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A theoretical model of water and trade
... Promising areas of innovation include the combination of hydrologic with agent-based, system dynamics or economic models of human decision making (Blair and Buytaert, 2016;Castilla-Rho et al., 2015;Jaxa-Rozen et al., 2019). However, efforts have been hampered by fundamental contrasts in the way societal and hydrologic models tend to be conceptualized; for example, many economic models are not spatially explicit (Dang et al., 2016;Wada et al., 2017). The result is that, while the hydrologic effects of direct human impacts tend to be well understood (Fig. 6), few hydrologic assessments account for human activities in the medium or long-term. ...
... Integration of groundwater extraction into land surface models is a promising method for investigating 669 links between groundwater withdrawals and climate, but uncertainties in extraction rates and 670 subsurface processes mean that this is an area of active research. Examples of recent studies include 671 Pokhrel et al. (2014), Wada et al. (2014), Zeng et al. (2016, Leng et al. (2017) and Nie et al. (2018). 672 S5. ...
Human activities have extensively altered landscapes throughout the world and further changes are expected in the future. Anthropogenic impacts such as land use change, groundwater extraction and dam construction, along with the effects of climate change, interact with natural factors including soil weathering and erosion. Together, these processes create a constantly shifting, dynamic terrestrial environment that violates the assumption of stationarity commonly applied in hydrology. Consequently, hydrologists need to rethink both statistical and calibrated models to account for complex environmental processes. We review the literature on human-landscape-hydrological interactions to identify processes and feedbacks that influence water balances. Most of the papers covered consider only a few of these processes at a time and focus on structural attributes of the interactions rather than the short and long-term dynamics. We identify challenges in representing the scale-dependence, environmental connectivity and human-water interactions that characterize complex, dynamic landscapes. A synthesis of the findings posits connections between different landscape changes, as well as the associated timescales and level of certainty. A case study explores how different processes could combine to drive long-term shifts in catchment behavior. Recognizing that some important questions remain unaddressed by traditional approaches, we suggest the concept of ‘big laboratories’ in which multifaceted experiments are conducted in the environment by artificially inducing landscape change. These experiments would be accompanied by mechanistic modeling to both untangle experimental results and improve the theoretical basis of environmental models. An ambitious program of physical and virtual experimentation is needed to progress hydrologic prediction for dynamic landscapes.
Plain language summary
The Earth’s surface is constantly changing due to human-driven and natural processes. Shifts may be driven by humans directly (e.g. via land use change) or indirectly (e.g. by driving climate change that causes shifts in ecological communities). Other changes are natural, such as certain soil processes that lead to shifts in texture and properties over time. In many places, landscape change is now occurring at unprecedented rates. This impacts the water cycle, creating a need for models that are robust under changing conditions. Our paper synthesizes a wide range of literature on key aspects of landscape change that have wide-ranging implications for hydrology. We focus on the impacts of processes at different spatial and temporal scales, along with feedbacks between various environmental and anthropogenic shifts. We discuss connections between different landscape changes and the timescales over which they each affect the water cycle. A case study is presented to highlight the potential for cascading landscape disturbances that could alter long-term catchment response. Recognizing limitations in traditional data collection and modeling, we introduce the concept of ‘big laboratories’ to conduct environmental experiments under landscape change, providing an avenue for addressing the complex questions around hydrology in a changing world.
... This effort is one response to recent critical reviews which suggest that nexus models increasingly need to incorporate aspects beyond water, energy and food such as explicit economic and policy considerations ( Biggs et al., 2015 ;Dang et al., 2016 ;Konar et al., 2016 ;Al-Saidi and Elagib, 2017 ). Weitz et al. (2017) suggest that the standard nexus concept may be "disconnected from the decision-making and policymaking processes it ultimately seeks to influence. ...
... Debaere and Kurzendoefer (2017) find evidence that water allocation has historically shift among sectors due to economic sectors, which lends support to the approach of this study. Another study, Dang et al. (2016) , is also based on standard economics, yet that study differs from all the above in being theoretical in nature and lacking a nested production structure or data. ...
Regions with vulnerabilities in their food-energy-water nexus may also have economic vulnerabilities. Actions to reduce environmental vulnerabilities may conflict with community concerns about jobs and economic vitality. To account for these potentially competing concerns, this study builds a nexus simulation model that incorporates water, energy, food, and detailed economic data. The model can be used for standalone analysis or incorporated into a multi-disciplinary design optimization framework. The model is called WEST (for Water Economy Simulation Tool) and can show how jobs and economic growth interact with surface and groundwater use, food, and energy. A case study for the U.S. state of Oregon illustrates the insights to be gained from the approach and provides a template for readers to develop their own WEST simulation model.
... Recent trade analyses have considered environmental impacts such as those associated with CO2 emissions , Vora et al 2017, Meng et al 2018, however, the study of environmental and social footprints of international trade (Wiedmann and Lenzen 2018) and associated spillovers (Liu et al 2015) has often failed to explicitly account for the impacts on water resources. Recent work has explicitly incorporated water as a factor of production into a theoretical trade model (Lenzen et al 2013, Lutter et al 2016, Dang et al 2016. This work incorporates key tradeoffs in agricultural production and decision making. ...
... Other frameworks used to describe VW trade include general equilibrium models of trade economics that have been used, for example, to analyze the changes of VW trade induced by Likewise, partial equilibrium framework has also been proposed by (Dang et al 2016) to describe the effects of policies and decision-making on water use in agriculture. This literature on the modeling of the impact of shocks on food prices and trade will be reviewed in the context of resilience analyses of VW trade (Section 8.5.). Figure 13 summarizes the drivers identified in the publications on VWT reviewed in this section. ...
The increasing global demand for farmland products is placing unprecedented pressure on the global agricultural system and its water resources. Many regions of the world, that are affected by a chronic water scarcity relative to their population, strongly depend on the import of agricultural commodities and associated embodied (or virtual) water. The globalization of water through virtual water trade (VWT) is leading to a displacement of water use and a disconnection between human populations and the water resources they rely on. Despite the recognized importance of these phenomena in reshaping the patterns of water dependence through teleconnections between consumers and producers, their effect on global and regional water resources has just started to be quantified. This review investigates the global spatiotemporal dynamics, drivers, and impacts of VWT through an integrated analysis of surface water, groundwater, and root-zone soil moisture consumption for agricultural production; it evaluates how virtual water flows compare to the major 'physical water fluxes' in the Earth System; and provides a new reconceptualization of the hydrologic cycle to account also for the role of water redistribution by the hidden 'virtual water cycle'.
