The policy relevance of virtual water can be enhanced by considering comparative advantages

The virtual water metaphor was created originally to gain the attention of public officials responsible for choosing policies that influence the use of water resources in and regions. Over time, the metaphor has been used in both empirical and conceptual settings, primarily to describe the water used to produce crop and livestock products that are traded in international markets. Several authors have described how water-short countries can enhance their food security by importing water-intensive food crops. Some authors have noted similarities between the virtual water metaphor and the economic theory of comparative advantage. The virtual water metaphor addresses resource endowments, but it does not address production technologies or opportunity costs. Hence, the metaphor is not analogous to the concept of comparative advantage. The metaphor can be helpful in motivating public officials to consider policies that will encourage improvements in the use of scarce resources, but comparative advantages must be evaluated to determine optimal production and trading strategies. The theory of comparative advantage is explained and demonstrated in several scenarios that depict differences in resource endowments and production technologies. Optimal strategies are not always consistent with expectations based only on resource endowments. Policy discussions regarding water resources can be enhanced by considering comparative advantages when evaluating opportunities to import or export agricultural products. (C) 2003 Elsevier B.V. All rights reserved.