Aino Friman, Postdoctoral Researcher; Xavier Irz, Professor; Yue Fu, Doctoral Researcher
University of Helsinki
When thinking about water sustainability, images of overflowing rivers, dry land, submerged streets or empty reservoirs come to mind. Less obvious is the fact that every loaf of bread, liter of milk, or kilogram of grain fundamentally depends on and embodies water. Agriculture accounts for around 70% of global freshwater withdrawals (Visit an external site. The link opens in a new tab.), making food production one of the largest drivers of water use worldwide. Thus, as climate change intensifies water scarcity in many regions, understanding the links between water, food systems, and international trade is becoming increasingly important.
This is why researchers – including our team – are paying growing attention to it. Trade and water influence each other. When food crosses borders, so does the water used to produce it – what researchers call “virtual water (Visit an external site. The link opens in a new tab.)”. A country importing wheat, for example, is indirectly relying on the water resources of the country where that wheat was grown. But the relationship also works the other way: as water becomes scarcer in some regions, food production there may become more difficult and costly, potentially shifting production and trade elsewhere.
The Nordic region offers an interesting perspective on this challenge – even perhaps a puzzle. Finland, for example, has some of the most abundant renewable freshwater resources per person in Europe. Yet Finland imports large amounts of virtual water (Visit an external site. The link opens in a new tab.) through food and agricultural products – including from regions where water is scarce.
Why would a water-abundant country rely so heavily on water used elsewhere? One reason is that having water does not automatically make a country a major agricultural producer. Land, climate, labor, infrastructure and many other factors (Visit an external site. The link opens in a new tab.) also determine what countries can competitively produce and trade.
The first part of our research starts by asking a simple question: do water-abundant countries actually export more water embodied in traded foods? Using global trade data, with particular attention to Finland and its trading partners, we compare the water resources available to countries with the water embodied in their agri-food trade. Looking forward, we also explore how climate-driven changes in water availability could reshape global trade and what such changes could mean for water-abundant countries such as Finland.
The second part looks at another force that can reshape global commerce: trade agreements. What happens to global water use in agri-food production when new trade agreements are in place?
The European Union is increasingly integrating sustainability objectives into its trade policy. Recent agreements with, for example, New Zealand (Visit an external site. The link opens in a new tab.) and Chile (Visit an external site. The link opens in a new tab.) are among the first EU trade agreements to explicitly include dedicated chapters on Sustainable Food Systems. However, while EU trade agreements can encourage more resource-efficient production patterns and create incentives for sustainable practices, they do not directly govern the sustainable use of water resources or substitute for robust water governance at national and local levels. Water scarcity and the environmental impacts of water use are ultimately best addressed where they occur, through appropriate local and national policies.
Using a global economic model, we examine how EU trade agreements – and specifically non-tariff measures (Visit an external site. The link opens in a new tab.) – may reshape agricultural production, agri-food trade and water use across countries. This allows us to look beyond the economic effects of trade agreements and ask an additional question: does the resulting shift in production and trade relieve or exacerbate water scarcity — and where? While the analysis is global, we pay particular attention to Finland and the other Nordic countries.
Together, the two approaches applied in our work take us from understanding today’s trade patterns to exploring possible futures. Could growing water scarcity in key agricultural regions change Finland’s role in global food trade? “Do the EU’s new trade agreements ease water pressures — or deepen them? And what economic gains, costs and trade-offs accompany these changes? These are the questions our ongoing research aims to answer.
Contact: Aino Friman, Postdoctoral Researcher, aino.friman@helsinki.fi