... Geographical factors determine trade, as given by the gravity model of international trade (Tinbergen 1962), but are likely exogenous to outcome variables of interest. This makes geographical variables suitable instruments for trade openness, and they have been applied in many other studies that suggest that openness does not have a negative impact on the environment, including reductions in air pollution (SO2 and NO2 emissions) (Frankel and Rose 2005) and water use (Kagohashi et al 2015, Dang andKonar 2016). ...
... This paper empirically determined that trade does not have unintended consequences for the quantity of nutrients that we use to produce our food. Recent work has presented a theoretical model of water and trade (Dang et al 2018) that is consistent with empirical findings on the relationship between trade and water use (Kagohashi et al 2015, Dang andKonar 2016). Now, we suggest there is a need for a similar model to be developed to explain the mechanistic relationship between trade and nutrient use. ...
To contribute to the debate over globalization and the environment we ask the question: what is the impact of trade openness on the nutrient use of nations? We address this question by using econometric methods to quantify the causal relationship between the trade openness and the nutrient use of nations on a global scale. In our empirical analysis we go beyond a cross-sectional analysis. We exploit time-series variation for an unbalanced panel of countries that spans the time period 2001-2014 (1027 total observations). By using a panel data analysis we are able to use fixed effects and better control for unobservable heterogeneity. We also explicitly consider how the openness of a country to trade may interact with its comparative advantage which determines its relative specialization in production, and hence its export strength as well as its import needs. We find that trade openness on average does not significantly impact nutrient use. However, there is evidence that as countries become more open and more capital abundant their nutrient use is reduced. This finding is in line with previous research that shows that trade openness does not have a negative impact on the environment. Our findings have both scientific and policy relevance as we strive to untangle causal relationships in the global food supply chain and determine its environmental impacts.
... Climate change is projected to lead to reduced snowpack and changes in timing of water availability, and is also expected to increase drought frequency, increasing water-related vulnerabilities. While changes in temperatures could also lead to new opportunities for individual farmers who have secure (senior) water rights, farmers' and water managers' water use decisions will affect junior water-right holders in the context of increased scarcity (Dang et al., 2016;Konar et al., 2016). In the Columbia River Basin, water use for pastures and hay has a large impact on aggregate water use and thus on shaping patterns of, and responses to, shortages (Rajagopalan, 2016). ...
... As their implementation will require multiple years in some cases, quantifying potential water deficiencies and savings is an urgent need. Research and extension can also support development or improvement of tools that provide specific data and information for waterrelated decision-making, helping to promote more cost-efficient allocation of water (Dang et al., 2016). ...
In order for agricultural systems to successfully mitigate and adapt to climate change there is a need to coordinate and prioritize next steps for research and extension. This includes focusing on “win-win” management practices that simultaneously provide short-term benefits to farmers and improve the sustainability and resiliency of agricultural systems with respect to climate change. In the Northwest U.S., a collaborative process has been used to engage individuals spanning the research-practice continuum. This collaborative approach was utilized at a 2016 workshop titled “Agriculture in a Changing Climate,” that included a broad range of participants including university faculty and students, crop and livestock producers, and individuals representing state, tribal and federal government agencies, industry, nonprofit organizations, and conservation districts. The Northwest U.S. encompasses a range of agro-ecological systems and diverse geographic and climatic contexts. Regional research and science communication efforts for climate change and agriculture have a strong history of engaging diverse stakeholders. These features of the Northwest U.S. provide a foundation for the collaborative research and extension prioritization presented here. We focus on identifying research and extension actions that can be taken over the next 5 years in four areas identified as important areas by conference organizers and participants: (1) cropping systems, (2) livestock systems, (3) decision support systems to support consideration of climate change in agricultural management decisions; and (4) partnerships among researchers and stakeholders. We couple insights from the workshop and a review of current literature to articulate current scientific understanding, and priorities recommended by workshop participants that target existing knowledge gaps, challenges, and opportunities. Priorities defined at the Agriculture in a Changing Climate workshop highlight the need for ongoing investment in interdisciplinary research integrating social, economic, and biophysical sciences, strategic collaborations, and knowledge sharing to develop actionable science that can support informed decision-making in the agriculture sector as the climate changes.
... Trade liberalization itself, however, has varied but beneficial effects on water scarcity. Dang et al. (2016) presented a theoretical model of trade and domestic water resources that demonstrates the conditions under which trade liberalization affects water use. Reimer (2014) also demonstrated that trade liberalization could be neutral from a waterresource perspective as well as improve welfare and allow markets to better cope with shocks. ...
Water scarcity is a growing concern across the globe due to climate change and demands for increased economic development. This paper analyses the relationship between economic development and freshwater abstraction in order to investigate its European impact. The analysis focuses on a total of 19 European countries, including 18 EU member states and one candidate, from 2007 to 2018. Using a panel dataset, the impact of a diverse selection of indicators of economic development (per capita GDP, the Human Development Index - HDI, water productivity and volume of international trade) on freshwater abstraction, our analysis finds that all explanatory variables are significant for cross-country variations except for international trade. To maintain scope, the analysis is limited to economicdevelopment indicators themselves, excluding the effects of climate change and the availability of water resources.
... Schmitz et al. conducted a study in South Asia, Southeast Asia, and the Middle East, which revealed a correlation between increased trade liberalization and water scarcity, as well as a decrease in water prices [64]. On the other hand, Dang et al. argued that the impact of trade liberalization on total water use would only be modest [65]. They further noted that agricultural trade liberalization's effect on water use is dependent on the elasticity of water substitution. ...
