Virtual water scarcity risk to the global trade system

College

Gokongwei College of Engineering

Department/Unit

Industrial Engineering

Document Type

Article

Source Title

Environmental Science and Technology

Volume

52

Issue

2

First Page

673

Last Page

683

Publication Date

1-16-2018

Abstract

Local water scarcity risk (LWSR, meaning potential economic output losses in water-using sectors due to physical water scarcity) can be transmitted to downstream economies through the globalized supply chains. To understand the vulnerability of the global economy to water scarcity, we examine the impacts of local water scarcity risk on the global trade system from 1995 to 2009. We observe increasingly intensified geographical separation between physical water scarcity and production losses due to water scarcity. We identify top nation-sectors in virtual water scarcity risk (VWSR) exports (indicating local water scarcity risk in each nation transmitted to foreign nations through its exports), including agriculture and utilities in major economies such as China, India, Spain, France, and Turkey. These nation-sectors are critical to the resilience of the global economy to water scarcity. We also identify top nation-sectors in virtual water scarcity risk imports (indicating each nation's vulnerability to foreign water scarcity risk through the global trade system), highlighting their vulnerability to distant water scarcity. Our findings reveal the need for nations to collaboratively manage and conserve water resources, and lay the foundation for firms in high VWSR-importing sectors to develop strategies to mitigate such risk. © 2017 American Chemical Society.

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Digitial Object Identifier (DOI)

10.1021/acs.est.7b04309

Disciplines

Operations Research, Systems Engineering and Industrial Engineering

Keywords

Water-supply; International trade—Environmental aspects

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