Water Trading: A Practical or Fantastic Idea?

Growing population and climate change is not only causing water scarcity but also water inequity. In India, extreme situations of flooding in some regions and drought in others are also more frequent than ever. Globally too, while some countries are facing extreme shortage of water, others have excess reserves. Innovative techniques need to be adopted to homogenize water distribution across the world.

Water trading – a feasible option?

Current water trading practices entail buying and selling water rights (permanent access entitlements) or water allocation entitlements (seasonal and temporary). Both cases involve the transfer of water from one agricultural water user to another or from the agricultural to other sectors i.e. industry/manufacturing.

Theoretically, water trading appears to be the best approach to reduce water wastage and improve its efficiency. However, its physical state, volume and weight pose challenge for trade or transportation of water, especially over long distances. Over short distances, it can be piped across states or countries e.g., water supplied by Malaysia to Singapore or can even be transported as was done in Maharashtra where a train transported water to drought ridden Marathwada from other parts of the state.

Virtual Water Trade

An alternative to this challenge is trading in Virtual Water; which would bridge the demand-supply gap of water (globally) by trading in derivatives (product or output water arising out) of water which are easily tradeable and can be transported over long distances economically.

A few decades ago there was significant imbalance in food production across countries due to non-homogeneous distribution of water. While the calamity was addressed suitably, it revealed a clear underlying message i.e. food surplus countries had access to large reservoirs/sources of water compared to the food deficient countries. Therefore, if one was to consider food as a derivative of water then trading food between countries would result in putting lesser pressure on water resources in food deficient versus the food surplus countries. This ‘Virtual Water trading’ in effect becomes a surrogate for water trading between countries.

As per an estimate, India exported nearly 25 km3 of Virtual Water in the form of agricultural exports to other countries; this is equivalent to meeting the food needs of nearly 13 million people. However, it is ironical that these exports included water-thirsty crops like cotton, sugarcane and rice, despite India being a water deficient nation.

Therefore, it makes sense to promote Virtual Water trade, wherein India could partner with water-rich [freshwater resources] countries like Brazil, Russia, Canada or the equatorial belt in Africa which experience high average rainfall. These countries could grow and export water-guzzling crops like rice, sugarcane, wheat etc. which are in high demand in India, in lieu of those imports, India can provide technological or other services which are sparsely available in these countries. This could result in a win-win scenario for both countries, plus India would conserve or limit it’s high agrarian use of water.

In summary, instead of fighting nature, topography or human behaviour, a more prudent option for the countries is to look at the world as a global village and drive uniform distribution/trade of water derived outputs. Practically it makes most sense, geopolitical considerations notwithstanding, however only time will tell if such sanity could prevail within humanity.