The liberalization of world trade has led to a significant increase in agricultural trade, which has brought to light various environmental externalities, including climate change, deforestation, and water pollution. While economic studies tend to overlook the environmental effects of agricultural trade liberalization, recent research has shown a growing interest in related aspects. As such, it is crucial to conduct a comprehensive analysis of the environmental impacts of agricultural trade liberalization. This study aims to address this issue by conducting a systematic review of the relevant literature from the past two decades. Research has revealed that agricultural trade liberalization has both positive and negative impacts on the environment. The various mechanisms through which these effects are observed include scale, structural, transport, and technology effects. Most studies have concluded that agricultural trade liberalization has a significantly negative impact on the environment. To address this issue, four potential solutions have been proposed, including factor allocation, policy adjustment, technological innovation, and improvements to compensation mechanisms. Future research should aim to develop a comprehensive model that can effectively examine the environmental impacts of agricultural trade policy distortions and the criteria used to select environmental measures. By doing so, we can gain a deeper understanding of the complex relationship between agricultural trade policies and their environmental consequences.
... Reimer (2012) tried to place the concept of virtual water on an economic framework. Dang et al. (2016) developed a theoretical model to considere four tradeoffs involving water-use decision-making. Afkhami et al. (2018) examine the comparative advantage theory in virtual water trade with respect to the relative abundance of capital. ...
This study calculates (with input-output technique) virtual water flows between Iran and European Union (EU 28) in 2011.
... obtaining water from an alternative source (Penny, Müller-Itten, et al., 2021). The linear form of the utility function implies that (a) the cost of drilling and setting up the pumps is small compared to the life-time (energy) costs of operating them, (b) the shadow price of water is exogenously given and not itself affected by groundwater production (see Dang et al., 2016), (c) systemic costs of decreased water levels beyond pumping cost externalities (e.g., decreased streamflow production (Sahu & McLaughlin, 2021)) are neglected and (d) water is the limiting factor of production. This last assumption can be relaxed by adding a pumping threshold to utility function beyond which pumping does not generate additional benefits (Penny, Müller-Itten, et al., 2021). ...
The common‐pool nature of groundwater resources creates incentives to over pump that contribute to their rapid global depletion. In transboundary aquifers, users are separated by a territorial border and might face substantially different economic and hydrogeologic conditions that can alternatively dampen or amplify incentives to over pump. We develop a theoretical model that couples principles of game theory and groundwater flow to capture the combined effect of well locations and user asymmetries on pumping incentives. We find that heterogeneities across users (here referred to as asymmetries) in terms of either energy cost, groundwater profitability or aquifer response tend to dampen incentives to over pump. However, combinations of two or more types of asymmetry can substantially amplify common‐pool overdraft, particularly when the same user simultaneously faces comparatively higher costs (or aquifer response) and profitability. We use this theoretical insight to interpret the emergence of the Disi agreement between Saudi Arabia and Jordan in association with the Disi‐Amman water pipeline. By using bounded non‐dimensional parameters to encode user asymmetries and groundwater connectivity, the theory provides a tractable generalized framework to understand the premature depletion of shared aquifers, whether transboundary or not.
... Firstly, with ecological compensation, the transferor can acquire more economic benefits from water rights trading. It will improve water conservation management in irrigation areas and encourage farmers to adopt water-saving behaviors, which will be favorable for the development of water markets (Dang et al. 2016). Secondly, according to beneficiary compensation rule, ecological compensation will improve the pricing model of water rights trading, which is conducive to reduce government intervention (Jiang et al. 2015). ...
Water rights trading is an effective way to promote the redistribution of agricultural water saving within and among water-shortage regions. Reasonable transfer price can not only improve the income of farmers and irrigation areas, but also improve the efficiency of agricultural water use. However, the trading across industries or regions will diminish the ecosystem service value of arable land, and negatively impacts irrigation areas. This paper investigates the pricing model of agricultural water transaction, which combines water trading with ecological compensation to balance the benefits of both parties. A bi-level programming model of agricultural water trading was established for optimizing the prices and corresponding volumes of transaction across users in water markets. The context of this study is the Inner Mongolia Autonomous Region, which is a typical water-shortage region in China. Results show that adjusting price variables through the model, including transaction price and ecological compensation, led to an optimization of transaction volumes across users. The economic benefits also are optimized between the irrigation districts and industrial water users. Pricing model of water trading is also improved with ecological compensation. This study ultimately provides a useful reference for policy-makers in water-shortage regions.
... Third, Dang et al. (2016) build on Ohlin's classical trade model (Ohlin 1935) to account for water as a limiting production factor. They model a domestic water market, where two sectors (agriculture and industry) compete for a limited amount of water. ...
A variety of interdisciplinary fields have provided distinct and complementary perspectives on human-water systems over the past few decades. In that context, an important distinctive feature of sociohydrology is its historical and methodological link to ecohydrology. This linkage implies a compatibility between the two fields that can be leveraged to address important modeling challenges in both fields. Sociohydrology has thus far focused on temporal dynamics and can benefit from recent advances in ecohydrology to represent spatial dynamics in coupled human-water systems. Conversely, as it increasingly focuses on human-altered catchments, ecohydrology can benefit from sociohydrology in terms of developing models of human behavior that are compatible with (eco)hydrological models, while being consistent with prevailing social science theories. We review recent work in ecohydrology and sociohydrology that substantiates these two arguments, and discuss the modeling of water-borne diseases as an example of a promising avenue of research that connects the two fields.
... Reimer (2012) tried to place the concept of virtual water on an economic framework. Dang et al. (2016) developed a theoretical model to considere four tradeoffs involving water-use decision-making. Afkhami et al. (2018) examine the comparative advantage theory in virtual water trade with respect to the relative abundance of capital. ...
The article is grounded on the rapid demand growth and supply constraints, which have imposed unprecedented pressure on water resources in Iran. Virtual water import has been recently discussed as a policy to tackle water scarcity and so the study calculates (with input-output technique) virtual water flows between Iran and European Union (EU 28) in 2011. The results show that Iran has been a net importer of virtual water in trade with the EU28, with net imports of about 667 million m3. The largest Virtual Water Export from Iran to the EU28 are respectively to Germany, Spain and Italy, which accounted for more than 74% of the total virtual water exports. By contrast, the Netherlands, Germany and Austria have been the largest virtual water exporters to Iran, with a total share of over 68.8% of the total. In any case, while Iran's virtual water import from the EU28 is about 2 times as much as virtual water exports, the value of Iran's imports from the EU28 is more than 7.6 times of its exports. An indicator developed shows that Iran's exports to the EU are high water-intensive but Iran's imports from the European Union are low water intensive.
