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Determinants of virtual water flows in the Mediterranean

Listed author(s):
  • Fracasso, Andrea
  • Sartori, Martina
  • Schiavo, Stefano

The aim of the paper is to investigate the main determinants of the bilateral virtual water ‘flows’ associated with international trade in agricultural goods across the Mediterranean basin. Virtual water refers to the volume of water used in the production of a commodity or a service. The exchange of water as embedded in traded goods brings about the so-called virtual water ‘trade’. We consider the bilateral gross ‘flows’ of virtual water in the area and study what export-specific and import-specific factors are significantly associated with virtual water ‘flows’. We follow a sequential approach. Through a gravity model of trade, we obtain a “refined” version of the variable we aim to explain, one that is free of the amount of flows due to pair-specific factors affecting bilateral trade flows and that fully reflects the impact of country-specific determinants of virtual water ‘trade’. A number of country-specific potential explanatory variables is presented and tested. To identify the variables that help to explain the bilateral ‘flows’ of virtual water, we adopt a model selection procedure based on model averaging. Our findings confirm one of the main controversial results in the literature: larger water endowments do not necessarily lead to a larger ‘export’ of virtual water, as one could expect. We also find some evidence that higher water irrigation prices reduce (increase) virtual water ‘exports’ (‘imports’).

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File URL: https://mpra.ub.uni-muenchen.de/60500/1/MPRA_paper_60500.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 60500.

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Date of creation: Dec 2014
Handle: RePEc:pra:mprapa:60500
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  1. Fracasso, Andrea, 2014. "A gravity model of virtual water trade," Ecological Economics, Elsevier, vol. 108(C), pages 215-228.
  2. Antonelli, Marta & Sartori, Martina, 2014. "Unfolding the potential of the Virtual Water concept. What is still under debate?," MPRA Paper 60501, University Library of Munich, Germany.
  3. Head, Keith & Mayer, Thierry & Ries, John, 2010. "The erosion of colonial trade linkages after independence," Journal of International Economics, Elsevier, vol. 81(1), pages 1-14, May.
  4. M. Antonelli & R. Roson & M. Sartori, 2012. "Systemic Input-Output Computation of Green and Blue Virtual Water ‘Flows’ with an Illustration for the Mediterranean Region," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 26(14), pages 4133-4146, November.
  5. Barro, Robert J. & Lee, Jong Wha, 2013. "A new data set of educational attainment in the world, 1950–2010," Journal of Development Economics, Elsevier, vol. 104(C), pages 184-198.
  6. Roberto Roson & Martina Sartori, 2012. "Climate Change, Tourism and Water Resources in the Mediterranean: A General Equilibrium Analysis," IEFE Working Papers 51, IEFE, Center for Research on Energy and Environmental Economics and Policy, Universita' Bocconi, Milano, Italy.
  7. Roberto Roson & Martina Sartori, 2010. "Water Scarcity and Virtual Water Trade in the Mediterranean," Working Papers 2010_08, Department of Economics, University of Venice "Ca' Foscari".
  8. de Fraiture, Charlotte & Cai, X & Amarasinghe, Upali & Rosegrant, M. & Molden, David, 2004. "Does international cereal trade save water?: the impact of virtual water trade on global water use," IWMI Research Reports H035342, International Water Management Institute.
  9. James E. Anderson, 2011. "The Gravity Model," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 133-160, September.
  10. Ansink, Erik, 2010. "Refuting two claims about virtual water trade," Ecological Economics, Elsevier, vol. 69(10), pages 2027-2032, August.
  11. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
  12. Wichelns, Dennis, 2004. "The policy relevance of virtual water can be enhanced by considering comparative advantages," Agricultural Water Management, Elsevier, vol. 66(1), pages 49-63, April.
  13. M. Kumar & O. Singh, 2005. "Virtual Water in Global Food and Water Policy Making: Is There a Need for Rethinking?," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 19(6), pages 759-789, December.
  14. Peter Debaere, 2014. "The Global Economics of Water: Is Water a Source of Comparative Advantage?," American Economic Journal: Applied Economics, American Economic Association, vol. 6(2), pages 32-48, April.
  15. Magnus, Jan R. & Powell, Owen & Prüfer, Patricia, 2010. "A comparison of two model averaging techniques with an application to growth empirics," Journal of Econometrics, Elsevier, vol. 154(2), pages 139-153, February.
  16. Robert C. Feenstra & James R. Markusen & Andrew K. Rose, 2001. "Using the gravity equation to differentiate among alternative theories of trade," Canadian Journal of Economics, Canadian Economics Association, vol. 34(2), pages 430-447, May.
  17. Anderson, James E, 1979. "A Theoretical Foundation for the Gravity Equation," American Economic Review, American Economic Association, vol. 69(1), pages 106-116, March.
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