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A gravity model of virtual water trade

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  • Fracasso, Andrea

Abstract

This work investigates the determinants of bilateral ‘virtual water trade (VWT) flows’ by means of an estimated gravity model of trade applied to the services of the water embodied in the agricultural goods exchanged across countries. In line with the recent literature on the gravity model of trade, the paper presents a battery of estimation methods. The analysis shows that bilateral VWT flows are affected by the classical determinants of trade, by national water endowments, and by the level of pressure on water resources. These general findings are robust, even though some variation can be observed across the estimation methods and, in particular, when smaller sub-samples of countries (such as continents and regional groups) are considered. This contributes to account for the mixed evidence in the literature on the importance of water endowments for the VWT flows.

Suggested Citation

  • Fracasso, Andrea, 2014. "A gravity model of virtual water trade," Ecological Economics, Elsevier, vol. 108(C), pages 215-228.
    • Handle: RePEc:eee:ecolec:v:108:y:2014:i:c:p:215-228
    DOI: 10.1016/j.ecolecon.2014.10.010
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    More about this item

    Keywords

    Virtual water; Gravity model of trade; Water scarcity;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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