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23 / 06 / 2010

Globalisation of water

The growing international market for products and services implies a virtual water market, which would make water a global resource

Nowadays society is aware of climate change and its global nature; local emissions of greenhouse gases influence the global temperature of the planet, increasing the evaporation of water resources and changing the precipitation patterns. However, there are other factors that also have a huge effect on water systems, causing the loss of aquifers, such as the consumption and pollution of water due to human activity in the industrial, domestic and agricultural sectors.

Under these considerations the Water Footprint concept was introduced (Hoekstra, 2002): an indicator of the appropriation of water resources that takes into account not only direct use of a consumer, but also the indirect use.

Water Footprint per capita of the nations that are the biggest consumers of water¹

The Water Footprint of a product is defined as the volume of fresh water needed to produce it, taking into account the full supply chain (virtual water content of a product). It is divided into three components that are multidimensional, as all of them must be specified geographically (location of use) and temporally.

Water Footprint components:

- Blue: volume of freshwater taken from surface and ground water, which is used and not returned to its place of origin.

- Green: volume of rainwater stored in the soil that is evaporated.

- Grey: volume of water polluted as a result of production processes. It is defined as the volume of water required to assimilate the load of pollutants based on existing water quality standards.

Water use and1pollution are associated with the production of the goods and services used by a society and the structure of the world economy that provides them. Therefore, the growing international market for these products implies a virtual water market, which would make water a global resource.

The impact of an end product on the water systems can only be calculated taking into account its production chain and knowing the location of each one of the stages.

This argument can be illustrated with an example: the consumption of cotton in the European Union. Cotton clothing used by European citizens is processed by the Malaysian textile industry, which previously imports the pure cotton from China, India and Pakistan.

It can be seen that the cotton supply in the European Union depends mainly on India’s water resources. If we focus on the blue component the impact is even greater in Uzbekistan than in India, by which it may be deduced that the inhabitants of the European Union contribute indirectly and unconsciously to the desertification of the Aral Sea.

Impact of cotton consumption by the EU25 on the world’s water resources (Mm3/year). Period: 1997-2001.2²

This situation invites us to think about a number of ways of offsetting water use to reverse the water stress caused by our consumption in other places on the planet. The concept of compensation of the Water Footprint has still not been well defined. At present, it is recommended to focus the response on prevention and reduction, and relegate compensation to last place.

International trade and, therefore, virtual water trade, could act as a key element in the reduction of the Water Footprint of the planet. It is possible to achieve a net water saving if trade occurs from countries with a high water productivity (low virtual water content in their products) to countries with a lower water productivity (high virtual water content in their products), exploiting the competitive advantages of each country in each sector, as they do not all need the same volume of water to produce a certain product.

Net water savings associated with international trade of agricultural products. Period 1997-2001.³

Virtual water trade could improve the efficiency of water use in the world, but this market will only be sustainable if the prices of exported goods reflect the externalisation of the negative environmental impact. Otherwise, the importing countries would not assume the costs associated with the water depletion caused by the external production of the goods consumed.

This last idea enables us to think of a future compensation market. If the price of a product or service included an economic tax associated with the water consumed in its production, this money could be invested in projects that would contribute to more sustainable water use. This mechanism could function in two different ways: through the reduction of the world’s water footprint, for example including improvements in irrigation techniques or reducing losses in water distribution systems; or through the improvement of water quality, for example by installing sewage treatment plants.

The “tax” related to water consumption should not be established only according to a product’s water footprint, but in some way should also include or account for the water stress on the place where the product was produced. The social, economic and environmental consequences are not the same if the goods produced are consumed in regions with plentiful water resources as in places with marked water stress. A fair compensation market must also include this last factor in the price of the product.

The consolidation of a compensation market of the Water Footprint will not be achieved without the involvement of all the sectors affected: governments, the scientific community, consumers and producers. Global agreements based on ideas such as water taxation protocols, product labelling and consumption permit systems will be needed to progress towards a sustainable and fair global water management.

¹ Hoekstra, A.Y., Chapagain, A.K.(2007) 'Water footprints of nations: water use by people as a function of their consumption pattern, Water Resources Management 21(1): 35-48.

² Champagain, A.K., Hoekstra, A.Y., Savenije, H.H.G. and Gautam, R. (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.

³ Chapagain A.K., Hoekstra A.Y., Savenije H.H.G (2005) “Saving water through Global trade”, Value of Water - Research Report Series Nº17, Unesco-IHE