Virtual Water Trade in Iran with Respect to Economic Productivity

The virtual water trade concept was devised about three decades ago and it is now considered as a way of balancing the distribution of water among countries and regions in attempts to confront with water scarcity. The background literature of virtual water has developed independent of economic knowledge and economists have not endeavored to theorize it. Based on this concept, the export of agricultural products from Iran has been under much criticism in recent years. This study attempts to provide a simple economic model that works with based on opportunity cost theory in combination with economic water productivity and virtual water trade concepts to evaluate major agricultural products of Iran exported or imported in a five-year period. According to the results, internal production of strategic crops has high opportunity costs. The exporting of fruits such as kiwi, citrus, grapes, watermelon, cucumber and tomato created high virtual water values, even higher than pistachio. However, under the water crisis conditions in Iran, these values are much lower than real value of water.