Virtual Water Trade in North America
Affuso, E. and F. G. Mixon Jr. "Virtual Water Trade in North America", Economia Internazionale/International Economics, vol. LXVII Issue No. 3 August 2014, pp. 319-336.
20 Pages Posted: 18 Nov 2010 Last revised: 15 Nov 2014
Date Written: July 31, 2014
The concept of virtual water – the amount of water used during the entire production chain of goods – represents a new tool for policymakers in water-scarce countries to shape policies in ways that improve water use efficiency. The present study extends work on the virtual water concept by testing a causality relationship between national water savings and economic growth of a water scarce country. Results of this study are twofold: (1) average annual precipitations explain the virtual water trade pattern in Mexico, and (2) there exists a Granger-causality relationship between agricultural and industrial growth and the annual volume of water saved in Mexico due to its acquisition of water-intensive crops from its North American Free Trade Agreement partners – Canada and the United States.
Keywords: Virtual Water Trade, International Trade Theory, NAFTA, Granger-Causality
JEL Classification: F11, F13, F18, O13, Q17, Q25
Suggested Citation: Suggested Citation