Water accounting:

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Water accounting virtual water transfers and
water footprints
Arjen Hoekstra University of Twente Netherlands w
ww.waterfootprint.org
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Globalization of Water
PRODUCTION of water-intensive goods
Local water consumption and pollution related to
export
TRADE
TRADE
CONSUMPTION of water-intensive goods
Water saving, but also water dependency related
to export
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Globalization of Water

• Consumers indirectly contribute to
• water depletion and pollution
• elsewhere, without covering the
• cost.
• Water-abundant regions have other
• opportunities than water-scarce
• regions.
• Several nations become
• increasingly dependent on external
• water resources. Water is a
• geopolitical resource.
• There is a growing need to
• harmonize national water and trade
• policies.

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Overview Presentation

• 1. The water needs of goods services
• The water footprint of products
• 2. National water scarcity in a global context
• International virtual water flows
• Saving water through trade
• Water footprints of nations
• Water dependency of nations
• 3. Water and business
• 4. From concept to practice
• 5. Conclusion discussion

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The water needs forgoods and services
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The concept of virtual water

• Virtual water is the water embodied in a
  product, not in real sense, but in virtual sense.
  It refers to the water needed for the production
  of the product.
• Global trade in goods and services brings
• along global trade in virtual water

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Assessing the virtual water contentof products

• Virtual water content of a crop
• Crop water use (m3/ha) / Crop yield (ton/ha)
• Virtual water content of an animal
• Sum of water for feed, drinking and servicing
• Virtual water content of a crop or livestock
  product
• Distribute the virtual water content of the root
  product over its derived products

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Crop water requirement

• Calculate reference crop evapotranspiration ET0
  (mm/day)
• e.g. Penman-Monteith equation
• Calculate crop evapotranspiration Etc (mm/day)
• Etc ET0 ? Kc where Kc crop coefficient
• Calculate crop water requirement CWR (m3/ha)
• CWR S Etc accumulate over growing period

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Irrigation requirement
Irrigation requirement crop water requirement
effective rainfall
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Crop water use

• Green water use by crop
• min (crop water requirement, effective
  precipitation)
• Blue water use by crop
• min (irrigation requirement, effective
  irrigation)

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? The Water Footprint of a product is the volume
of fresh water used to produce the product,
summed over the various steps of the production
chain.
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? The Water Footprint of a product is the same as
its virtual water content, but includes a
temporal and spatial dimension when and where
was the water used.
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? The Water Footprint consists of three
componentsBLUE wf GREEN wf GREY wf
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? Assessing the Water Footprint of a product
requires analysis of the full production chain.
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Production chain cotton
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2500 litres of water for 1 cotton shirt
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The water footprint of products
global averages
Hoekstra Chapagain, 2008
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40 litres of water for 1 slice of bread
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1500 litres of water per kg refined sugar
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1 egg 135 litres water
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2400 litres of water for 1 hamburger
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140 litres of water
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2400 litres of water for 100 gram of chocolate
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10 litres of water for 1 sheet of A4-paper
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? The Water Footprint is spatially explicit.
Examples for coffee and cotton.
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Water footprint of Dutch coffee consumption
Hoekstra Chapagain, 2008
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Water footprint of EUs cotton consumption blue
water
Hoekstra Chapagain, 2008
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Water footprint of EUs cotton consumption green
water
Hoekstra Chapagain, 2008
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Water footprint of EUs cotton consumption gray
water
Hoekstra Chapagain, 2008
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Water footprint of EUs cotton consumption blue
water green water gray water
Hoekstra Chapagain, 2008
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The water footprint making a link
between consumption in one place and impacts on
water systems elsewhere
Photo Gleick, 1993
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Water footprint of energy
Gerbens-Leenes, Hoekstra Van der Meer, 2008
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Energy from biomass
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Water footprint ofbiomass energy
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Water footprint of bio-energy

• Notes
• Large differences over countries.
• Conservative estimates, because step to secondary
  energy carriers will include efficiency losses.

Gerbens-Leenes, Hoekstra Van der Meer, 2008
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2
National water scarcity in a global context
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Assessing international virtual water flows

• Virtual water trade flow (m3/yr)
• Trade volume (ton/yr) ? Virtual water content
  (m3/ton)
• Global trade data
• UN Statistics Division, New York
• FAOSTAT, FAO, Rome

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International virtual water flows (1997-2001)
16 of global water use!
Hoekstra Chapagain, 2008
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National virtual water balances
Hoekstra Chapagain, 2008
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Regional virtual water balances(only
agricultural trade)
Arrows show trade flows gt10 Gm3/yr
Hoekstra Chapagain, 2008
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Water saving through trade

• National water saving
• A water scarce nation can save water by importing
  a water-intensive commodity instead of producing
  it domestically.
• Global water saving
• International trade can save water globally
• if a water-intensive commodity is traded
• from an area with high to an area with low water
  productivity.

