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Enquirica Research - Global Trade in Virtual Water

Enquirica Research - Global Trade in Virtual Water

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Published by enquirica
Enquirica is a Calgary based firm focusing on independent analysis of alternative asset classes and opportunities, particularly in exempt market securities that target investments in western Canada.
Enquirica is a Calgary based firm focusing on independent analysis of alternative asset classes and opportunities, particularly in exempt market securities that target investments in western Canada.

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Published by: enquirica on Oct 26, 2010
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10/28/2010

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Global Trade in Virtual Water 
economic, financial and marketing analysis
 
2
SUMMARY
 Virtual or embedded water is an economic concept that attempts to measure theamount of water used in the production of an agricultural or industrial product.
INTRODUCTION
 The water footprint of an individual is dened as the total amount of freshwaterthat is used to produce the goods and services that the individual consumes. Itis a useful indicator of diet and consumption patterns. By way of example thevirtual water of some common items is set out below:1 cup of coffee needs 140 liters of water
1 glass of wine needs 120 liters of water
1 liter of milk needs 800 liters of water
1 kg of wheat needs 1100 liters of water
1 kg of tomatoes needs 180 liters of water
1 kg of rened sugar needs 1,500 liters of water
1 kg of rice needs 2,300 liters of water
1 kg maize needs 900 liters of water
1 kg of beef requires 22,000 liters of water.
GLOBAL VIRTUAL WATER TRADE
 The global average water footprint = 1,243 m
3
 /capita/yr and the global virtual-water trade is estimated at around a thousand km
3
 /year or 20 River Niles. TheMiddle East and North Africa region was the rst area in history to run out of water in the 1970s. Drinking water takes up 1 m
3
 /capita/year in the MENA region, which represents the majority of the available supply. An additional1,000 m
3
 /capita of low quality water is needed to produce food. Because of thischallenging math, the MENA region has been importing 40 million tons of cerealsand our annually since the 1980s and Saudia Arabia is phasing out domesticcrop production all together to avoid depletion of its fossil aquifer.Surprisingly given the amount of rainfall and fresh water available in many of these countries, the developed nations of the world are large net water importers- depending heavily on importing large amounts of virtual water in the form of manufactured goods from the developing world.
 
3
COUNTRY VIRTUAL WATER FOOTPRINTS
 The following table contains the per capita water footprint and the net waterimport position of some key water consuming nations.India:Average water footprint = 980 m
3
 /capita/yrPart of footprint falling outside of the country = 2%China:Average water footprint = 702 m
3
 /capita/yrPart of footprint falling outside of the country = 7%Brazil:Average water footprint = 1,381 m
3
 /capita/yrPart of footprint falling outside of the country = 8%Russian Federation:Average water footprint = 1,858 m
3
 /capita/yrPart of footprint falling outside of the country = 16%Indonesia: Average water footprint = 1,317 m3/capita/yrPart of footprint falling outside of the country = 10%US:Average water footprint = 2,483 m
3
 /capita/yrPart of footprint falling outside of the country = 19%Canada:Average water footprint = 2,049 m
3
 /capita/yrPart of footprint falling outside of the country = 20 %UK:Average water footprint = 1,245 m
3
 /capita/yrPart of footprint falling outside of the country = 70%
CHINA IN DETAIL
 As people in the emerging economies of India and China make the transitionto western standards of living absolute and virtual water consumption will risedramatically, exacerbating an already precarious domestic supply situation – fromthe table above you can see that in absolute terms China and India consumeabout 40% - 50% per capita of the virtual water consumed in the west.
China has only 8 percent of the world’s fresh water to meet the needs of 22percent of the world’s people.

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