Report

Making water use in global trade more sustainable

This report from UK think tank Chatham House explores the challenge to improve supply-chain resilience and water security in the context of geopolitical change.

Water can be thought of as the ‘forgotten input’ in global trade. Although water is critical to the production and transport of manufactured goods, and to the extraction, processing and transport of commodities, the link between trade and water use is seldom sufficiently reflected in policy, legislation or corporate supply-chain decisions. The hidden water dependencies embedded in trade and production systems mean that water impacts are often all but invisible to markets, a problem that merely further encourages unsustainable water use.

This research paper takes a pragmatic look at what measures are needed to improve sustainable water use in supply chains, taking particular account of today’s geopolitical fragmentation – a trend that complicates prospects for multilateral cooperation. The paper outlines how thinking on supply-chain security needs to take explicit account of the concept of ‘virtual water’ trade, and sets out 10 recommendations for governments, producers, traders, investors and civil society organizations. As businesses and governments continue to reorganize supplier relationships, in part to reduce costs and boost longer-term supply-chain security, we argue that physical water scarcity and water degradation challenges must not be overlooked.