Virtual water trade and international trade law

More efficient use of fresh water will be crucial in mitigating increased competition over this scarce resource, which is predicted to be substantially accentuated by climate change. The water which was used during the production cycle of a good is considered to be virtually ‘embedded’ in this good (Allan, 1997). The ‘water footprint’ of a product indicates the total amount of water which was needed to produce a good (agricultural or industrial) in a certain place (Hoekstra, 2002). Based on the 'water footprint' concept, the ‘global water saving’ concept emerged in the year 2004, indicating that a certain amount of fresh water could be saved through international trade in ‘virtual water’ (Oki and Kanae, 2004). Looking into the water footprint data on agricultural products, one could thus assume that if crops with a higher water demand were being produced in water-rich regions and crops with a lower water demand were being produced in water-scarce regions, a significant amount of fresh water could be saved in water-scarce regions. In this regard, there are two highly relevant topics under the WTO international trade law framework: the legal status of irrigation (and related) subsidies and the possibility of using non-product related process and production methods as a criterion to distinguish between otherwise ‘like’ products.