... At the beginning of this century, it was gradually turned to the research on the management performance of water resources and sustainable development, and the discussion on water rights trading model and renewable energy issues was also increased [2] . Aiming at how to effectively balance water resources among different economic sectors, Qian Dang, Megan Konar (2016) proposed a sustainable water rights trading model, and conducted research from the aspects of profit maximization, trading risks and target taxes in order to make agricultural water rights trading more effective [3] . Thanh Mai (2019) innovatively put forward a systematic water rights trading model on the basis of previous studies, and discussed the uncertainty and complexity of the water rights trading system [4] . ...
There are some problems in China’s agricultural water resources, such as low per capita consumption and uneven spatial and temporal distribution. It is urgent to speed up the reform of water rights trading mode. Based on the market orientation and the experience of the United States and Australia, this paper studies the effectiveness of China’s agricultural water rights trade. Firstly, the characteristics of “quasi-market” should be clarified. Secondly, under the market mechanism, this paper analyzes the mechanism of the impact of economic incentives of trading subjects, reasonable delimitation of trading prices and multiple participation of institutions and departments. Furthermore, the factors that affect the efficiency are deeply analyzed. At last, the paper provides some suggestions on the construction of a trading mechanism with Chinese characteristics from the aspects of right confirmation registration, pricing mechanism and supervision regulations, to provide decision support for agricultural water rights management system.
... Los impuestos ambientales son otra herramienta diseñada para corregir problemas de sobreexplotación y externalidades en recursos naturales. El agua es esencial para la producción agrícola una posible política para reducir su consumo excesivo podría ser incrementar su precio a través de impuestos dirigidos a cierto nivel de uso del agua (Dang et al., 2016), medida que es ratificada por Graveline (2019) quien sugiere que la forma más rentable y robusta de mejorar el estado de las aguas subterráneas es aumentar el componente económico (un impuesto flexible). A través de un modelo de equilibrio general Torbón et al. (2017) abordan la interacción entre un sistema económico y un sistema natural (cuerpo de agua) cuyos derechos de propiedad están definidos para el suministro de agua potable, sus resulta-dos indican que la resiliencia del cuerpo de agua disminuye a medida que la contaminación deja de ser prudente, además los impuestos Pigouvianos son insuficientes para mantener la capacidad de recuperación debido al efecto acumulativo de la contaminación, lo que sugiere ser más prudentes al implementar impuestos ambientales sujetos al criterio de bajos niveles de resiliencia. ...
Con la finalidad de brindar información sobre el impacto de las iniciativas económicas vinculadas a atenuar los daños ambientales, el presente documento contiene revisión bibliográfica de los últimos 5 años sobre instrumentos económicos (pago por servicios ecosistémicos e impuestos ambientales) empleados en la mitigación del sobreuso de recursos hídricos. Así mismo clasifica diversos estudios de valoración economía en relación a la metodología que emplean para valorar determinados servicios ecosistémicos provistos por los recursos hídricos. Los que diseñan políticas públicas al implementar impuestos ambientales dirigidos a determinados niveles de consumo deben considerar aspectos cómo la acumulación de la contaminación para garantizar la sostenibilidad del suministro de servicios ecosistémicos. Incluir los valores obtenidos en valoración económica en el análisis costos – beneficio puede ayudar en la toma de decisiones de inversión en restauración o recuperación del capital natural.
... Other factors of production-such as arable land, nutrient fertilizers, farm labor, and agricultural machinery-are also critical in agriculture. In fact, it is the relative endowment between factors that determine each country's comparative advantage to trade in commodities (Dang et al., 2016;Reimer, 2012), and many factors of production are more important than water (e.g., labor and capital; Debaere, 2014). The economic structure, composition, and productivity of a nation will influence how it uses its water (and other) resources (Debaere et al., 2015;Marston et al., 2018). ...
Extensive research has evaluated virtual water trade, the water embodied in traded commodities. However, relatively little research has examined virtual water storage or the water embodied in stored commodities. Just as in physical hydrology, both flows and stocks of virtual water resources must be considered to obtain an accurate representation of the system. Here we address the following question: How much water can be virtually stored in grain storage in the United States? To address this question, we employ a data-intensive approach, in which a variety of government databases on agricultural production and grain storage capacities are combined with modeled estimates of grain crop water use. We determine the virtual water storage capacity (VWSC) in grain silos, map the spatial distribution of VWSC, calculate contributions from irrigation and rainwater sources, and assess changes in VWSC over time. We find that 728 km ³ of water could be stored as grain in the United States, with roughly 86% coming from precipitation. National VWSC capacities were 777 km ³ in 2002, 681 km ³ in 2007, and 728 km ³ in 2012. This represents a 6% decline in VWSC over the full 10-year period, mostly attributable to increased water productivity. VWSC represents 62% of U.S. dam storage and accounts for 75–97% of precipitation receipts to agricultural areas, depending on the year. This work enhances our understanding of the food-water nexus, will enable virtual water trade models to incorporate temporal dynamics, and can be used to better understand the buffering capacity of infrastructure to climate shocks.
... For instance, Lenzen et al. (2013) showed that accounting for the opportunity costs associated with water scarcity substantially affects the modeled structure of the virtual water trade network. Dang et al. (2016) incorporated water-specific features (competition for water between different sectors and climate uncertainty) into a stylized classical trade model to investigate the effect of tariffs and subsidies on water use and food trade. A second objective of interdisciplinary collaboration may be improving the capacity to make future predictions. ...