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Global water savingthrough rice trade from USA
to Mexico
Hoekstra Chapagain, 2008
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Global water lossthrough rice trade from
Thailand to Indonesia
Hoekstra Chapagain, 2008
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Global water savingthrough agricultural product
trade
Hoekstra Chapagain, 2008
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Global water saving
The total global water saving as a result of
the international trade of agricultural products
352 Gm3/yr (period 1997-2001) Equivalent
to 6 of water use in agriculture in the world !
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Water use efficiency at different levels
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Key question how to develop a coherent set of
actions at different spatial levels to solve
local water problems?
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Local problems in a global contextlook with a
fish eye lens
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The concept of comparative advantage
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? The Water Footprint of a nation is the total
amount of water that is used to produce the goods
and services consumed by the inhabitants of the
nation.
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? Consumption is partly related to domestic
resource use, and partly to resource use outside
the country borders ? Internal External Water
Footprint.
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? National Water Footprint national water
use virtual water import virtual water
export
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National water accounting framework
Export
Consumption
Import
Production
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Hoekstra Chapagain, 2008
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Water footprint per capita
Hoekstra Chapagain, 2008
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Water footprint per capita
Hoekstra Chapagain, 2008
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Global water footprintcontribution by
consumption category
Global water footprint 7450 Gm3/yr
Hoekstra Chapagain, 2008
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Major determinants of a water footprint

• Consumption characteristics
• Consumption volume
• Consumption pattern
• Production circumstances
• Climate evaporative demand at place of
  production
• Agricultural practice water use efficiency

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Water dependency of nations

• Many countries have net import of water in
  virtual form and a significant external water
  footprint
• most of Europe
• North Africa
• Middle East
• Japan
• Mexico

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Virtual water Virtual waterexporter importers
Middle East and North Africa
Dependency on virtual water import 19 33 15
74 73 17 67

• Syria Egypt
• Algeria
• Morocco
• Israel
• Jordan
• Tunesia
• Lebanon

Hoekstra Chapagain, 2008
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below a threshold of 1500 m3/cap/yr, the demand
for cereal import increases exponentially with
decreasing water resources
Yang et al., 2003
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? Country Case Studies China, India , Morocco,
Netherlands
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Virtual water transfers in China
52 Gm3/yr
Ma et al., 2006 Hoekstra Chapagain, 2008
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South to North water transfer in China
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Virtual water trade vs.real interbasin water
transfers

• Current water use in China 550 billion m3/yr
• Proposed water transfers
• from South to North China
• 40-50 billion m3/yr
• Alternative
• Stop the use of water in the North for making
  products that are traded to the South

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Virtual water flows India
Kampman et al., 2008
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Perverse trade

• Water scarcity
• ? water use efficiency
• ? comparative advantage in water-intensive
  commodities
• ? virtual water export
• Examples
• China export of water-intensive products from
  water-scarce North to water-rich South.
• India idem, from water-poor states such as
  Haryana to water-rich states such as Bihar.

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Water footprint of Morocco
15 of Moroccos water footprint is outside its
own borders
Hoekstra Chapagain, 2008
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Water saving in Morocco through trade
Use of domestic water 37 Gm3/yr National saving
due to import 28 Gm3/yr Water use if import
would stop and all products would be produced
domestically 65 Gm3/yr !
Hoekstra Chapagain, 2008
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Global water footprint of the Netherlands
82 of the Dutch water footprint is outside its
own borders
Hoekstra Chapagain, 2008
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The external water footprint of The Netherlands
Van Oel, Mekonnen Hoekstra, 2008
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Environmental Water Scarcity Index
Smakhtin, Revenga Doll, 2004
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The impact of the water footprint of the
Netherlands hotspots
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The impact of the water footprint of the
Netherlands hotspots
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3
Water and Business
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Water footprint of a business

• Two components
• Operational water footprint
• the direct water use by the producer for
  producing, manufacturing or for supporting
  activities.
• Supply-chain water footprint
• the indirect water use in the producers supply
  chain.

Gerbens-Leenes Hoekstra, 2008
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The virtual water chain
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Water footprint of a business
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Water footprint of a business

• Why businesses are interested
• corporate image
• marketing perspective
• sustainability reporting is part of corporate
  social responsibility
• anticipate regulatory control
• financial risk related to water pollution
• risk of freshwater shortage for own operations
• risk of bottleneck in supply chain due to water
  shortage

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Water footprint of a business

• World Business Council on Sustainable
  Development
• By 2010 many countries require companies to
  report their water footprints the total volume
  of water used directly or indirectly to produce
  goods and services. Meanwhile, the UN publicizes
  its report on the water footprint of countries.
• WBCSD (2006) Business in the world of water,
• Water scenarios to 2025.

