The tendency is to make adjustments which are conflict-avoiding through economic and policy substitutions for water.”
The initial awareness of the virtual water trade came at a time when there was more to go around and fewer mouths to feed. Trading of water through goods doubled from 1986 to 2007 as the global population rose and international shipping became more sophisticated. These trends — together with an increase of gross domestic product in some of the world’s largest economies — will continue through the century, according to a September paper on the future of virtual water trading by scientists at the University of Maryland.
The researchers project that today’s virtual water market will expand as much as five times by 2100. More efficient trading could help reduce water needs, with potential savings of 6 trillion cubic meters of water through the end of the century, the equivalent of almost 2 billion Olympic swimming pools or more than the volume of Lake Michigan.
It took nearly three decades for scientists to figure out how to map the virtual water trade. Researchers at the Polytechnic University of Turin in Italy did so by analyzing millions of data points on agricultural exchanges through 2016, which were recorded by the United Nations’ Food and Agriculture Organization.
“Virtual water has become a way for us to understand how countries connect to each other from a geopolitical point of view,” says Marta Tuninetti, a co-author of the Turin research. “We use these indicators to understand what are the repercussions over the trade network if a climatic or a geopolitical crisis hits a producer country.”
There are plenty of recent examples. Russia’s invasion of Ukraine sent shock waves through the grain market. Each ton of wheat requires about 1,500 cubic meters of water on average globally, according to CWASI, a database managed by the Turin researchers that shows how much water is embedded in goods. Flooding in California has washed out fields of almonds (5,356 cubic meters of water per ton) while drought in the Colorado River basin has upended the production of broccoli (224 cubic meters of water per ton).
Being a large importer or exporter doesn’t necessarily make a country a winner or loser in the water game. “Having water doesn’t make you rich if you’re giving it away for free to grow food, or if you’re letting others pollute it,” says Pedro Arrojo-Agudo, an expert who advises the UN on water and sanitation. When that happens, “it becomes a case of economic exploitation from companies that export products to semiarid countries that capture the water and the wealth that comes with it.”
A key question is how much of a country’s natural water resources are left for local communities and ecologies. A country-by-country ranking of the amount of water available per person, compared with how much is exported — physically and virtually — sheds light on how it’s really being traded around the world.
Source: Bloomberg