Edited by Kevin P. Gallagher
Chapter 8: The Relation Between International Trade and Water Resources Management
A.Y. Hoekstra Unlike oil, water is generally not regarded as a global resource. Whereas in most countries the energy sector has an obvious international component, this is diﬀerent for the water sector. The international component of water is recognized only in the case of transboundary rivers. The relation between international trade and water management is generally not something that water sector oﬃcials think about. The reason is that water is not traded internationally, due to its bulky properties. Besides, there is no private ownership of water, so that it can also not be traded as in a market (Savenije, 2002). Water sector specialists often forget, however, that water is traded in virtual form, i.e. in the form of agricultural and industrial commodities. Although invisible, import of ‘virtual water’ can be an eﬀective means for water-scarce countries to preserve their domestic water resources (Allan, 2001a). Water sector specialists do not usually explicitly study the relation between water use and import or export. At the same time, trade specialists and economists engaged in or studying international trade generally do not bother much about the implications of international trade for the water sector. The reason here is that the water inputs generally hardly contribute to the overall price of traded commodities. This seems to justify the conclusion that water cannot be a signiﬁcant factor inﬂuencing trade patterns. The fact that water inputs are generally heavily subsidized by national governments is hereby ignored. Trade specialists also tend to forget...
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