Virtual Water and Trade: A Critical Economic Review

  • Erik Gawel
Part of the Springer Water book series (SPWA)


In recent years many scholars have dealt with aspects of a “globalisation of water resources” implicating the need for a global approach to governing scarce water resources. Especially the concepts of virtual water and water footprints have garnered increasing attention due to their pledge to disclose the linkages of local water consumption and global agricultural trade. In response, trade-restricting policy instruments have been promoted by some authors in response to seemingly inefficient, unfair or unsustainable “virtual water”-trade patterns. To shed some light on the link between food trade, water and sustainability this paper discusses the informative value of the virtual water and water footprint concepts from an economic point of view, including various refinements of these indicators which have been suggested in the literature. Additionally, the performance of trade-related global water governance arrangements based on virtual water will be considered, bringing up again the debate about the environmental benefits of free trade. It must be concluded that the virtual water concept is limited in terms of its usefulness in providing policy advice or guiding economic decision-making. Specific sustainability problems (distorted pricing, bad governance, trade performance) should be solved in the respective arenas and not by virtual water-related global governance schemes or even trade barriers.


Carbon Footprint Trade Flow Water Saving Water Footprint Virtual Water 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.



The author would like to thank two anonymous referees for helpful comments.


  1. Aldaya MM, Llamas MR (2009) Water footprint analysis (hydrologic and economic) of the Guadiana River Basin. Accompanying report to the U.N. world water development report no. 3. United Nations Educational, Scientific and Cultural Organization, ParisGoogle Scholar
  2. Aldaya MM, Garrido A, Llamas MR, Varelo-Ortega C, Novo P, Casado RR (2010) Water footprint and virtual water trade in Spain. In: Garrido A, Llamas MR (eds) Water policy in Spain. CRC Press, Leiden, pp 49–59Google Scholar
  3. Allan JA (1998) Virtual water: a strategic resource, global solutions to regional deficits. Groundwater 36(4):545–547CrossRefGoogle Scholar
  4. Ansink E (2010) Refuting two claims about virtual water trade. Ecol Econ 69(10):2027–2032CrossRefGoogle Scholar
  5. Bhagwati J (1993) The case for free trade. Sci Am 269:18–23CrossRefGoogle Scholar
  6. Biewald A (2011) Give virtual water a chance! An attempt to rehabilitate the concept. GAIA 20(3):168–170Google Scholar
  7. Biewald A, Lotze-Campen H, Rolinski S, Hoff H (2011) The impact of trade on local green and blue water availability. Discussion paper. Potsdam Institute for Climate Impact Research, Potsdam, 15 Apr 2011Google Scholar
  8. CEO Water Mandate (2009) From footprint to public policy—the business future for addressing water issues. Pacific Institute DP, Pacific Institute of Public Policy, Port Vila, Vanuatu. Accessed 18 Jan 2014
  9. Chapagain AK, Hoekstra AY (2008) The global component of freshwater demand and supply: an assessment of virtual water flows between nations as a result of trade in agricultural and industrial products. Water Int 33(1):19–32CrossRefGoogle Scholar
  10. Chapagain AK, Hoekstra AY, Savenije HHG (2005) Saving water through global trade. Value of water research report series 17. Institute of Water Education, Delft, Netherlands. Accessed 18 Jan 2014
  11. Daly HE (1993) The perils of free trade. Sci Am 269:24–29CrossRefGoogle Scholar
  12. Daly HE, Cobb J (1994) For the common good—redirecting the economy toward community, the environment and a sustainable future. Beacon Press, BostonGoogle Scholar
