Water Scarcity and International Agricultural Trade

There is increasing interest in the water-food nexus, and the potential implications of future water scarcity for food production. However, little is known about the macro-economic implications of future water scarcity, and the potential impacts on global trade and economic welfare. In this paper, we utilize a recently developed model, GTAP-BIO-W, in order to study the global economic e_x001b_ects of projected water scarcity for 126 river basins, globally in the year 2030. Projected irrigation shortfalls are obtained from the IMPACT-WATER model, and these are imposed upon the present day economy. We _x001c_nd that regional production impacts are quite heterogeneous, depending on the size of the shortfall, the irrigation intensity of crop production, as well as the global commodity price e_x001b_ects. Projected 2030 scarcity leads to signi_x001c_cant output declines in China, South Asian, Middle East and North Africa, with increases in crop production sub-Sahara Africa. We _x001c_nd that projected irrigation shortfalls signi_x001c_cantly alter the geography of international trade. The global welfare loss amounts to $3.7 billion (2001 prices) both due to the reduction in irrigation availability, as well as due to interactions with domestic support for agriculture.