Value‐added based inequity in global virtual water trade

Abstract

AbstractCommodity exports have played a crucial role in driving global economic growth, but they have also led to increased flow and consumption of natural resources worldwide. To measure and analyse the inter‐regional virtual water consumption and value‐added benefits driven by exports, as well as the unequal exchange between regions, we utilised the global supply chain database of Eora to construct a multi‐regional input–output (MRIO) model of virtual water consumption and value‐added benefits among 189 countries and regions from 1991 to 2016. We also proposed a virtual water consumption uneven index. The results highlight that relatively less developed regions accounted for 27% of the world's total export value added and 56% of virtual water exports. In contrast, relatively developed regions contributed 73% of the global export value added but only 44% of virtual water exports. The export of high‐value‐added products, such as financial services, was concentrated in the relatively developed regions, while water‐intensive products, like agriculture, forestry, and animal husbandry, were mainly exported by relatively less developed regions. Economically developed regions enjoyed a beneficiary position in terms of virtual water consumption, with each unit of export‐driven added value requiring only 4–100 kg of virtual water. Conversely, economically less developed regions consumed 140–1800 kg of virtual water per unit of export‐driven added value. The disparities in virtual water exchanges across different regions primarily stem from the differences between developed and less developed regions. Therefore, less developed regions and countries should focus on improving water efficiency in water‐consuming industries, adjusting the structure of export industries, and striving to reduce or reverse the disadvantageous position of resource consumption, such as virtual water, in global trade exports.