Because human and environmental systems in the Anthropocene are increasingly coupled, hydrologists and economists often find themselves studying the same systems from different vantage points. Here we argue that synthesis across economics and hydrology can help address two pressing sociohydrologic challenges: actionable prediction and the generation of transferable knowledge from place-based studies. Specifically, we review (1) empirical methods and (2) theoretical approaches from economics and connect the two through a proposed iterative framework. First, we find that empirical methods for statistical analysis of natural and quasi-experiments in economics can be leveraged to distinguish causal relations from mere correlations in complex and data scarce systems, which can help address the challenge of sociohydrologic prediction. Second, we find that economic theories based on rational choice can be used to decipher known paradoxes in water resources, which can help address the challenge of sociohydrologic knowledge generation. In both empirical and theoretical domains, specialized knowledge in hydrology remains critical to properly applying techniques from economics to coupled human-water systems. We propose that linkages between the two fields highlight a large potential for interaction.
... Although the issue has being discussed in scientific sphere through the concepts of virtual water and the water embedded in the agricultural commercevirtual water trade (Lenzen et al., 2013;Dang et al., 2016;Reimer, 2012), our proposal is to use a different theoretical and methodological approach (kinds of water footprintgreen, blue and gray) based on bioeconomic theory. Our main statement shares ideas with Ansink's (2010) study which analyzes the use of virtual water trade. ...
Purpose
The aim of this essay is to present an alternative viewpoint to better manage the global natural resources using the case of soybean international market as a baseline and water as the natural resource, although the product and natural resource could be any other.
Design/methodology/approach
The case of Brazilian soya production and the international soybean market was used to illustrate the commodities and agricultural use of water, a global and finite natural resource. The water footprint analysis was applied to balance the international water trade associated to soybean exportation.
Findings
The net water balance indicates that Brazil is more efficient in the water use to soybean production considering water origin (types of water) and availability. That implies a benefit for soybean importers from Brazil which are not internalized in prices paid for the product.
Research limitations/implications
The alternatives proposed and discussed in this essay is far from to be complete and definitive. The details of their implications are beyond the scope and purpose of this essay. However, it may be the starting point for a wider academic and political debate.
Originality/value
From a discussion about the fundamental role of natural resources in the maintenance of mankind life and the implications of its irrational use, a global governance of natural resources is being proposed. As practical actions for global governance a green soybean, marketed under a water seal, has been discussed.
... As the basic provisional service to the ecological-economic-social system, water, with its adaptive utilizations, has been a hotspot in many sectors including research, management, and policy-making (Field et al., 2014;Henriques et al., 2015;Pahl-Wostl and Knieper, 2014). Given water scarcity and increased demand in most part of the world (Mo et al., 2016;Pedro-Monzonis et al., 2015), it is necessary to understand the major drivers of changes in water resources (Fatichi et al., 2015;Shrestha et al., 2017) for sustainability assessment of the coupled human-nature system , from perspectives of both rational utilization by human (Dang et al., 2016;Li et al., 2014;Oron et al., 2014) and efficient services by water (Batchelor et al., 2014;Fuller et al., 2017). ...
... Either way, it is time for socio-hydrology to move beyond individual case studies and find generalized but locally relevant descriptions of changes in the (large-scale) humanwater system (McMillan et al., 2016). Importantly, a recent study has presented a generalized socio-hydrology model of water resources and trade (Dang et al., 2016), which also highlights the opposite challenge in socio-hydrology model development, e.g. no explicit spatial representation in many economics models. ...
Over recent decades, the global population has been rapidly
increasing and human activities have altered terrestrial water fluxes to an
unprecedented extent. The phenomenal growth of the human footprint has
significantly modified hydrological processes in various ways
(e.g. irrigation, artificial
dams, and water diversion) and at various scales (from a watershed to the
globe). During the early 1990s, awareness of the potential for increased
water scarcity led to the first detailed global water resource assessments.
Shortly thereafter, in order to analyse the human perturbation on terrestrial
water resources, the first generation of large-scale hydrological models
(LHMs) was produced. However, at this early stage few models considered the
interaction between terrestrial water fluxes and human activities, including
water use and reservoir regulation, and even fewer models distinguished water
use from surface water and groundwater resources. Since the early 2000s, a
growing number of LHMs have incorporated human impacts on the hydrological
cycle, yet the representation of human activities in hydrological models
remains challenging. In this paper we provide a synthesis of progress in the
development and application of human impact modelling in LHMs. We highlight a
number of key challenges and discuss possible improvements in order to better
represent the human–water interface in hydrological models.
... Global hydrologic and land-surface models also provide important information on water availability for FEW systems (Bierkens et al., 2015); however, model intercomparisons reveal large uncertainties in these models (Haddeland et al., 2014;Schewe et al., 2014). New insights are emerging by coupling trade data for global food transport with embedded water and energy to understand the stocks and flows of our economic use of resources (Dang et al., 2016). However, a spatial disconnect exists between global data and the scales at which FEW systems are managed. ...
Emerging interdisciplinary science efforts are providing new understanding of the interdependence of food, energy, and water (FEW) systems. These science advances, in turn, provide critical information for coordinated management to improve the affordability, reliability, and environmental sustainability of FEW systems. Here we describe the current state of the FEW nexus and approaches to managing resource conflicts through reducing demand and increasing supplies, storage, and transport. Despite significant advances within the past decade, there are still many challenges for the scientific community. Key challenges are the need for interdisciplinary science related to the FEW nexus; ground-based monitoring and modeling at local-to-regional scales; incorporating human and institutional behavior in models; partnerships among universities, industry, and government to develop policy relevant data; and systems modeling to evaluate tradeoffs associated with FEW decisions.
Water markets represent a favorable means to reallocate water resources. With global changes in water consumption patterns and caps, water rights trading has become an appropriate method to reallocate water between agriculture and industry in water-rich regions. This paper analyzed the economic benefits of water trading in water-rich regions, with reference to a case study of southern China. Based on a regional input-output table, the economic benefits that water trading brings to the regional economy were quantified, including related economic benefits, indirect economic benefits, and cumulative economic benefits. The results showed that water trading yields significant economic benefits for the regional economy because of the accompanying technological and economic connections established among different sectors. This study provides a reference point for water rights trading policies in water-rich regions.
