Estimating the economic value of green water as an approach to foster the virtual green-water trade. (March 2022)

• Record Type: Journal Article
• Authors: Lowe, Benjamin H.; Zimmer, Yelto; Oglethorpe, David R.
• Is Part Of: Ecological indicators. Volume 136(2022)
• Publication Date: 2022-03
• Subjects: CNR Change in Net Rents -- CWU Crop Water Use -- EU European Union -- EWP Economic Water Productivity -- FAO Food and Agriculture Organisation -- IS Irrigation Schedule -- MJ Megajoule -- QR Quasi-rents -- RVM Residual Value Method -- TR Total Revenue -- TVC Total Variable Costs -- VMP Value Marginal Product -- WF Water Footprint -- USA United States of America -- USD United States Dollar; Atmospheric water -- Blue water -- Economic value of water -- Economic water productivity -- Global water resources -- Rainfall -- Water footprint -- Water governance; Environmental monitoring -- Periodicals; Environmental management -- Periodicals; Environmental impact analysis -- Periodicals; Environmental risk assessment -- Periodicals; Sustainable development -- Periodicals; 333.71405
• DOI: 10.1016/j.ecolind.2022.108632
• Languages: English
• ISSNs: 1470-160X

Abstract

Highlights: A revised method is used to estimate the economic value of green water. Case study illustrates how economic value could further the virtual green-water trade. Economic value can inform horizontal expansion and intensification of rainfed agriculture. Environmental economics needs to recognise larger spatial units and the whole hydrological cycle. Abstract: Green water – precipitation that is stored in the soil as moisture and consumed in the production of biomass – provides the main source of water for crop cultivation, pasturelands, forestry, and terrestrial ecosystems. At a local level, green water is land-bound and cannot be easily allocated between uses. However, at the global level, agricultural commodities and their embodied virtual water are traded between countries. This trade typically sees the cultivation of crops in water abundant rainfed locations exported to regions that would otherwise have employed local irrigation resources. The result is a global saving of irrigation water and the negative environmental externalities associated with irrigation. In addition, scarce blue water resources are freed up for other (often higher valued) uses. Here we assess whether there is an economic rationale for the virtual green-water trade and the increased and intentional allocation of crop cultivation to water abundant rainfed locations. We model a realistic case study of maize cultivation on representative farms in 16 major maize producing regions (across four continents) and provide the first spatially variable estimates of the economic value of the green water employed. These economic values are contrasted with the economic value of blue water used for irrigation. We find that the volume of green water employed in the cultivation of maize varies between 409 m 3 /tonne and 1547 m 3 /tonne; the estimated economic value of green water varies between $ −0.04 m 3 and $0.12 m 3 . We demonstrate how these economic value estimates can inform crop allocation decisions in favour of green water-based cultivation and inform decisions regarding the intensification and horizontal expansion of rainfed agriculture. In so doing, we aim to provide a further rationale for the green water-based measures that have been identified in the literature as the principal means of providing the additional fresh water needed to address pressing global challenges beyond the case study.