Refuting two claims about virtual water trade
Using the Heckscher-Ohlin trade model, I refute two prominent but incorrect claims on virtual water trade. These claims are that virtual water trade (i) levels uneven water distribution, and (ii) reduces the potential for water conflict. Both claims are based on an incorrect understanding of comparative advantage in the production of water-intensive goods. The results show that both claims only hold under certain conditions, but do not necessarily follow from the Heckscher-Ohlin trade model.
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