  13. Dellapenna JW, Gupta J (eds) (2009) The evolution of the law and politics of water. Springer, BerlinGoogle Scholar
  14. Fader M, Gerten D, Thammer M, Heinke J, Lotze-Campen H, Lucht W, Cramer W (2011) Internal and external green-blue agricultural water footprints of nations, and related water and land savings through trade. Hydrol Earth Syst Sci Discuss 8(1):483–527CrossRefGoogle Scholar
  15. Falkenmark M (2003) Freshwater as shared between society and ecosystems: from divided approaches to integrated challenges. Philos Trans R Soc Lond B 358(1440):2037–2049CrossRefGoogle Scholar
  16. de Fraiture C, Cai X, Amarasinghe U, Rosegrant M, Molden D (2004) Does international cereal trade save water? The impact of virtual water trade on global water use. In: Comprehensive assessment research report 4, Colombo, Sri Lanka. Accessed 30 Jun 2011
  17. Garrido A, Llamas MR, Varela-Ortega C, Novo P, Rodríguez-Casado R, Aldaya MM (2010) Water footprint and virtual water trade in Spain—policy implications. Springer, New YorkCrossRefGoogle Scholar
  18. Gawel E, Bernsen K (2011a) Do we really need a water footprint? global trade, water scarcity and the limited role of virtual water. GAiA 21(3):162–167Google Scholar
  19. Gawel E, Bernsen K (2011b) The colour of water: what does it tell us about scarcity? GAiA 21(4):224–228Google Scholar
  20. Gawel E, Bernsen K (2011c) Globalisation of water: the case for global water governance? Nature + Culture 6(3):205–217Google Scholar
  21. Gawel E, Bernsen K (2013) What is wrong with virtual water trading? On the limitations of the virtual water concept. Environ Plann C (Government and Policy) 30(6):168–181CrossRefGoogle Scholar
  22. Gerbens-Leenes W, Hoekstra A, Holland R, Koch G, Moss J, Ndebele P, Orr S, Ronteltap M, de Ruyter van Stevenink E (2007) Water neutrality: a concept paper. Accessed 18 Jan 2014
  23. Hoekstra AY (2006) The global dimension of water governance: nine reasons for global arrangements in order to cope with local water problems. Value of water research report series 20. Institute for Water Education, Delft, Netherlands. Accessed 18 Jan 2014
  24. Hoekstra AY (2008) Water neutral: reducing and offsetting the impacts of water footprints. Value of water research report series 28. Institute for Water Education, Delft, Netherlands. Accessed 18 Jan 2014
  25. Hoekstra AY (2011) The global dimension of water governance: why the river-basin approach is no longer sufficient and why cooperative action at global level is needed. Water 2011(3):21–46Google Scholar
  26. Hoekstra AY, Chapagain AK (2007) Water footprints of nations: water use by people as a function of their consumption pattern. Water Resour Manag 21(1):35–48Google Scholar
  27. Hoekstra AY, Chapagain AK, Aldaya MM, Mekonnen MM (2009) Water footprint manual, state of the art 2009. Water footprint report. Water Footprint Network, Enschede, Netherlands. Accessed 18 Jan 2014
  28. Hoekstra AY, Hung PQ (2002) Virtual water trade: a quantification of virtual water flows between nations in relation to international crop trade. Value of water research report series 11. Institute for Water Education, Delft, Netherlands. Accessed 18 Jan 2014
  29. Hoekstra AY, Hung PQ (2003) Virtual water trade: a quantification of virtual water flows between nations in relation to international crop trade. Value of water research report series 11. Institute for Water Education, Delft. Accessed 18 Jan 2014
  30. Hoff H (2009) Global water resources and their management. Curr Opin Environ Sustain 1(2):141–147CrossRefGoogle Scholar
  31. Hoff H, Falkenmark M, Gerten D, Gordon L, Karlberg L, Rockström J (2010) Greening the global water system. J Hydrol 384(3–4):177–186CrossRefGoogle Scholar
  32. Kumar MD, Singh OP (2005) Virtual water in global food and policy making: is there a need for rethinking? Water Resour Manag 19(6):759–789Google Scholar
  33. Lenzen M, Moran D, Bhaduri A, Kanemoto K, Bekchanov M, Geschke A, Foran B (2013) International trade of scarce water. Ecol Econ 94:78–85CrossRefGoogle Scholar
  34. LeVernoy A, Messerlin P (2011) Water and the WTO: don’t kill the messenger. Paper prepared for the workshop “accounting for water scarcity and pollution in the rules of international trade” Amsterdam, 25–26 Nov 2011Google Scholar
  35. Lillywhite RD, Allan AJ, Chapagain A, Garnett T (2010) Water footprinting—a review in support of the defra project WU0120. Department of Environment Food and Rural Affairs, LondonGoogle Scholar
  36. Lotze-Campen H, Welp M (2007) More food with less water: the role of efficiency gains, lifestyles and trade. In: Lozán JL, Graßl H, Hupfer P, Menzel L, Schönwiese D (eds) Global change: enough water for all? Hamburg, p 306–309Google Scholar
  37. McKay J (2003) A proposal for an international virtual water trading council: building institutional frameworks at international level to reduce poverty. In: Ünver O, Gupta RK, Ayşegül K (eds) Water development and poverty reduction. Kluwer Academic Publishers, Norwell, pp 111–128CrossRefGoogle Scholar
  38. Mehta L (2003) Problems of publicness and access rights: perspectives from the water domain. In: Kaul I (ed) Providing global public goods, managing globalization. Oxford, New York, p 556–575Google Scholar
  39. Meran G (2011) The unimportance of “virtual water” for environmental policy.—meran.pdf. Accessed 18 Jan 2014
  40. Moss T, Newig J (2010) Multi-level water governance and problems of scale: setting the stage for a broader debate. Environ Manag 46(1):1–6Google Scholar
  41. Neubert S (2008) Strategic virtual water trade—a critical analysis of the debate. In: Scheumann W (ed) Water politics and development cooperation: local power plays and global governance. Springer, Berlin, pp 123–145CrossRefGoogle Scholar
  42. Organisation for Economic Co-operation and Development (OECD) (2003) Improving water management: recent OECD experience. OECD, ParisGoogle Scholar
  43. Pahl-Wostl C, Gupta J, Petry D (2008) Governance and the global water system: a theoretical exploration. Glob Gov 14(4):419–435Google Scholar
  44. Perry C (2014) Water footprints: path to enlightenment, or false trail? Agric Water Manag 134:119–125CrossRefGoogle Scholar
  45. Petrella R (2001) Wasser für alle. Ein globales Manifest, Rotpunktverlag, ZürichGoogle Scholar
  46. Pfister S, Koehler A, Hellweg S (2009) Assessing the environmental impacts of freshwater consumption in LCA. Environ Sci Technol 43(11):4098–4104CrossRefGoogle Scholar
  47. Ridoutt BG, Pfister S (2010) A revised approach to water footprinting to make transparent the impacts of consumption and production on global freshwater scarcity. Glob Environ Change 20(1):113–120CrossRefGoogle Scholar
  48. Rogers P, Hall A (2003) Effective water governance. TEC Background Paper 7. Global Water Partnership, Stockholm. Accessed 18 Jan 2014
  49. Roth D, Warner J (2008) Virtual water: virtuous impacts? The unsteady state of virtual water. Agric Hum Values 25(2):257–270CrossRefGoogle Scholar
  50. Schnurr M (2008) Global water governance: managing complexity on a global scale. In: Scheumann W (ed) Water politics and development cooperation: local power plays and global governance. Springer, Berlin, pp 107–120CrossRefGoogle Scholar
  51. Schubert H (2011) The concepts of virtual water and water footprints. acatech Materialien no. 4. Acatech, MunichGoogle Scholar
  52. Schulz C-E (1996) Trade policy and ecology. Environ Resource Econ 8(1):15–38Google Scholar
  53. Siebert H (1996) Trade policy and environmental protection. Kiel Working Papers 730. Accessed 18 Jan 2014
