Are virtual water flows in Spanish grain trade consistent with relative water scarcity?

Virtual water adds a new dimension to international trade, and brings along a new perspective about water scarcity and water resource management. Most virtual water literature has focused on quantifying virtual water flows and on its application to ensure water and food security. Nevertheless, the analysis of the potential gains from international trade, at least from a water resources perspective, needs to take into account both spatial and temporal variations of blue (groundwater and stream flow) and green (soil moisture) water, as well as the socioeconomic and policy conditions. This paper evaluates whether Spanish international trade with grains is consistent with relative water scarcity. For this purpose, the study estimates the volume and economic value of virtual water flow through international grain trade for the period 1997-2005, which includes 3 years with different rainfall levels. The calculations show that Spain is a net virtual water importer through international grain trade. The volume of net virtual water imports amounts to 3420, 4383 and 8415 million m(3) in wet (1997), medium (1999) and dry (2005) years, respectively. Valuing blue water at its shadow price or scarcity value, blue water exports oscillate between 0.7 and 34.2 million Euros for a wet and dry year, respectively. Overall, grain trade is apparently consistent with relative water scarcity as net imports increase in dry years. However, the evolution of grain exports, expressed as a variation in quantity and volume, does not match the variations in resource scarcity. A disaggregated crop analysis reveals that there are other factors, such as quality, product specialization or the demand for a standardized product, which also influence trade decisions and are not included in the notion of virtual water. These facts, among others, can therefore create potential distortions in the application of virtual water to the analysis of specific trade patterns. Nevertheless, from a water resources perspective, virtual water can bring important insights across countries for improving water and land management globally, fostering adaptation strategies to climate change and to transboundary resource management. (C) 2008 Elsevier B.V. All rights reserved.