We contribute to the debate over globalization and the environment by asking: What is the impact of trade on national water use? To address this question we employ econometric methods to quantify the causal relationship between trade openness and water use. Specifically, we use the instrumental variables methodology to evaluate the impact of trade openness on domestic water withdrawals in agriculture and industry. We find that trade openness does not have a significant impact on total or industrial water withdrawals. However, we show that a one percentage point increase in trade openness leads to a 5.21% decrease in agricultural water withdrawals. We find that trade openness reduces water use in agriculture primarily through the intensive margin effect, by leading farmers to produce more with less water, such as through the adoption of technology. We do not find evidence for extensive margin or crop mix impacts on agricultural water withdrawals. Significantly, these results demonstrate that trade openness leads to less water use in agriculture. This finding has broad scientific and policy relevance as we endeavor to untangle causal relationships in the complex global food system and develop policies to achieve water and food security.
Water-related risks impact development opportunities and can trap communities in a downward spiral of economic decline. In this article, the dynamic relationship between water-related risks and economic outcomes for an embanked area in coastal Bangladesh is conceptualized. The interaction between flood events, salinity, deteriorating and poorly maintained water infrastructure, agricultural production and income is modelled. The model is used to test the effect of improvements in the reliability, operation and maintenance of the water infrastructure on agricultural incomes and assets. Results indicate that interventions can have non-marginal impacts on indicators of welfare, switching the system dynamic from a poverty trap into one of growth.
We present a network model of interstate food trade and report comprehensive estimates of embodied irrigation energy and greenhouse gas (GHG) emissions in virtual water trade for the United States (U.S.). We consider trade of 29 food commodities including 14 grains and livestock products between 51 states. A total of 643 million tons of food with a corresponding 322 billion m3 of virtual water, 584 billion MJ of embodied irrigation energy, and 42 billion kg CO2-equivalent GHG emissions were traded across the U.S. in 2012. The estimated embodied GHG emissions in irrigation water are similar to CO2 emissions from the U.S. cement industry, highlighting the importance of reducing environmental impacts of irrigation. While animal based commodities represented 12% of food trade, they accounted for 38% of the embodied energy and GHG emissions from virtual irrigation water transfers due to the high irrigation embodied energy and emissions intensity of animal based products. From a network perspective, the food trade network is a robust, well-connected network with the majority of states participating in food trade. When the magnitude of embodied energy and GHG emissions associated with virtual water are considered, a few key states emerge controlling high throughput in the network.
Prediction is central to water resources management in planning of both "hard" 23 infrastructure and "soft-path" solutions, such as pricing and conservation incentives 24 (Gleick 2003). Typically, the goal of prediction in water management has been to generate 25 time series of future water availability and use. Water resources scientists and 26 professionals build computer models and calibrate these using historical data to obtain a 27 "working model of the system". The models are then extrapolated into the future under a 28 range of population, land use, infrastructure, policy, and climate scenarios. These are 29 presented to decision makers to help them choose optimal solutions. 30 Human activities and goals have been an integral part of many water resources system 31 models since the days of the Harvard Water Program in the 1960s (Maass et al. 1962). 32 Water resources systems models incorporated human modifications such as dams and 33 canals. Hydro-economic models monetized benefit streams to allow an even-handed 34 comparison among uses (Harou et al. 2009) for optimal design and operation. A defining 35 feature of all these models was that the biophysical system was presumed to be relatively 36 independent of the social system in both model development and model use. Two-way 37 feedbacks between water resources and social systems were not usually incorporated. 38 Further, the scientists would typically build models and then hand them over to "decision 39 makers" to make the decisions. 40
As globalization links economies, the value of a country's irrigation water becomes increasingly sensitive to competitive forces in world markets. Water policy at the national and regional levels will need to accommodate these forces or water is likely to become undervalued. The inefficient use of this resource will lessen a country's comparative advantage in world markets and slow its transition to higher incomes, particularly in rural households. While professionals widely agree on what constitutes sound water resource management, they have not yet reached a consensus on the best ways of implementing policies. Policymakers have considered pricing water - a debated intervention - in many variations. Setting the price 'right,' some say, may guide different types of users in efficient water use by sending a signal about the value of this resource. Aside from efficiency, itself an important policy objective, equity, accessibility, and implementation costs associated with the right pricing must be considered. Focusing on the examples of China, Mexico, Morocco, South Africa, and Turkey, Pricing Irrigation Water provides a clear methodology for studying farm-level demand for irrigation water. This book is the first to link the macroeconomics of policies affecting trade to the microeconomics of water demand for irrigation and, in the case of Morocco, to link these forces to the creation of a water user-rights market. This type of market reform, the contributors argue, will result in growing economic benefits to both rural and urban households.
In flood risk assessment, there remains a lack of analytical frameworks capturing the dynamics emerging from two-way feedbacks between physical and social processes, such as adaptation and levee effect. The former, “adaptation effect”, relates to the observation that the occurrence of more frequent flooding is often associated with decreasing vulnerability. The latter, “levee effect”, relates to the observation that the non-occurrence of frequent flooding (possibly caused by flood protection structures, e.g. levees) is often associated to increasing vulnerability. As current analytical frameworks do not capture these dynamics, projections of future flood risk are not realistic. In this paper, we develop a new approach whereby the mutual interactions and continuous feedbacks between floods and societies are explicitly accounted for. Moreover, we show an application of this approach by using a socio-hydrological model to simulate the behavior of two main prototypes of societies: green societies, which cope with flooding by resettling out of flood-prone areas; and technological societies, which deal with flooding also by building levees or dikes. This application shows that the proposed approach is able to capture and explain the aforementioned dynamics (i.e. adaptation and levee effect) and therefore contribute to a better understanding of changes in flood risk, within an iterative process of theory development and empirical research.
Growing water extractions combined with emerging demands for environment protection increase competition for scarce water resources worldwide, especially in arid and semiarid regions. In those regions, climate change is projected to exacerbate water scarcity and increase the recurrence and intensity of droughts. These circumstances call for methodologies that can support the design of sustainable water management. This paper presents a hydro-economic model that links a reduced form hydrological component, with economic and environmental components. The model is applied to an arid and semiarid basin in Southeastern Spain to analyze the effects of droughts and to assess alternative adaptation policies. Results indicate that drought events have large impacts on social welfare, with the main adjustments sustained by irrigation and the environment. The water market policy seems to be a suitable option to overcome the negative economic effects of droughts, although the environmental effects may weaken its advantages for society. The environmental water market policy, where water is acquired for the environment, is an appealing policy to reap the private benefits of markets while protecting ecosystems. The current water management approach in Spain, based on stakeholders’ cooperation, achieves almost the same economic outcomes and better environmental outcomes compared to a pure water market. These findings call for a reconsideration of the current management in arid and semiarid basins around the world. The paper illustrates the potential of hydro-economic modeling for integrating the multiple dimensions of water resources, becoming a valuable tool in the advancement of sustainable water management policies.
