UC Santa Barbara

The uneven distribution of water on earth causes its scarcity in many countries, hindering economic and human development. Virtual water trading takes place by the export and import of agricultural and industrial products whose production involves water and, so, is one of the methods to cope with water scarcity. This work investigates the integrated management of the virtual water trade of strategic agricultural and industrial products with the goals of maximizing economic revenue and minimizing the consumption of virtual water. Bi-objective optimization is performed with the non-dominated sorting genetic algorithm (NSGA)-II algorithm under two scenarios. One of the scenarios applies production constraints to ensure a minimum of internal or domestic production of agricultural and industrial goods, thus providing a degree of self-sufficiency. This paper applies its methodology to Iran and establishes that the imports of industrial products should be terminated and exports of these products should increase. The results show that the export amount of iron ore increases by 71% due to the application of the self-sufficiency constraint, which shows the profitability of this product in addition to its low water consumption. This paper demonstrates that the optimal solutions for agricultural products (except for potatoes and tomatoes) is achieved by producing at least 50% of the domestic demand, but rarely calls for a higher level of production. This work illustrates through the case study that it is possible to increase economic revenue under water scarcity by proper management of the virtual water trade.