ABSTRACT

ABSTRACT: The relevance of international food trade has been growing in the last decades, as a result of population and income growth, and agricultural and trade policies liberalization. The integration of the world food system has important implications for food and water security. From a food security perspective, trade may provide access to cheaper products, help alleviate food scarcity in importing nations and increase economic returns in exporting nations. Nevertheless, it has distribution effects and may increase the exposure to market forces. This raises the question of whether the welfare gains benefit the most vulnerable. From a water resources perspectives, trade has the potential to alleviate scarcity and increase the efficiency of resource use. It may play a part in ensuring water and water-dependent food security in water short countries. International trade of commodities involves flows of virtual water over large distances, where Virtual Water (VW) should be understood as the volume of water required to produce a commodity However, the use of water for exporting products may deprive some domestic purposes. In addition to this, the social and environmental costs associated with water use are often not taken into account, and remain in the exporting countries. The chapter presents the evolution of the VW trade of six Latin American countries in the period 1996-2008, and reflects on its impacts and potential development. It also presents a study of the VW trade of Spanish feedstuff imports and animal products exports. An econometric grangercausality analysis is performed to provide insights over the determinants of this trade. After these case studies, the chapter discusses the potential role that the World Trade Organization may take in order to regulate water resources. The WTO is one of the main determinants of international trade but its rules do not include food and water security issues. The chapter adds reasons for and against the inclusion of water concerns in the trade regime and the international agreements. Finally, it advocates for the development of institutional or economic solutions to handle market externalities and make the trade regime truly socially-enhancing.