Investigating Factors Affecting Virtual Water Trade in wheat production Using Gravity Model

Increasing demand for water resources due to population growth and economic development on one hand, and water loss and rainfall reduction, on the other hand, have required attention to the demand for water at macro level and policy making. With regard to the new approach of countries in virtual water trade and according to the Heckcher-Oholian theory (H-O), the study of virtual water trade will provide valuable points for planners and policymakers in the water and agriculture sector. In this study, the factors affecting virtual water trade (VWT) using the gravity model (GM) based on the H-O theory was studied. to this end, using the World Bank and FAO international databases, wheat crop statistics were collected in selected countries over a period of 4 years’ period of 5 years from 1994 to 2013. During the study period, the total volume of imported and exported wheat was 44.1 and 235.7 billion cubic meters, respectively. The highest effect on GM is on wheat cultivar with a coefficient of -2.54. Considering the ineffectiveness of water prices on virtual water trade, it is possible to pay a special attention to the rationale of water pricing in order to differentiate water tariffs.