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WATER POLITICS

Via Bloomberg, a report on how more extreme weather is reshaping the availability of water, a commodity embedded in almost every product bought and sold in international markets:

Increasingly acute scarcity has forced cities, countries and companies to purchase much more water from farther-away places than ­before. Water deliveries are a growing industry, and not just in places with unreliable freshwater supplies. Tanker trucks loaded with the life-­giving liquid have become necessary even in developed nations enduring multiyear droughts. At the same time, marketplaces where water rights are bought and sold have become more volatile in parts of Australia, Chile, Spain and the US.

But that trade of H?0 pales in comparison to another, invisible way that water moves around the globe. Because it’s needed to make almost every raw material and product that humans consume, the trillions of dollars in commodities and goods exchanged every year also ultimately represent an exchange of water.

Sources: BACI, CEPII; S. Tamea et al.: 1961–2016 CWASI database; Graham, N.T., Hejazi, M.I., Kim, S.H. et al. Future changes in the trading of virtual water

Tony Allan, a British geographer, coined the term “virtual water” in the 1990s to describe the unseen trade that happens every day — as opposed to the “physical water” that’s bought and sold through pipelines, bottles and contracts. Food imports, he argued, served as an indicator of the scale of an economy’s water deficit. High levels of food imports showed that a nation didn’t have enough water to grow its own food; low levels suggested the opposite. It was a good thing that such a market developed organically, as it helped mitigate shortages and tensions over scarcity.

“Everywhere there are examples of conflict over water being avoided,” Allan wrote in his first paper on the issue in 1993. “The tendency is to make adjustments which are ­conflict-avoiding through economic and policy substitutions for water.”

The initial awareness of the virtual water trade came at a time when there was more to go around and fewer mouths to feed. Trading of water through goods doubled from 1986 to 2007 as the global population rose and international shipping became more sophisticated. These trends — together with an increase of gross domestic product in some of the world’s largest economies — will continue through the century, according to a September paper on the future of virtual water ­trading by scientists at the University of Maryland.

The researchers project that today’s virtual water market will expand as much as five times by 2100. More efficient trading could help reduce water needs, with potential savings of 6 trillion cubic meters of water through the end of the century, the equivalent of almost 2 billion Olympic swimming pools or more than the volume of Lake Michigan.

It took nearly three decades for scientists to figure out how to map the virtual water trade. Researchers at the Polytechnic University of Turin in Italy did so by analyzing millions of data points on agricultural exchanges through 2016, which were recorded by the United Nations’ Food and Agriculture Organization.

“Virtual water has become a way for us to under­stand how countries connect to each other from a geopolitical point of view,” says Marta Tuninetti, a co-­author of the Turin research. “We use these indicators to understand what are the repercussions over the trade network if a climatic or a geopolitical crisis hits a producer country.”

There are plenty of recent examples. Russia’s invasion of Ukraine sent shock waves through the grain market. Each ton of wheat requires about 1,500 cubic meters of water on average globally, according to CWASI, a database managed by the Turin researchers that shows how much water is embedded in goods. Flooding in California has washed out fields of almonds (5,356 cubic meters of water per ton) while drought in the Colorado River basin has upended the production of broccoli (224 cubic meters of water per ton).

The World’s Biggest Water Market Players

Taking virtual water into account reveals a hidden trade network

Being a large importer or exporter doesn’t necessarily make a country a winner or loser in the water game. “Having water doesn’t make you rich if you’re giving it away for free to grow food, or if you’re letting others pollute it,” says Pedro Arrojo-Agudo, an expert who advises the UN on water and sanitation. When that happens, “it becomes a case of economic exploitation from ­companies that export products to semiarid countries that capture the water and the wealth that comes with it.”

A key question is how much of a country’s natural water resources are left for local communities and ecologies. A country-by-country ranking of the amount of water available per person, compared with how much is exported — physically and ­virtually — sheds light on how it’s really being traded around the world.

Some Water-Scarce Areas Are Also Major Water Exporters

A closer look at net exports reveals surprising relationships

VIRTUAL WATER TRADING GOES BEYOND FOOD

Agriculture makes up 80% to 90% of humanity’s total water consumption, so most efforts to understand virtual water trading have focused on food. But there’s growing interest in examining how much water goes into all the other products humans buy and sell.

For example, 3.9 cubic meters of water are needed to make a single cotton T-shirt. A pair of leather boots can require up to 14.5 cubic meters of water; a smartphone, about 12.7 cubic meters, according to research commissioned by Friends of the Earth, an environmental organization. Water is also used to extract and refine oil, the world’s other most important commodity. Crude carried on giant tankers is roughly 0.15% water, meaning about 22 million barrels of water are exported by ship annually, according to trade analytics firm Kpler.

Another water-intensive raw material is copper. The metal is used to make electric vehicles and cables used to transport clean energy — two products that are set to see soaring demand as the world accelerates its green transition.

The various industrial methods used to process Chile’s ore require vast amounts of water. Producing one ton of refined copper in the Antofagasta region consumes about 70m³ of water using one approach, and 120m³ using another, according to Francisco Acuna, principal consultant at CRU. The above calculation uses the lower figure, meaning the true number will be even higher. Even more water is used in total, but some is recycled.

Mining companies in Chile’s Atacama Desert, the region that mines the most copper in the world, have spent billions of dollars building energy-guzzling desalination plants because most of the freshwater has been depleted during a 13-year megadrought. Cochilco, a government body, estimates the amount of water used to make copper will increase about 2% every year through 2033. Within a decade, 71% of the water used by copper miners in Chile could be desalinated.

AN INDUSTRY BUILT ON WATER

Companies in Chile have benefited from the only system in the world that, until recently, awarded water rights to private parties in perpetuity. The market, implemented in the 1980s during Augusto Pinochet’s dictatorship, led to decades of unchecked water use by mining and agriculture businesses.

Now there’s a debate on how to fix that. When millions of people marched in the streets of Chile in 2019, one of their demands was for fair access to water. The country’s new water bill approved last year caps water rights at a maximum of 30 years and allows authorities to halt the issuance of new licenses if supplies are at risk.

Draining Chile’s Desert

The country is rethinking its water market as prolonged drought and decades of overuse dry up its aquifers

Some of the members of the assembly drafting a new constitution have advocated for an article enshrining water as a human right. They want to eliminate the water-rights market and move to a state-controlled system for awarding licenses that’s similar to Europe and other parts of Latin America.

“We can’t give the market the responsibility to manage water,” says Christian Valenzuela, who founded Agua Circular, an online water-rights trading platform. Still, he worries it might be too late for reforms: “There’s no legal system that can fix the tensions caused by climate change.”

LESS WATER TO TRADE

It’s an issue that a growing proportion of the world will have to grapple with as key food-producing regions in Europe, the US and Australia become drier and some of the world’s most-populous countries get richer. Today, 3.6 billion people have inadequate access to water at least one month every year. The World Meteorological Organization expects that to increase to more than 5 billion by 2050.

The 25 countries exposed to extremely high water stress are using 80% of their natural water supply for irrigation, livestock, industry or domestic needs, according to a report by the World Resources Institute. That means even short-term droughts can quickly put these places at risk of running out of water, a scenario that has played out in India, Iran, Mexico, South Africa and the UK.

Two thirds of the world’s freshwater flows across national boundaries, yet only in five cross-border aquifers out of more than 300 globally have governments signed agreements that regulate the use of water. In South America, Brazil President Luiz Inácio Lula da Silva is reviving a push for the eight countries sharing the Amazon river basin to protect it. But elsewhere there has been increased conflict. In central Asia, Taliban-led Afghanistan and Iran have exchanged ultimatums as skirmishes erupt on the border. Along the Nile, shared by more than ten countries, a $5-billion dam built by Ethiopia has upset its neighbors.

The University of Maryland research projects that in the future most of the world’s virtual water exports will come from along the Amazon basin, the central US, northern India and parts of southern Canada and Russia. But even powerful scientific models can’t forecast how these changing trends will affect geopolitical relations and the lives of people living along key waterways.

“There are trade-offs, because we’re shifting where the water is coming from,” says Neal Graham, one of the authors of the University of Maryland paper. “Somebody is going to have to use water somewhere to grow these crops — where it happens is what’s up for debate.”