Does interstate trade of agricultural products in the U.S. alleviate land and water stress?

Abstract

Interregional free-trade of agricultural products is expected to transfer embodied (virtual) water from more to less water-productive regions. However, irrigation in semi-arid to arid regions may significantly push up agricultural productivity but cause local water scarcity. This may result in a puzzle: inter-regional trade may save overall water consumption but lead to more severe local water scarcity. An analogous puzzle may exist for farmland, for instance, trade may save farmland but not address farmland scarcity. To test the existence of these two important puzzles, we applied environmentally extended multi-regional input-output models to obtain the inter-regional virtual agricultural water and land transfer across 48 states of the conterminous U.S. and estimated their agricultural land and water footprints in 2017. Such a detailed analysis showed that while the land-abundant Midwestern states exported a sizable amount of virtual farmland to other densely populated areas and foreign nations, the water-stressed Western U.S. and Southwestern U.S. states, like California, Arizona, and New Mexico, exported considerable amounts of water-intensive crops such as fruits, vegetables and tree nuts to the Eastern U.S. and overseas, thus worsen the local water scarcity of those water scarce states. Our analysis highlights a critical dilemma inherent in an economic productivity-focused incentive regime: It frequently leads to increased withdrawal of scarce water. Therefore, resource scarcity rents need to be reflected in inter-regional trade with the support of local environmental policies.