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Global Virtual Water Trade: Integrating Structural Decomposition Analysis with Network Theory

Author

Listed:
  • Tiziano Distefano

    (IMT Institute for Advanced Studies Lucca, Italy.)

  • Giovanni Marin

    (CERIS-CNR Milano, Italy; SEEDS Sustainability Environmental Economics Dynamics Studies, Ferrara, Italy.)

  • Massimo Riccaboni

    (IMT Institute for Advanced Studies Lucca, Italy.)

Abstract

The consideration of both the direct and the indirect effects of global production and trade is the first step in order to assess the sustainability of resource exploitation, in particular water usage. This paper applies the Global Multi-Regional Input-Output model to quantify the interdependencies of different sectors and to determine the overall water consumption of each country. This procedure allows the measurement of Virtual Water Trade, that is the volume of water embedded in traded goods. This paper introduces further extensions based on network analysis to overcome the limitations of I-O models. To the best of our knowledge, this is the first attempt to build a bridge between two different, but related, methodologies. Firstly, we assess the evolution of the structure of international trade in Virtual Water (VW). Secondly, we present the results from the Structural Decomposition Analysis. Finally, we introduce other measures from Network Theory, in order to integrate the previous results. Community Detection assessment reveals the emergence of regional VW systems composed by a limited set of countries. Thus our study confirms the need of elaborating and implementing transboundary policies for water management, especially in the European Union.

Suggested Citation

  • Tiziano Distefano & Giovanni Marin & Massimo Riccaboni, 2014. "Global Virtual Water Trade: Integrating Structural Decomposition Analysis with Network Theory," SEEDS Working Papers 2314, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Aug 2014.
    • Handle: RePEc:srt:wpaper:2314
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    References listed on IDEAS

    as
    1. Turner, Karen & Lenzen, Manfred & Wiedmann, Thomas & Barrett, John, 2007. "Examining the global environmental impact of regional consumption activities -- Part 1: A technical note on combining input-output and ecological footprint analysis," Ecological Economics, Elsevier, vol. 62(1), pages 37-44, April.
    2. Xavier Gabaix, 2009. "Power Laws in Economics and Finance," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 255-294, May.
    3. Miller,Ronald E. & Blair,Peter D., 2009. "Input-Output Analysis," Cambridge Books, Cambridge University Press, number 9780521517133.
    4. M. Antonelli & R. Roson & M. Sartori, 2012. "Systemic Input-Output Computation of Green and Blue Virtual Water ‘Flows’ with an Illustration for the Mediterranean Region," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 26(14), pages 4133-4146, November.
    5. Miller,Ronald E. & Blair,Peter D., 2009. "Input-Output Analysis," Cambridge Books, Cambridge University Press, number 9780521739023.
    6. Bin Su & B. W. Ang, 2012. "Structural Decomposition Analysis Applied To Energy And Emissions: Aggregation Issues," Economic Systems Research, Taylor & Francis Journals, vol. 24(3), pages 299-317, March.
    7. Wiedmann, Thomas & Lenzen, Manfred & Turner, Karen & Barrett, John, 2007. "Examining the global environmental impact of regional consumption activities -- Part 2: Review of input-output models for the assessment of environmental impacts embodied in trade," Ecological Economics, Elsevier, vol. 61(1), pages 15-26, February.
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    More about this item

    Keywords

    virtual water trade; multi-regional input-output model; network analysis; community detection;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • F18 - International Economics - - Trade - - - Trade and Environment

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