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Symposium 2011

Solution for Water Scarcity and Virtual Water Trade

The Challenge

Two fifths of the world’s population faces water shortages. During the coming decades, water scarcity is expected to rise as a result of a rapid increase in the demand for water due to population gr ...

Two fifths of the world’s population faces water shortages. During the coming decades, water scarcity is expected to rise as a result of a rapid increase in the demand for water due to population growth, urbanization and increasing consumption of water per capita. In addition, climate change is expected to influence the supply of water, modifying the regional distribution of freshwater resources.

Modify accounting standards to reflect the role of water in the food supply chain.

Water is an input to production in most economic activities. Agriculture, and therefore food production, is the largest user, leaving potentially large water footprints or trading large volumes of virtual water. But in many regions of the world, water has no price and consumption is not reported in the accounting systems, at either the company or national level.

Accounting standards have to be modified not only for billing purposes, but also to understand the role of water in the food supply chain. Simplistic approaches to “water footprint” need to be avoided and replaced by “net water footprint,” that is, net of reuse and recycling, including quality considerations. Accounting for net water use in the production process will provide the necessary information to facilitate decision-making at the management, producer and consumer level.

This solution is particularly suitable for developed economies as data availability may be poor in less developed countries where water scarcity is most severe. Too complicated accounting systems may thus undermine their implementation.

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