The Virtual Water Metaphor Enhances Policy Discussions Regarding Scarce Resources.

In a recent issue of Water International, three authors discuss their views of the virtual water metaphor that is used to describe the water embedded in crops that are traded in international markets. The term 'virtual water' was created originally to gain the attention of public officials responsible for choosing policies that influence water use in arid regions. Over time, both the terminology and the scope of the virtual water metaphor have been extended beyond the original purpose. This paper supports the view that the virtual water metaphor is helpful in encouraging public officials to consider the scarcity value (opportunity cost) of water when designing policies that influence water use. The paper proposes, also, that the policy relevance of the virtual water metaphor is found primarily in its application to issues regarding the supply of agricultural products, rather than demand. The distinction between supply and demand issues and the potential value of the virtual water metaphor in policy discussions regarding supply are demonstrated using three examples of water allocation decisions, described within the framework of economic optimization. The examples include wheat production in Saudi Arabia and the production of sudangrass and ethanol in the United States. [ABSTRACT FROM AUTHOR]