Methodology note: Water risk and global trade

The document details a methodology for assessing 'embedded' water risk in global trade by combining the IOTA hybrid MRIO model with water stress data from the World Resources Institute's Aqueduct database. It explains how production of agricultural commodities is linked to final consumers and how country-level water risk is calculated using two distinct indicators: aggregate national water stress and the proportion of land area under stress. The methodology is illustrated through examples of maize and rice consumption, showing that regions like south and central Asia face high consumption-based water risk. Future improvements aim to increase spatial resolution to the sub-country level and expand the range of risk indicators to include groundwater scarcity and flood likelihood.

• The methodology utilizes the IOTA (Input-Output Trade Analysis) model, a hybridized physical-financial multi-regional input-output (MRIO) model, to allocate the production of raw agricultural commodities to their final point of consumption.
• Country-level water risk is determined using two different indicators derived from the WRI Aqueduct database: one based on total water withdrawal divided by total blue water availability at the aggregate national level, and another based on the proportion of a country's land area with a Baseline Water Stress (BWS) score of 3 or higher (including 'arid' areas).
• The two water risk indicators can produce contrasting results; for example, Egypt is classified as low risk by the aggregate national indicator but high risk by the land area indicator because 97% of its water withdrawal occurs in sources classified as 'Low' which only cover 19% of its land area.
• Analysis of maize consumption indicates that south and central Asia, Mexico, and southern Africa have a high reliance on maize produced in countries with high water scarcity, while South American consumption generally shows low levels of risk.
• Analysis of rice consumption shows that central and south Asia maintain the highest level of consumption-based water risk, with increased risk also noted in North America, Europe, and northern and eastern Africa compared to maize.
• The authors identify several areas for future methodological improvement, including correlating commodity production at a sub-country level with basin-level scarcity, incorporating sub-national trade information via the SEI-PCS model, and expanding risk indicators to include groundwater scarcity, flood likelihood, and drought severity.

APA

West, C., & Croft, S. (n.d.). Methodology note: Water risk and global trade. Stockholm Environment Institute. https://www.sei.org/mediamanager/documents/Publications/Climate/SEI-WP-2016-07-TCI-Methodology-Indicator-8-note.pdf

Chicago

West, Chris, and Simon Croft. Methodology note: Water risk and global trade. Stockholm Environment Institute, n.d. https://www.sei.org/mediamanager/documents/Publications/Climate/SEI-WP-2016-07-TCI-Methodology-Indicator-8-note.pdf.

Wikipedia

{{cite report |last1=West |first1=Chris |last2=Croft |first2=Simon |title=Methodology note: Water risk and global trade |publisher=Stockholm Environment Institute |url=https://www.sei.org/mediamanager/documents/Publications/Climate/SEI-WP-2016-07-TCI-Methodology-Indicator-8-note.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{westndmethodology, author = {West, Chris and Croft, Simon}, title = {{Methodology note: Water risk and global trade}}, institution = {Stockholm Environment Institute}, url = {https://www.sei.org/mediamanager/documents/Publications/Climate/SEI-WP-2016-07-TCI-Methodology-Indicator-8-note.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }