International trade amplifying national water scarcity

In the period 1997-2001, 16% of the water use in the world was not for producing products for domestic consumption but for making products for export (Hoekstra and Chapagain, 2007, 2008). The nations with the largest net annual water use for producing export products were the USA (92 billion cubic meters), Australia (57 billion cubic meters), Argentina (47 billion cubic meters), Canada (43 billion cubic meters), Brazil (36 billion cubic meters), and Thailand (26 billion cubic meters). The main products behind the national water use for export from the USA were oil-bearing crops and cereal crops. These products are grown partly rain-fed and partly irrigated. In Australia and Canada, the water use for export was mainly related to the production of cereals and livestock products. In Argentina and Brazil, water use for export was primarily for producing oil-bearing crops. The national water use for export in Thailand was mainly the result of export of rice. Much of the rice cultivation in Thailand is done during the rainy season, but irrigation is widespread, to achieve two harvests per year. In the period 1997-2001, Thailand used 27.8 billion cubic meters per year of water (sum of rainwater and irrigation water) to produce rice for export, mostly grown in the central and northern regions (Maclean et al., 2002). The monetary equivalent of the rice export was US$1,556 million per year (ITC, 2004). Hence, Thailand generated a foreign exchange of 0.06 US$/m3.

Let me repeat that currently 16% of the water use in the world is not for producing products for domestic consumption but for making products for export and let us assume that, on average, agricultural production for export does not cause significantly more or fewer water-related problems (such as water depletion or pollution) than production for domestic consumption. That means that roughly one sixth of the water problems in the world can be traced back to production for export. Consumers do not see the effects of their consumption behaviour due to the tele-connection between areas of consumption and areas of production. The benefits are at the consumption side, but since water is generally grossly under-priced, the costs remain at the production side. From a water-resources point of view it would be wise for the exporting countries in the world to review their water use for export and see to which extent this is good policy given the fact that the foreign income associated with the exports generally does not cover most of the costs associated with the use of water. The construction of dams and irrigation schemes and even operation and maintenance costs are often covered by the national or state government. Negative effects downstream and the social and environmental costs involved are not included in the price of the export products as well.

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