UN report warns: international food trade diverts the world's water resources towards wealthier nations

Richmond Hill, Ontario – 27 August 2025: International agricultural trade plays a central role in balancing global food supply and demand. Yet, with every shipment of crops crossing borders, the water used to produce them is virtually transferred as well, reshaping the distribution of water resources worldwide.   

A new report by the United Nations University Institute for Water, Environment and Health (UNU-INWEH) reveals that virtual water transfers through food trades generally reduce water scarcity for much of the global population, while at the same time deepening shortages for millions of others, particularly those in low-income communities.  

When food is imported, countries effectively save the water that would have been needed to produce it domestically, easing pressure on their own supplies. This option is most accessible to high-income countries, which can afford to source crops internationally. By contrast, when food is exported, the water embedded in those crops flows abroad. For many developing countries, these exports generate revenue but also deplete limited local resources, leaving less water available for their own populations. According to the UN scientists, these dynamics have a more severe impact on low-income populations, even in high-income countries, given their limited capacity to cope with inadequate water resources and the resulting income losses. 

Although the world overall benefits from the virtual water transfers associated with food trade, the impacts of such exchanges are not the same across countries. Regions such as Northern China, Europe, and parts of Northern Africa benefit the most from agricultural trade, while countries like India and Pakistan, as well as areas in eastern Australia and the central United States, experience little to no benefit, and in some cases face even greater water stress. 

According to UNU-INWEH, also known as the UN’s Think Tank on Water, 75% of the population in high-income countries and 62% in low-income countries experience reduced water scarcity as a result. On the other hand, food trade exacerbates water scarcity for 22% of the population in high-income countries, while this share rises to 37% in low-income countries. What concerns the UN analysts is the observation that such impacts are not uniformly distributed, with high-income communities often being the main beneficiaries of reduced water scarcity, while low-income populations suffer the most from increased scarcity.  

The report underlines the injustice implications and calls for measures to address the outstanding water inequity issues that result from international food trades between and within the UN member states.  

"This form of 'virtual water trade' reflects a broader pattern of environmental injustice around the world, where the environmental costs and risks are increasingly shifted from those who can afford to absorb them to those who cannot," said Professor Kaveh Madani, Director of UNU-INWEH and the co-author of the report. "Our report is a wake-up call about another inequity problem, the rich nations are mainly accountable for. The existing global food trade system continues to make the world's most vulnerable people and nations more vulnerable." 

The analysis further reveals that international agricultural trade almost never produces outcomes that are purely positive or negative. Instead, it creates trade-offs that reveal sharp contrasts across regions and income levels. These trade-offs underscore that the same trade flows can simultaneously create winners and losers, with low-income populations most vulnerable to the negative side of the equation. “This reality calls for more targeted and equity-oriented water and trade policies that support vulnerable populations with limited adaptive capacity and promote fair and sustainable global water governance.” said Dr. Yue Qin, the report's lead author. 

The report emphasizes that policies must focus on how trade outcomes affect lower-income populations, not only on overall water availability. National water strategies can reduce inequity by providing subsidies or direct financial support to low-income households, capping water prices to keep them affordable, and investing in local water infrastructure to secure basic needs. On the agricultural side, improvements such as drip irrigation and shifting to less water-intensive crops can make production more water-efficient, easing local scarcity and supporting small farmers. 

Nations also need to develop their food trade policies strategically, the report emphasizes. Diversifying crop imports and trading partners can reduce pressure on vulnerable countries, as seen in the example of China adjusting its rice and wheat import mix to balance water demands more fairly. Because agricultural trade has created deep interdependence among nations, coordinated action is essential. The study calls on governments to design water and trade policies that explicitly consider water scarcity and a fair distribution of benefits and costs, ensuring that global trade supports sustainable development rather than widening the inequalities. 

Key Findings in Brief 

• International agricultural trade is an effective policy tool to address local water shortages through the transfer of water embedded in food. 
• International agricultural trade can alleviate the impacts of water scarcity in some parts of the world, especially in Northern China, Europe, and Northern Africa.  
• In developing countries such as India and Pakistan, agricultural trade provides minimal relief and can worsen water scarcity. 
• In developed regions like Eastern Australia and the Central United States, trade offers little benefit and sometimes increases water stress. 
• Developed countries benefit more from food trade-induced water scarcity alleviation than developing countries. 
• Due to agricultural trade, the share of the relatively low-income population experiencing no or low water scarcity increases by 20% in developed countries, but by only 0.1% in developing countries, further widening the water scarcity gap between the two economies. 
• In developing countries, 62% of the population experience reduced water scarcity, while 37% face increased water scarcity as a result of food trades, with the latter being  poorer.  
• In developed countries, 75% of the population benefits from reduced water scarcity as the result of food trades, and only 22% experience an increase.  
• Trade-induced water impacts are highly asymmetric. In developing countries, 35% of the population who suffer from increased water scarcity and inequity are the poorest, while in developed countries, the poorest 13% benefit from reduced water scarcity and inequity 
• For the relatively poor in developing countries, water use becomes more concentrated among the affluent due to agricultural trade, leading to a 30% increase in inequity. In contrast, trade reallocates more water to the impoverished, enhancing equity by 65% for the relatively poor populations in developed countries.  

Read the UNU Report: 

Qin, Y., Gu, W., AghaKouchak, A., Liu, Y., Madani, K., Ni, J. (2025). Water Inequity in Global Agricultural Trade. United Nations University Institute for Water, Environment, and Health (UNU-INWEH), Richmond Hill, Ontario, Canada, doi: 10.53328/INR25AMG001 

Media Contacts: 

• Kyra Bowman, UNU Head of Communications, bowman@unu.edu  

• Shooka Bidarian, Media and Journalism Fellow, Sustainability and Climate, shooka.bidarian@unu.edu 

Available for Interviews: 

• Dr. Yue Qin, Lead Author 

• Prof. Amir AghaKouchak - Water, Climate and Infrastructure Risk Lead, UNU-INWEH 

• Prof. Kaveh Madani - Director, UNU-INWEH - madani@unu.edu 

About UNU-INWEH 

The United Nations University Institute for Water, Environment and Health (UNU-INWEH) is one of 13 institutions comprising the United Nations University (UNU), the academic arm of the United Nations. Established in 1996 through an agreement with the Government of Canada, UNU-INWEH, also known as the UN's Think Tank on Water is headquartered in the City of Richmond Hill, Ontario. UNU-INWEH specializes in addressing critical global security and development challenges at the intersection of water, environment, and health. Through research, capacity development, policy engagement, and knowledge dissemination, the institute bridges the gap between scientific evidence and the practical needs of policymakers and UN member states, with particular attention to low and middle-income countries. By collaborating with a diverse array of partners—including UN agencies, governments, academia, the private sector, and civil society—UNU-INWEH develops solutions that advance human security, resilience, and sustainability worldwide.