Future virtual water flows under climate and population change scenarios: focusing on its determinants

Abstract

Water resources are under increasing pressure from population growth, socio-economic development, and climate change. The main user of freshwater is the agriculture sector, accounting for 70–80% of global water use. Consequently, increasing water productivity and reducing water use in this sector are vital for alleviating water scarcity. It has been alleged that domestic or international trade of water-consumed products from wet-provinces or countries to arid and semi-arid provinces or countries is one possible path to mitigate water shortage. In this regard, virtual water flows and their determinants in Iran are investigated in this paper. This study examines the main determinants of bilateral virtual water flows associated with international trade in agricultural goods among Iran and other countries using a gravity model of trade. The impacts of climate change and socio-economic change scenarios on the virtual water trade are simulated. The result of the gravity model indicated that bilateral virtual water trade flows are influenced by the classical determinants and all the mass-related variables (gross domestic product and population) are significant with expected signs. Finally, the result obtained from the simulation of climate and socio-economic change scenarios showed that under the pessimistic scenario of climate change and population growth rate of 0.98 and 0.44%, VW trade between Iran and other countries would increase by 41 and 66% in the periods of 2016–2045 and 2070–2099, respectively. As a consequence, identifying the appropriate countries for business interactions and adopting effective trade policies are very important and need attention soon.