Debate about the costs and benefits of trade rarely consider the implication of trade for natural resources. However, international trade can have considerable impacts on the environment. Yet these impacts are often unintended, since natural resources and the environment are typically not the main focus of trade policies.

New research by CEE at Illinois assistant professor Megan Konar, water resources expert at the Institute of Government & Public Affairs, and graduate student Qian Dang makes it clear that trade has unintended and beneficial consequences for water use. They find that trade leads countries to use less water to grow crops, but does not impact the amount of water used in industry. This research was recently published by a top academic publication, the journal Water Resources Research.

“The goal of our paper is to understand the impact of trade for the water use of nations,” Konar said. “We show that trade leads to more efficient use of our water resources in agriculture. Agricultural production is by far the main user of water resources, making this an important finding. We hope that this research will contribute to a more broad debate on the merits of globalization.”

To evaluate the impact of trade on water use the researchers combined a variety of freely available government databases.

“We live in a big data world except when it comes to water. Our study was limited to the year 2004 due to a lack of water data,” Konar said. “We call for an improved data collection and maintenance effort on local, national and global water use. It is essential to have more and higher quality data to inform scientific and policy insight related to water resources sustainability. Our study would not have been possible without government databases.”

The authors used advanced statistical techniques to determine the causal impact of trade on water use.

“Our main finding is that trade reduces the amount of water nations use to produce their food,” Konar said. “We find that trade openness reduces water use in agriculture primarily through the intensive margin effect. This means that trade leads farmers to produce more with less water, such as through the adoption of technology.”

Konar noted that the findings of the study are relevant to Illinois.

“Illinois is a major agricultural producing state with significant crop exports. Right now, crop production in Illinois mainly relies on rainfall. However, growers may need to irrigate more in the future, as the climate and rainfall patterns shift. This work indicates that trade is an important component of the food production system in Illinois that policy makers should consider going forward,” Konar explained.

The study will be published in a forthcoming edition of the journal Water Resources Research. It is available online here.