Water is at the core of the most difficult sustainability challenges facing humans in the modern era, involving feedbacks across multiple scales, sectors, and agents. We suggest that a transformative new discipline is necessary to address the many and varied water-related challenges in the Anthropocene. Specifically, we propose socio-hydrology as a use-inspired scientific discipline to focus on understanding, interpretation and scenario development of the flows and stocks in the human-modified water cycle across time and space scales. A key aspect of socio-hydrology is explicit inclusion of two-way feedbacks between human and water systems, which differentiates socio-hydrology from other inter-disciplinary disciplines dealing with water. We illustrate the potential of socio-hydrology through three examples of water sustainability problems, defined as paradoxes, which can only be fully resolved within a new socio-hydrologic framework that encompasses such two-way coupling between human and water systems.
Virtual water trade is increasingly recognized as a useful metaphor for thinking about freshwater resources in an international context. Its legitimacy in terms of economic theory has been questioned by a number of authors, however. In this article I develop new theoretical results that place the virtual water concept on a firm economic foundation, and which correct several misconceptions within the existing literature on virtual water economics.
Based on predicted changes in the magnitude and distribution of global precipitation, temperature and river flow under the A1B and A2 scenarios of the Intergovernmental Panel on Climate Change Special Report on Emissions Scenarios (IPCC SRES), this study assesses the potential impacts of climate change and CO 2 fertilization on global agriculture, and its interactions with trade liberalization, as proposed for the Doha Development Round. The analysis uses the new version of the GTAP-W model, which distinguishes between rainfed and irrigated agriculture and implements water as an explicit factor of production for irrigated agriculture. Significant reductions in agricultural tariffs lead to modest changes in regional water use. Patterns are non-linear. On the regional level, water use may go up for partial liberalization, and down for more complete liberalization. This is because different crops respond differently to tariff reductions, and because trade OPEN ACCESS Water 2011, 3 527 and competition matter too. Moreover, trade liberalization tends to reduce water use in water scarce regions, and increase water use in water abundant regions, even though water markets do not exist in most countries. Considering impacts of climate change, the results show that global food production, welfare and GDP fall over time while food prices increase. Larger changes are observed under the SRES A2 scenario for the medium term (2020) and under the SRES A1B scenario for the long term (2050). Combining scenarios of future climate change with trade liberalization, countries are affected differently. However, the overall effect on welfare does not change much.
Economic ideas and processes are becoming increasingly integrated with more traditional engineering and hydrologic models
of water management problems. Combining economic management concepts and performance indicators with an engineering-level
of understanding of a hydrologic system can provide results and insights more directly relevant for water management decisions
and policies. When such models are developed and used with involvement of stakeholders, they can become a basis for shared
understanding of water problems as a foundation for negotiated management and policy solutions. When implemented with optimization
software, integrated hydro-economic models also can suggest promising innovative solutions for policy-makers to consider.
Their applications to river basin management problems are reviewed. Economic and integrated economic-engineering-hydrologic
modeling is then discussed in the context of the evolving European Water Framework Directive. Relevant items are cost recovery
and water pricing, cost-effectiveness of water management measures, and public participation in decision processes.
This study quantifies and maps the water footprint (WF) of humanity at a high spatial resolution. It reports on consumptive use of rainwater (green WF) and ground and surface water (blue WF) and volumes of water polluted (gray WF). Water footprints are estimated per nation from both a production and consumption perspective. International virtual water flows are estimated based on trade in agricultural and industrial commodities. The global annual average WF in the period 1996-2005 was 9,087 Gm(3)/y (74% green, 11% blue, 15% gray). Agricultural production contributes 92%. About one-fifth of the global WF relates to production for export. The total volume of international virtual water flows related to trade in agricultural and industrial products was 2,320 Gm(3)/y (68% green, 13% blue, 19% gray). The WF of the global average consumer was 1,385 m(3)/y. The average consumer in the United States has a WF of 2,842 m(3)/y, whereas the average citizens in China and India have WFs of 1,071 and 1,089 m(3)/y, respectively. Consumption of cereal products gives the largest contribution to the WF of the average consumer (27%), followed by meat (22%) and milk products (7%). The volume and pattern of consumption and the WF per ton of product of the products consumed are the main factors determining the WF of a consumer. The study illustrates the global dimension of water consumption and pollution by showing that several countries heavily rely on foreign water resources and that many countries have significant impacts on water consumption and pollution elsewhere.
Integrated studies of coupled human and natural systems reveal new and complex patterns and processes not evident when studied
by social or natural scientists separately. Synthesis of six case studies from around the world shows that couplings between
human and natural systems vary across space, time, and organizational units. They also exhibit nonlinear dynamics with thresholds,
reciprocal feedback loops, time lags, resilience, heterogeneity, and surprises. Furthermore, past couplings have legacy effects
on present conditions and future possibilities.
We present a co-evolutionary view of hydrologic systems, revolving around feedbacks between environmental and social processes operating across different time scales. This brings to the fore an emphasis on emergent phenomena in changing water systems, such as the levee effect, adaptation to change, system lock-in, and system collapse due to resource depletion. Changing human values play a key role in the emergence of these phenomena and should therefore be considered as internal to the system. Guidance is provided for the framing and modeling of these phenomena to test alternative hypotheses about how they arose. A plurality of co-evolutionary models, from stylized to comprehensive system-of-system models, may assist strategic water management for long time scales through facilitating stakeholder participation, exploring the possibility space of alternative futures, and helping to synthesize the observed dynamics in a wide range of case studies. Future research opportunities lie in exploring emergent phenomena arising from time scale interactions through historical, comparative and process studies of human-water feedbacks. This article is protected by copyright. All rights reserved.
