The Effect of Per-Capita Income Growth on Net Imports of Virtual Water in Selected Countries

Mozhgan Moallemi ()
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Mozhgan Moallemi: Assistant Professor of Economics, Payame Noor University

Quarterly Journal of Applied Theories of Economics, 2018, vol. 5, issue 1, 133-158

Abstract: Today, the concept of virtual water is one of the most important issues in water resources management. Although there are many studies in the world about this, however, there are few limited quantitative studies in the field of virtual water in Iran. Considering the critical situation of water resources in low-water regions of the world, especially in Iran, this issue is of great importance. The innovation of the present paper is to compute virtual water values by 6-digit SITC codes for all sectors of the economy in selected countries (Persian Gulf countries and European countries). So, for each export and import code in the countries, the amount of virtual water is calculated. The aim of the paper is to estimate the effect of the growth of per capita income on the net import of virtual water in selected countries during 2001-2012, using estimated values of water contained in products. For this purpose, using the panel data method, an econometric model is estimated. The results of the model estimation showed that, according to theoretical foundations, there is a U-inversion relationship between per capita income and the growth of virtual water imports. So that, Virtual import of water in countries with lower per capita income (Persian Gulf countries) is facing increasing growth. Therefore, it is recommended that in such countries, products with higher water productivity should be considered for export. On the other hand, import relies on products with lower water productivity.

Keywords: Virtual water imports; Per-capita income; Panel data; Persian Gulf countries; European countries. (search for similar items in EconPapers)
JEL-codes: O13 Q18 Q25 (search for similar items in EconPapers)
Date: 2018
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