A Virtual Approach to Water

What is Virtual Water?

The term Virtual water was first coined by John Allan in the 1990s (Hoekstra, 2003).   Put simply, it seeks to recognise the significant use of water in countries' resources, including that of food, and to encourage countries which have a low stockpile of water to import water intensive food products, so as to lower the strain on their country's water supply. The volume of virtual water ‘hidden’ or ‘embodied’  in a particular product is defined as the volume of water used in the production process of that product. The volume of virtual water transfer is so great that in Middle Eastern and North African countries, it exceeds the outflow of the Nile in a year (Allan, 2003).

The simple fact is, food needs water. Grain is an often-used example: one kilogram requires 1000kg to 2000kg of water. Between 5000-6000kg of water is needed for a kilo of cheese(Hoekstra, 2003). Thus, there is a huge amount of water hidden within our food. Allen (2003) proposed the idea of virtual water to simplify the trade process, allowing water to be more visible. It also provides an insight into which resources are impacted most by water, hence allowing countries to make economic choices on allocative efficiency with regard to their water. It should however be noted that while countries may have similar levels of freshwater resources, their ability to create the same produce depends on their climate. An example is that France and Botswana have similar freshwater levels, yet due to the large level of evapotranspiration and a lower level of soil water, cereal production is not possible to the same extent within Botswana (Earle,2001).   

 

Figure 1- Global Freshwater balance between 1995-1999. Green represents net exporter of virtual water. (Hoekstra, 2003,10)

 

Potential of virtual water for Southern Africa?

Today, I want to highlight how the virtual water trade has affected Southern Africa, specifically Namibia, Zimbabwe and Botswana. Africa has a huge stockpile of freshwater resources, estimated at around 5400km²(Earle, 2001). However, this freshwater is varied in its supply across the continent (Hoekstra, 2003). The economic rationale for virtual water is ‘nations should export products in which they possess a relative or comparative advantage in production, while they should import products in which they possess a comparative disadvantage’(OECD,2010,6). It is seen as an alternative to irrigation schemes, which can be expensive, damaging for the environment and prone to corruption. Virtual water suggests that countries should adjust their water use to give the most value. World grain prices have declined by 50% since 1960, and further, markets in Africa have found it near-impossible to deal with the competition from American/European farms which receive huge subsidies, resulting in cheaper consumer products (Earle, 2001). Earle (2001) found that wheat produces $0.09 in value per cubic metre of water used, compared with oranges which produce $0.9 per cubic metre of water used . Further, if a country were to switch away from agriculture production to Aluminium they could generate $307 per cubic metre used. This is obviously not a simple solution however, given that agriculture currently employs the majority of the populations in Southern Africa. 

 

Figure 2, Food Defecit in Calories vs % Malnourished (Earle,2001,35)

Studies on virtual water trade within Southern Africa show that the countries with the higher HDI and GDP are those which rely the most on virtual water imports (Matchaya,2019). These are the most water-stressed countries out of the regions listed (Botswana and South Africa), and as their water supplies have become depleted they have decided to divert their precious water, to areas which will generate greater income. In comparison, Zimbabwe, which has higher levels of water, yet has a population with a far lower calorific intake than South Africa and Botswana (Earle, 2001,35). Zimbabwe has the lowest ‘level of social resources’ and thus is the 'least able to find alternatives as physical scarcity threatens’ (Earle, 2001,49). Thus the reliance on grain production puts them in a worse financial position, and further they are more prone to climatic shocks which could drastically impact their economy. Southern Africa provides a good insight into the positive economic and environmental potential of virtual water, which as Yang (2002) suggests can be extended beyond water and food.  Nevertheless, issues regarding implementation of this kind of network prevents it from being a perfect solution.

Attached is an insightful ted talk on the potential of Virtual water