The Trade In Virtual Water

Every crop that is grown anywhere in the world takes up some water to grow. Some crops take more than others. Rice, cotton and sugarcane are among the world’s most water-intensive crops and take a longer time to grow than, for example, subtropical fruits or vegetables. Most of these water-intensive crops are grown in parts of the world that already have problems with water scarcity.

Think about it like this: a Pakistani cotton farmer exports his cotton sheets to an Italian design company which then exports cotton T-shirts to the USA where they can be bought for $5 each. The cost of this chain of international trade does not take in to account the fact that the water contained within the product has shifted dramatically from one place to another. This is called the trade in “virtual water” and hides the cost of that trade in water terms.

A World Trade Organisation paper from 2010 found that cotton farming in Pakistan has contributed to the drying up of the Aral Sea and intensive use and pollution of the Indus River. So in our example, an economic activity in a country that has depleted water resources is depleting it even further in order to make short term profit.

As a second example, let’s take the country of Jordan, which exports annually 1 billion cubic metres of water in goods, but which imports 5 to 7 billion cubic metres of water in others. This may be surprising, but Jordan is essentially improving its water health by importing more water than it exports.

The trade in virtual water depends upon a number of things including how open the market is to a supplier switching its goods from one long-standing product to another. Water is generally grossly underpriced in making these decisions.

The authors of the WTO paper in 2010 argued for a mechanism of labelling which would ensure transparency at the consumer end of buying a product as to its water usage history, as well as an International Water Pricing Protocol and an International Water Permit System. None of these have yet come about and it’s not clear if or when they will.


Image credit: “water drops” by fox_kiyo is licensed with CC BY-SA 2.0. To view a copy of this license, visit

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What Is Water Scarcity?

Simply put: Water scarcity is when there is not enough clean water available to meet a local population’s needs.

Population Growth

By most forecasts, the global population is growing fast. A growing population needs more water. We use it to drink, to bathe, to grow our crops and in all sorts of industrial processes like making textiles and leather, paper and steel. But, currently, there simply isn’t enough of it to sustain us moving forward. Why is that, you might ask, given that over 70% of the world’s surface is water?


The answer lies in the difference between salinated and desalinated, or freshwater. Salinated ocean water contains too many salts and bacteria to be digested safely by humans, and although we can get rid of them through chemical processes, this costs around 15 times as much money as simply transporting local freshwater sources to populations that need them. That doesn’t mean it’s impossible: in fact, Kuwait meets its entire water supplies by converting salt water to freshwater – but Kuwait is one of the richest countries in the world by GDP per capita, as well as one of the smallest. Part of the World Bank’s Water Strategy is to encourage the uptake of desalination plants globally so that we can meet our growing water needs.

According to the World Bank, the world may face a 40% shortfall of supply of clean water by 2030, which is not far off.


Most of the freshwater we get is from aquifers. Aquifers are underground caverns where water has collected over centuries through rainfall. Many of these aquifers are being depleted at a rate faster than they can be refilled naturally, and once the water in them reaches below a certain level, they may not refill at all. Plus, warmer weather often means less rainfall in the areas where aquifers have formed. Many cities and towns in the USA rely on them for drinking water and have formed a project to manually inject drinking water back in to aquifers to ensure they stay working for future generations.

Water Usage

The vast majority – 70% – of our freshwater today is used in agricultural production. Irrigated crops like rice and cotton take up a lot of water. There’s a hidden trade in water called the virtual water economy which we’ll talk more about next time.

By 2050, with an additional 2 billion people on the planet, that figure will need to rise to 112% of our current water supplies. Most of that population growth will be in South Asia and sub-Saharan Africa, regions which are already suffering from water scarcity. Either we need somehow to create new water, or we need to change our agricultural and consumption habits.

Water scarcity fuels conflict, and can make drastic weather events such as floods and droughts more likely. All this puts a big question mark over how we get freshwater to be where it needs to be so that we all get adequate access, now and in future.


Sources: World Bank and UNESCO

Image: “Water Scarcity” by Alejandro Peters is licensed with CC BY 2.0. To view a copy of this license, visit

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