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Water Scarcity and Food Imports: An Emperical Investigation of the 'Virtual Water' Hypothesis in the MENA Region

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  • Hakimian Hassan

    (Cass Business School)

Abstract

Despite the long tradition established by the Heckscher-Ohlin (H-O) theorem and copious literature on the so-called Leontief Paradox, economists have not methodically linked the Middle East and North Africa (MENA) region's well-known water-scarcity problem to its mounting food imports. This paper first reinterprets the factor endowments and comparative advantage theory in the MENA context, suggesting that the 'virtual water' (VW) hypothesis, focusing on water embedded in commodities, is in line with the H-O model's tenet that 'trade in commodities is an indirect way of trade in factors of production'. Second, findings using comparative cross-section regression analysis for 100 countries appear to vindicate the VW hypothesis that the import structures for water-deficit areas are dominated by large food/agricultural imports. The study ends with a discussion of the policy and political economy implications of the hypothesis in the light of our empirical findings.

Suggested Citation

  • Hakimian Hassan, 2003. "Water Scarcity and Food Imports: An Emperical Investigation of the 'Virtual Water' Hypothesis in the MENA Region," Review of Middle East Economics and Finance, De Gruyter, vol. 1(1), pages 70-84, January.
    • Handle: RePEc:bpj:rmeecf:v:1:y:2003:i:1:n:5
    DOI: 10.2202/1475-3693.1004
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    References listed on IDEAS

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    1. Bowen, Harry P & Leamer, Edward E & Sveikauskas, Leo, 1987. "Multicountry, Multifactor Tests of the Factor Abundance Theory," American Economic Review, American Economic Association, vol. 77(5), pages 791-809, December.
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    Cited by:

    1. Gholamreza Soltani, 2013. "Agricultural Water-Use Efficiency in a Global Perspective: The Case of Iran," Working Papers 778, Economic Research Forum, revised Oct 2013.
    2. Maria Berrittella & Katrin Rehdanz & Arjen Y. Hoekstra & Roberto Roson & Richard S.J. Tol, 2006. "The Economic Impact Of Restricted Water Supply: A Computable General Equilibrium Analysis," Working Papers FNU-93, Research unit Sustainability and Global Change, Hamburg University, revised Jul 2006.
    3. Hussein Al-Rimmawi, 2012. "Middle East Chronic Water Problems: Solution Prospects," Energy and Environment Research, Canadian Center of Science and Education, vol. 2(1), pages 1-28, June.
    4. A. Hassan & M. Y. Saari & T. H. Tengku Ismail, 2017. "Virtual water trade in industrial products: evidence from Malaysia," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 19(3), pages 877-894, June.
    5. Hamidreza Manshadi & Mohammad Niksokhan & Mojtaba Ardestani, 2015. "A Quantity-Quality Model for Inter-basin Water Transfer System Using Game Theoretic and Virtual Water Approaches," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 29(13), pages 4573-4588, October.
    6. Dik Roth & Jeroen Warner, 2008. "Virtual water: Virtuous impact? The unsteady state of virtual water," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 25(2), pages 257-270, June.
    7. Sayan Serdar, 2003. "H-O for H2O: Can the Heckscher-Ohlin Framework Explain the Role of Free Trade in Distributing Scarce Water Resources Around the Middle East?," Review of Middle East Economics and Finance, De Gruyter, vol. 1(3), pages 21-36, December.
    8. Dimaranan, Betina & Duc, Le Thuc & Martin, Will, 2005. "Potential Economic Impacts of Merchandise Trade Liberalization under Viet Nam’s Accession to the WTO," Conference papers 331403, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    9. Delbourg, Esther & Dinar, Shlomi, 2020. "The globalization of virtual water flows: Explaining trade patterns of a scarce resource," World Development, Elsevier, vol. 131(C).
    10. Konstantin Kogan & Charles Tapiero, 2010. "Water supply and consumption uncertainty: a conflict-equilibrium," Annals of Operations Research, Springer, vol. 181(1), pages 199-217, December.

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