North Africa South-east Asia Central Africa Southern Africa
North America Western Europe Former Soviet Union
Eastern Europe Middle East
Central America North Africa
Central Africa
Central America Former Soviet Union
Eastern Europe Middle East
Central and South Asia Western Europe
Figure 14: Regional virtual water balances and net interregional virtual water flows related to the trade in
agricultural products, 1997–2001. The arrows show net virtual water flows between regions (>10 BCM/yr) Source: Chapagain and Hoekstra (2008)
whole, the world is generally worse off. However, some countries strive for food sovereignty for various reasons including security.
In an attempt to understand the likely impacts of freer trading arrangements on water use, a background paper to this chapter uses a model to estimate the likely effects of agricultural trade liberalisation on water use (Calzadilla et al. 2010). The model used differentiates between rain-fed and irrigated agriculture and includes functions that take into account the effects of climate change on the volume of water available for extraction. The trade- liberalisation scenario is based on the proposals being developed as part of the Doha round of negotiations, which seek to move the world towards a regime where agricultural trade is less restricted. In particular, the analysis assumes that there is a 50 per cent reduction in tariffs, a 50 per cent reduction in domestic support to agriculture and that all export subsidies are removed. Given that progress towards such a regime will take time to implement, the scenario is examined with and without climate change. The climate-change scenarios are based on those developed by the International Panel on Climate Change (IPCC) (2008).
Table 3 presents a summary of the findings of this modelling exercise, presented in more detail in the background paper. The introduction of Doha-like freer trading arrangements increases global welfare by US$ 36 billion. If strong climate change occurs, global welfare
is reduced by US$ 18 billion. The model assumes no change to the policies that determine how the welfare benefits from increased trade are distributed. Calzadilla et al. conclude that trade liberalisation:
■ Increases the quantity of agricultural products traded and the capacity of nations to trade with one another with the consequence that global capacity to adjust to climate change is greater than it otherwise would be;
■ Tends to reduce water use in water-scarce regions and increase water use in water-abundant regions, even though water markets do not exist in most countries; and
■ Makes each nation more responsive to changing conditions and, as a result, reduces the negative impacts of climate change on global welfare by 2 per cent. Regional changes, however, are much larger than this.
In summary, the modelling suggests that freer international trading arrangements for agriculture will significantly reduce the costs of facilitating adjustment and attaining MDG targets. Trade liberalisation can be expected to reduce water use in places where supplies are scarcest and increase water use in areas where they are abundant. Trade liberalisation increases the capacity to adapt to climate change and reduces its negative effects.
South America Southern Africa Oceania South-east Asia Central and South Asia