Economy-water nexus in agricultural sector: decomposing dynamics in water footprint by the LMDI
Abstract
Traditional economic activities induce environmental pressures. In order to ensure sustainable economic growth, one needs to decouple it from the environmental pressures. Sustainable growth of the agricultural sector is topical in the sense that economic activity supports rural populations, whereas the resulting environmental pressures may affect diverse groups of population. Thus, the analysis of water footprint related to crop farming is important in the sense of efficient resource use and sustainable development of agriculture in general. In this paper, we focus on Lithuanian crop farming and the related green and grey water footprints. Specifically, we decompose the changes in the water footprints during 2000–2016 by exploiting the Logarithmic Mean Divisia Index. Due to the expansion of the areas harvested, the scale effect appeared as an important driver of growth in green and grey water footprints. The shifts in spatial distribution of area harvested virtually had no influence on the dynamics in either of the water footprints. The crop-mix effect was much higher for the grey water footprint (51% over the period of 2000–2015) than it was the case for the green water footprint (21%). The yield growth induced growth in both green and grey water footprints.
Keyword : water economics, economy-water nexus, water footprint, Index Decomposition Analysis, Logarithmic Mean Divisia Index, crop farming, Lithuania
How to Cite
Su, W., Chen, S., Baležentis, T., & Chen, J. (2020). Economy-water nexus in agricultural sector: decomposing dynamics in water footprint by the LMDI. Technological and Economic Development of Economy, 26(1), 240-257. https://doi.org/10.3846/tede.2020.11908
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Cai, X., Wallington, K., Shafiee-Jood, M., & Marston, L. (2018). Understanding and managing the foodenergy-water nexus-opportunities for water resources research. Advances in Water Resources, 111, 259–273. https://doi.org/10.1016/j.advwatres.2017.11.014
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Chaudhry, A. M., & Barbier, E. B. (2013). Water and growth in an agricultural economy. Agricultural Economics, 44(2), 175–189. https://doi.org/10.1111/agec.1200
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D’Ambrosio, E., De Girolamo, A. M., & Rulli, M. C. (2018). Assessing sustainability of agriculture through water footprint analysis and in-stream monitoring activities. Journal of Cleaner Production, 200, 454–470. https://doi.org/10.1016/j.jclepro.2018.07.229
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Miao, Z., Baležentis, T., Tian, Z., Shao, S., Geng, Y., & Wu, R. (2019). Environmental performance and regulation effect of China’s atmospheric pollutant emissions: Evidence from “Three Regions and Ten Urban Agglomerations”. Environmental and Resource Economics, 74, 211–242. https://doi.org/10.1007/s10640-018-00315-6
Miglietta, P., Morrone, D., & De Leo, F. (2018). The water footprint assessment of electricity production: An overview of the economic-water-energy nexus in Italy. Sustainability, 10(1), 228. https://doi.org/10.3390/su10010228
Miglietta, P., Toma, P., Fanizzi, F., De Donno, A., Coluccia, B., Migoni, D., Bagordo, F., & Serio, F. (2017a). A grey water footprint assessment of groundwater chemical pollution: Case study in Salento (southern Italy). Sustainability, 9(5), 799. https://doi.org/10.3390/su9050799
Miglietta, P. P., De Leo, F., & Toma, P. (2017b). Environmental Kuznets curve and the water footprint: An empirical analysis. Water and Environment Journal, 31(1), 20–30. https://doi.org/10.1111/wej.12211
Papadimitriou, L., D’Agostino, D., Borg, M., Hallett, S., Sakrabani, R., Thompson, A., & Knox, J. (2019). Developing a water strategy for sustainable irrigated agriculture in Mediterranean island communities – Insights from Malta. Outlook on Agriculture, 48(2), 143–151. https://doi.org/10.1177/0030727019841060
Richard, A., Casagrande, M., Jeuffroy, M. H., & David, C. (2018). An innovative method to assess suitability of Nitrate Directive measures for farm management. Land Use Policy, 72, 389–401. https://doi.org/10.1016/j.landusepol.2017.12.059
Rosegrant, M. W., Ringler, C., Zhu, T., Tokgoz, S., & Bhandary, P. (2013). Water and food in the bioeconomy: Challenges and opportunities for development. Agricultural Economics, 44(s1), 139–150. https://doi.org/10.1111/agec.12058
Schönhart, M., Trautvetter, H., Parajka, J., Blaschke, A. P., Hepp, G., Kirchner, M., Mitter, H., Schmid, E., Strenn, B., & Zessner, M. (2018). Modelled impacts of policies and climate change on land use and water quality in Austria. Land use Policy, 76, 500–514. https://doi.org/10.1016/j.landusepol.2018.02.031
Sears, L., & Lawell, C. Y. L. (2019). Water management and economics. The Routledge Handbook of Agricultural Economics, 269–284. https://doi.org/10.4324/9781315623351-16
Serban, A. C., Aceleanu, M. I., & Saseanu, A. S. (2017) Constraints of transition to ecological agriculture in a sustainable development society. Romanian Perspective. Transformations in Business & Economics, 16, 56–73.