  54. Sonnenberg A, Chapagain A, Geiger M, August D (2009) Der Wasser-Fußabdruck Deutschlands. Woher Stammt das Wasser, das in unseren Lebensmitteln steckt?, WWF Germany, Berlin Google Scholar
  55. Ünver O (2008) Global governance of water: a practitioner’s perspective. Glob Gov 14(4):419–435Google Scholar
  56. Van den Bergh J, Verbrüggen H (1999) Spatial sustainability, trade and indicators: an evaluation of the ‘ecological footprint’. Ecol Econ 29(1):61–72CrossRefGoogle Scholar
  57. Velázquez E, Madrid C, Beltrán MJ (2011) Rethinking concepts of virtual water and water footprint in relation to the production-consumption binomial and the water-energy nexus. Water Resour Manag 25(2):743–761Google Scholar
  58. Verkerk MP, Hoekstra AY, Gerbens-Leenes PW (2008) Global water governance: conceptual design of global institutional arrangements. Value of water research report series 26. Institute for Water Education, Delft, Netherlands. Accessed 18 Jan 2014
  59. Vörösmarty C, Lettenmaier D, Leveque C, Meybeck M, Pahl-Wostl C, Alcamo J, Cosgrove W, Grassl H, Hoff H, Kabat P, Lansigan F, Lawford R, Naiman R (2004) Humans transforming the global water system. Eos, Trans Am Geophys Union 85(48):509–520CrossRefGoogle Scholar
  60. Wackernagel M, Rees W (1997) Unser Ökologischer Fußabdruck: Wie der Mensch Einfluss auf die Umwelt Nimmt. Birkhäuser Verlag, BaselCrossRefGoogle Scholar
  61. Warner J (2003) Virtual water – virtual benefits? Scarcity, distribution, security and conflict reconsidered. In: Hoekstra AY (ed) Virtual Water Trade–Proceedings of the International Expert Meeting on Virtual Water Trade. IHE Delft Value of Water Research Report Series No. 12Google Scholar
  62. Wichelns D (2004) The policy relevance of virtual water can be enhanced by considering comparative advantages. Agric Water Manag 66(1):49–63CrossRefGoogle Scholar
  63. Wichelns D (2010a) Virtual water: a helpful perspective, but not a sufficient policy criterion. Water Resour Manag 24(10):2203–2219Google Scholar
  64. Wichelns D (2010b) Virtual water and water footprint offer limited insight regarding important policy questions. Int J Water Resour Dev 26(4):639–651CrossRefGoogle Scholar
  65. Wichelns D (2010c) Virtual water and water footprints: policy relevant or simply descriptive? Int J Water Resour Dev 26(4):689–695CrossRefGoogle Scholar
  66. Wichelns D (2011) Virtual water and water footprints. Compelling notions, but notably flawed. GAIA 20(3):171–175Google Scholar
  67. World Water Assessment Programme (2009) Water in a changing world. Third UN world water development report. UNESCO, ParisGoogle Scholar
  68. World Water Council (2004) Virtual water trade—conscious choices. E-conference synthesis. World Water Council, Marseille. Accessed 18 Jan 2014
  69. Yang H, Reichert P, Abbaspour K, Zehnder AJB (2003) A water resources threshold and its implications for food security. Environ Sci Technol 37(14):3048–3054CrossRefGoogle Scholar
  70. Yang H, Wang L, Zehnder AJB, Abbaspour KC (2006) Virtual water trade: an assessment of water use efficiency in the international food trade. Hydrol Earth Syst Sci 10:443–454CrossRefGoogle Scholar
  71. Young GJ, Dooge JCI, Rodda JC (1994) Global water resource issues. Cambridge University Press, CambridgeGoogle Scholar
  72. Zehnder AJB (2003) Water issues: the need for action at different levels. Aquat Sci 65(1):1–20CrossRefGoogle Scholar
  73. Zehnder AJB (2010) Water food nexus. Presentation at the first water research horizon conference, Berlin, 13 July 2003Google Scholar

Copyright information

© Springer International Publishing Switzerland 2014

Authors and Affiliations

  1. 1.Department of EconomicsHelmholtz Centre for Environmental Research – UFZLeipzigGermany

Personalised recommendations