Water may be saved through trade provided it moves from countries that use water wisely to those lacking water, as a coming water crisis—driven by climate change, neglect of infrastructure, and misguided policies—threatens global economic growth in countries struggling to develop, and in developed countries.

Savings don’t refer to the volume of virtual water of the imported product, but to the volume of water the importers would have required to produce the same quantity of product. Globally, savings represent on average 10% of the 352 cubic kilometers of global freshwater used each year.

Most virtual water goes into agricultural exports rather than industry, and is heavily subsidized to make them competitive. There is no recognized way to price water, so it reflects demand and supply, and water, both surface and groundwater, is underpriced. The reality is that water resources are becoming more expensive to exploit, and this is not reflected in the price of a final product.

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About the speaker

Alexandre le Vernoy is a consultant at Groupe d’Economie Mondiale.

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