Driving factors of virtual water in international grain trade: A study for belt and road countries

Abstract

Water resources are distributed in the form of virtual water through international trade, which influences the water supply and consumption of each country. Therefore, it is of significance to study the driving factors of grain virtual water trade to alleviate water stress and guarantee food security. In this paper, the virtual water volume of grain crops traded between China and countries along the Belt and Road (B&R) from 2000 to 2019 was calculated, and a gravity model using panel data was applied to explore the effect of natural and socioeconomic factors on virtual water trade. The virtual water export from B&R countries to China obviously increased in the twenty years and the contributions of various crops to virtual water were more balanced. The regression results indicate that GDP and exchange rate were positively correlated with virtual water inflow, while per capital water resources, arable land, geographic distance, and population were negative factors that hindered virtual water import. The most powerful driving force for grain virtual water trade is water endowment. GDP is an important driver on importing virtual water for countries without water shortage, and a large number of local water resources will not obviously inhibit the driving force of economic strength. By comparing the contribution of factors to virtual water in the past ten years, it can be found that the contribution rate of distance decreased due to the development of transportation industry which reduced the transportation cost of exporting products. The contribution rate of GDP and exchange rate increased, because economic globalization has promoted the effect of economic factors on grain trade. Therefore, the trade structure of agricultural products should be modified based on the characteristics of virtual water flow. For countries without high economic level but water shortage, export crops with high water consumption be reasonably controlled.