International trade buffers the impact of future irrigation shortfalls

AbstractThere is increasing interest in the water–food nexus, especially the restrictive effect of water on food production in hot spots where irrigation stress is growing. However, little is known about the larger-scale implications of future irrigation shortfalls for global trade and economic welfare, as well as of the potential buffering impacts of international trade on the local impacts of irrigation shortage. In this paper, we utilize a recently developed model, GTAP-BIO-W, to study the economic effects of changes in irrigation outlook for 126 river basins, globally by 2030. Projected irrigation availability is obtained from the IMPACT-WATER model, and imposed upon the present-day economy. Irrigation availability in 2030 is expected to drop by 30–60% in several key rivers basins, including: Hai He, Indus, Luni, and the Eastern Mediterranean basin, leading to significant output declines in China, South Asia, and the Middle East. We find that the regional production impacts of future irrigation water shortages are quite heterogeneous, depending on the size of the shortfall, the irrigation intensity of crop production, the possibility of expanding rainfed areas, as well as the crop mix. These changes in regional output significantly alter the geography of international trade. To compensate for the loss of productivity caused by the irrigation constraint, an estimated 7.6 million hectares of cropland expansion is needed to meet the demand for food. In spite of the remarkable reduction of irrigation in some basins, the resulting welfare impact is relatively modest as a result of the buffering capacity of global markets. The global welfare loss amounts to $3.7 billion (2001 prices) and results from a combination of the reduction in irrigation availability as well as the interplay with agricultural support policies