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The CocaCola Companybeverage industry
Water footprint of one coke (250 ml) 0.25 litre
water 0.25 litre for production, washing 2.5
litre for PET bottle 50 litre for
sugar ___________________ 53 litre total
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The CocaCola Companybeverage industry
New Delhi, 4 Oct 2006
"Today, The Coca-Cola Company pledges to replace
every drop of water we use in our beverages and
their production to achieve balance in
communities and in nature with the water we use.
Working with WWF, we will seek opportunities
to reduce water use in our supply chain,
beginning with sugar where we will expand our
existing collaboration on the Better Sugar
Initiative." 6 May 2007 E. Neville Isdell,
Chairman and CEO
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4
From concept to practice
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Practical use of the concepts ofvirtual water
water footprint

• Analysis
• providing understanding of the relation between
  production chains, trade and water use
• Awareness raising
• showing the link between consumption and impacts
  of water use
• Indicator for policy making
• labelling of products certification of
  businesses
• setting community standards with respect to water
  use
• international negotiations on sustainable
  equitable water use
• Target groups
• governments, public, ngos, businesses, academia

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From accounting to policy
Hoekstra, 2008
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Water neutral reducing and offsetting the
impacts of water footprints

• Reduce all what is reasonably possible should
  have been done to reduce the existing water
  footprint do not undertake water-using
  activities if better alternatives are available.
• Offset the residual water footprint is offset by
  making a reasonable investment in establishing
  or supporting projects that aim at the
  sustainable and equitable use of water.
• reasonably possible and reasonable investment
  include normative elements that need further
  specification and about which one needs to reach
  consensus.

Hoekstra, 2008
87
Consumer perspective

• Reduction of the direct water footprint
• water saving toilet, shower-head, etc.
• Reduction of the indirect water footprint
• substitution of a consumer product that has a
  large water footprint by a different type of
  product that has a smaller water footprint
• substitution of a consumer product that has a
  large water footprint by the same product that is
  derived from another source with smaller water
  footprint.
• Ask product transparency from businesses and
  regulation from governments

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Business perspective

• Reduction of the direct water footprint
• water saving in own operations.
• Reduction of the indirect water footprint
• influencing suppliers
• changing to other suppliers.
• transform business model in order to incorporate
  or better control supply chains.

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Government perspective

• Reduction of own organizational water footprint
• Reducing the water footprint of public services.
• Supporting / forcing businesses
• to make annual business water footprint accounts
• to implement measures that reduce the impacts of
  business water footprints.
• Promoting product transparency
• through promoting a water label for
  water-intensive products
• through water-certification of businesses.

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Shared responsibility and an incremental approach

• Consumers or consumer or environmental
  organizations push businesses and governments to
  address water use and impacts along supply
  chains.
• Some businesses act voluntarily in an early
  stage.
• Governments promote businesses in an early phase
  and implement regulations in a later phase.

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International cooperation

• international protocol on water pricing
• minimum water rights
• tradable water footprint permits
• water-labelling of water-intensive products
• water-certification of industries and retailers
• international nutrient housekeeping
• shared guidelines on water-neutrality for
  businesses

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5
Conclusion and discussion
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Conclusions (1)

• Water saving through trade
• Import of water in virtual form as a source of
  water has not yet been exploited by many
  water-scarce-countries.
• Current global trade reduces water use in
  agriculture by 6.
• Export from water-scarce nations can best focus
  on products with high water productivity
  (Euro/m3).

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Conclusions (2)

• Water dependency
• Most countries in EU, North Africa and Middle
  East are dependent on water resources in other
  parts of the world.
• Water has become a geopolitical resource, like
  oil.
• Local consumption, global impact
• Consumers cause water impacts all over the world
  without paying.

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Discussion (1)

• From the global perspective
• ? Is virtual water trade a mechanism to increase
  global water efficiency?
• ? What is the risk of shifting off the
  environmental impacts?
• From the national perspective
• ? Is import of water in virtual form a solution
  to a water-scarce country?
• ? What is the risk of becoming water dependent?

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Discussion (2)

• From a business perspective
• ? Reducing the business water footprint can
  reduce business risks and improve the corporate
  image.
• ? What will water footprint reduction cost?
• From the consumer perspective
• ? Consumers can directly reduce humanitys water
  footprint through changing their consumption
  behaviour.
• ? Is there sufficient product information for
  consumers to make good decisions?

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More info publications www.waterfootprint.org
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The water footprint calculator