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 import water embodied in goods from the rest of the world to alleviate pressure on domestic water resources. At the same time, as demand continues to increase and climate change threatens to alter hydrological cycles, water scarcity is a growing problem. Does research into virtual water trade need to consider water scarcity and differentiate flows out of water-scarce regions from flows out of water-abundant regions? Previous studies sum and compare virtual water volumes originating in countries experiencing vastly different degrees of water scarcity. We therefore incorporate water scarcity into an assessment of global virtual water flows. We use input-output analysis to include indirect virtual water flows. We find that the structure of global virtual water networks changes significantly after adjusting for water scarcity.
Many authors have estimated the virtual water content of good and services traded internationally, and many have calculated national water footprints that account for the volumes of virtual water imported and exported. Some authors have suggested that international trade of virtual water has been harmful to selected exporting countries with limited water endowments. Some suggest also that current patterns of international trade should be rearranged to make better use of global water resources. Yet, countries do not actually trade in virtual water. They trade in goods and services for which water is one of many inputs. Wise choices regarding water resources and smart strategies regarding international trade cannot be determined by focusing on water alone. The notions of virtual water and water footprints are not helpful indicators of optimal strategies regarding water resources, particularly when considering issues such as water scarcity or international trade. I describe four perspectives regarding virtual water and water footprints, with the goal of demonstrating the inadequacies of these notions in policy discussions and in efforts to determine the optimal allocation and use of water resources. The four perspectives are: (1) international trade should not be modified or regulated to reflect the virtual water content of traded commodities or water footprints in the countries of trading partners, (2) countries do not save water by engaging in virtual water trade, (3) consumers in one country cannot alleviate water scarcity or improve water quality in other countries, and (4) water footprints are not analogous to carbon or ecological footprints.
We examine whether a firm is more or less likely to adopt precision technology when input prices are stochastic. The results are important to determining whether programs and contracts that reduce input price uncertainty may deter the adoption of conservation practices. An economic model of the technology adoption decision shows that the net effect of input price risk is ambiguous and depends on several factors including the shutdown effect, the mean price effect, the precision expansion effect, and the risk aversion effect. An empirical implementation of the model relies on data on water price and irrigation technology adoption observed in a California irrigation district over the period 1999–2002. The results show that a stable input price increases the adoption of precision technology, but the impact depends on crop choice and land quality characteristics.
A. Wald has presented a model of production and a model of exchange and proofs of the existence of an equilibrium for each of them. Here proofs of the existence of an equilibrium are given for an integrated model of production, exchange and consumption. In addition the assumptions made on the technologies of producers and the tastes of consumers are significantly weaker than Wald's. Finally a simplification of the structure of the proofs has been made possible through use of the concept of an abstract economy, a generalization of that of a game.
Future water management will shift from building new water supply systems to better operating existing ones. The variation of water values in time and space will increasingly motivate efforts to address water scarcity and reduce water conflicts. Hydro-economic models represent spatially distributed water resource systems, infrastructure, management options and economic values in an integrated manner. In these tools water allocations and management are either driven by the economic value of water or economically evaluated to provide policy insights and reveal opportunities for better management. A central concept is that water demands are not fixed requirements but rather functions where quantities of water use at different times have varying total and marginal economic values. This paper reviews techniques to characterize the economic value of water use and include such values in mathematical models. We identify the key steps in model design and diverse problems, formulations, levels of integration, spatial and temporal scales, and solution techniques addressed and used by over 80 hydro-economic modeling efforts dating back 45-years from 23 countries. We list current limitations of the approach, suggest directions for future work, and recommend ways to improve policy relevance.
Water is not a normal economic good. It has a large number of characteristics that distinguish it from other goods. Individually, these characteristics may not be unique, but their combination makes water a special economic good. The metaphor about the girl refers to the fact that people always consider something which is close to their heart as special. A parent often fails to see that the daughter is just a girl. One could also blame water professionals for not seeing that water is just a normal economic good. The paper argues that there are good arguments to consider water as a special economic good. As a result, the application of regular economic theories to water resources management is not very efficient.
The water that is used in the production process of a commodity is called the ‘virtual water’ contained in the commodity. International trade of commodities brings along international flows of virtual water. The objective of this paper is to quantify the volumes of virtual water flows between nations in the period 1995–1999 insofar related to international crop trade and to analyse national virtual water balances in relation to national water needs and water availability. The basic approach is to multiply international crop trade flows (ton/yr) by their associated virtual water content (m3 ton−1). The calculations show that the global volume of crop-related international virtual water flows between nations was 695 Gm3 yr−1 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−1. 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 a conservative estimate because only a limited number of crops––although the most important ones––have been taken into account and because crop products (such as cotton clothes) have been excluded from the study. The countries with the largest net virtual water export are United States, Canada, Thailand, Argentina and India. The largest net import appears to be in Japan, the Netherlands, the Republic of Korea, China and Indonesia.
Water problems are typically studied at the level of the river catchment. About 70% of all water is used for agriculture, and agricultural products are traded internationally. A full understanding of water use is impossible without understanding the international market for food and related products, such as textiles. The water embedded in commodities is called virtual water. Based on a general equilibrium model, we offer a method for investigating the role of water resources and water scarcity in the context of international trade. We run five alternative scenarios, analyzing the effects of water scarcity due to reduced availability of groundwater. This can be a consequence of physical constraints, and of policies curbing water demand. Four scenarios are based on a "market solution", where water owners can capitalize their water rent or taxes are recycled. In the fifth "non-market" scenario, this is not the case; supply restrictions imply productivity losses. Restrictions in water supply would shift trade patterns of agriculture and virtual water. These shifts are larger if the restriction is larger, and if the use of water in production is more rigid. Welfare losses are substantially larger in the non-market situation. Water-constrained agricultural producers lose, but unconstrained agricultural produces gain; industry gains as well. As a result, there are regional winners and losers from water supply constraints. Because of the current distortions of agricultural markets, water supply constraints could improve allocative efficiency; this welfare gain may more than offset the welfare losses due to the resource constraint.
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