Going against the flow: A critical analysis of inter-state virtual water trade in the context of India’s National River Linking Program

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Abstract

Virtual water trade has been promoted as a tool to address national and regional water scarcity. In the context of international (food) trade, this concept has been applied with a view to optimize the flow of commodities considering the water endowments of nations. The concept states that water rich countries should produce and export water intensive commodities (which indirectly carry embedded water needed for producing them) to water scarce countries, thereby enabling the water scarce countries to divert their precious water resources to alternative, higher value uses.

While progress has been made on quantifying virtual water flows between countries, there exists little information on virtual water trade within large countries like India. This paper presents the results of two MSc theses which quantify and critically analyze inter-state virtual water flows in India in the context of a large inter-basin transfer plan of the Government of India.

Our analysis shows that the existing pattern of inter-state virtual water trade is exacerbating scarcities in already water scarce states and that rather than being dictated by water endowments, virtual water flows are influenced by other factors such as “per capita gross cropped area” and “access to secure markets”. We therefore argue that in order to have a comprehensive understanding of virtual water trade, non-water factors of production need to be taken into consideration.

Section snippets

India’s National River Linking Program (NRLP)

Water infrastructure projects have always caught the fancy of planners and policy makers around the world. From the Hoover dam in the United States to the Aswan dam in Egypt, Nurek in Tajikistan, Bakun in Malaysia, Tarbela in Pakistan, Itaipu in Brazil, and India’s Bhakra and Sardar Sarovar dams, all of them have been hailed as marvels of modern society and have been a source of national pride to many. Pandit Jawaharlal Nehru, India’s first Prime Minister, famously described the Bhakra Nangal

Virtual water trade and international trade theories

The term ‘virtual water’ was introduced by Professor Tony Allan, 1993, Allan, 1994 referring to the volume of water needed to produce agricultural commodities. The same concept has differently been referred to as ‘embedded water’ (Allan, 2003), ‘exogenous water’ (Haddadin, 2003) or ‘ultra-violet’ water (Savenije, 2004). When a commodity (or service) is traded, the buyer essentially imports (virtual) water used in the production of the commodity. In the context of international (food) trade,

Inter-state virtual water trade in India: quantum and direction

Kampman (2007) has estimated that the virtual water flow as a result of inter-state crop trade in India is 106 × 109 m3/yr or 13 per cent of total water use. This estimate covers virtual water flows as a result of trade in 16 primary crops which represent 87 per cent of the total water use, 69 per cent of the total production value and 86 per cent of the total land use. The estimates do not include virtual water flows as a result of trade in fodder, milk and milk products. Verma (2007) estimated

Determinants of inter-state virtual water trade in India

Why do water rich states import even more water (in virtual form) from relatively water scarce states? In order to test the relationship between the water resources endowments of states and their behaviour in the virtual water trade arena we checked whether the type of water endowment mattered. Fig. 4a, Fig. 4b, Fig. 4c, Fig. 4d plot net virtual water imports (or exports) against per capita green water availability (a); per capita internal blue water availability (b); per capita total blue

Discussion: why H–O does not work for H2O?

If the H–O model of international trade was able to explain the quantum and direction of trade, we would have expected water endowments to be strongly and positively correlated with a region’s virtual water exports. However, our estimates of inter-state virtual water trade clearly do not match with such a pattern. One of the reasons for this could be the method Kampman (2007) applied for estimating inter-state trade. Kampman assumed that trade (import or export) is equal to the difference

Conclusions and implications for India’s river linking program

Mean annual inter-state virtual water trade as embodied in agricultural commodities in India has been estimated to be 106 × 109 m3/yr for the years 1997–2001 (Kampman, 2007). While these estimates are neither precise nor comprehensive, they do illustrate that the quantum of inter-state virtual water trade is comparable to the proposed inter-basin water transfers proposed by the Government of India under the NRLP (178 × 109 m3/yr). Significantly, the estimates also show that the direction of virtual

Acknowledgements

This paper stems from the Masters’ thesis of Shilp Verma at UNESCO-IHE under the supervision of Pieter van der Zaag and Frank Rijsberman (Verma, 2007). The M.Sc. was financially supported by the International Water Management Institute (IWMI) as part of the project “Strategic Analyses of India’s National River Linking Program” being undertaken by the IWMI and its partners under the Challenge Program for Water and Food (CPWF). The paper is further based on another Masters’ thesis undertaken at

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