Song, M., Fisher, R., & Kwoh, Y. (2019). Technological challenges of green innovation and sustainable resource management with large scale data. Technological Forecasting and Social Change, 144, 361–368. https://doi.org/10.1016/j.techfore.2018.07.055
Statistics Lithuania. (2019). Indicator Database. Retrieved April 1, 2019, from https://osp.stat.gov.lt/statistiniu-rodikliu-analize#/
Tian, H., Lu, C., Pan, S., Yang, J., Miao, R., Ren, W., Yu, Q., Fu, B., Jin, F.-F., Lu, Y., Melillo, J., Ouyang, Z., Palm, & C., Reilly, J. (2018). Optimizing resource use efficiencies in the food–energy–water nexus for sustainable agriculture: From conceptual model to decision support system. Current Opinion in Environmental Sustainability, 33, 104–113. https://doi.org/10.1016/j.cosust.2018.04.003
Toma, P., Miglietta, P. P., Zurlini, G., Valente, D., & Petrosillo, I. (2017). A non-parametric bootstrapdata envelopment analysis approach for environmental policy planning and management of agricultural efficiency in EU countries. Ecological Indicators, 83, 132–143. https://doi.org/10.1016/j.ecolind.2017.07.049
Tsolakis, N., Srai, J., & Aivazidou, E. (2018). Blue water footprint management in a UK poultry supply chain under environmental regulatory constraints. Sustainability, 10(3), 625. https://doi.org/10.3390/su10030625
UN-Water. (2018). The United Nations World Water Development Report 2018: Nature-Based Solutions for Water. United Nations Educational, Scientific and Cultural Organization, Paris, France. http://unesdoc.unesco.org/images/0026/002614/261424e.pdf
Velasco-Muñoz, J., Aznar-Sánchez, J., Belmonte-Ureña, L., & López-Serrano, M. (2018a). Advances in water use efficiency in agriculture: A bibliometric analysis. Water, 10(4), 377. https://doi.org/10.3390/w10040377
Velasco-Muñoz, J., Aznar-Sánchez, J., Belmonte-Ureña, L., & Román-Sánchez, I. (2018b). Sustainable water use in agriculture: A review of worldwide research. Sustainability, 10(4), 1084. https://doi.org/10.3390/su10041084
Wang, J., Ma, Y., & Collins, A. R. (2019). Measuring benefits of rural-to-urban water transfer: A case study from Puyang River basin, China. Chinese Journal of Population Resources and Environment, 17(4), 352–358. https://doi.org/10.1080/10042857.2019.1613628
Xu, W., & Lowe, S. E. (2018). An integrated analysis of the effects of local water institutions on irrigated agriculture outcomes in the arid western United States. Applied Economics, 50(15), 1761–1776. https://doi.org/10.1080/00036846.2017.1374539
Xu, Y., Huang, K., Yu, Y., & Wang, X. (2015). Changes in water footprint of crop production in Beijing from 1978 to 2012: A Logarithmic Mean Divisia Index decomposition analysis. Journal of Cleaner Production, 87, 180–187. https://doi.org/10.1016/j.jclepro.2014.08.103
Zhao, C., & Chen, B. (2014). Driving force analysis of the agricultural water footprint in China based on the LMDI method. Environmental Science & Technology, 48(21), 12723–12731. https://doi.org/10.1021/es503513z
Zhao, C., Chen, B., Hayat, T., Alsaedi, A., & Ahmad, B. (2014). Driving force analysis of water footprint change based on extended STIRPAT model: Evidence from the Chinese agricultural sector. Ecological Indicators, 47, 43–49. https://doi.org/10.1016/j.ecolind.2014.04.048
Zhao, X., Tillotson, M. R., Liu, Y. W., Guo, W., Yang, A. H., & Li, Y. F. (2017). Index decomposition analysis of urban crop water footprint. Ecological Modelling, 348, 25–32. https://doi.org/10.1016/j.ecolmodel.2017.01.006
Zhuo, L., Mekonnen, M. M., & Hoekstra, A. Y. (2016). The effect of inter-annual variability of consumption, production, trade and climate on crop-related green and blue water footprints and interregional virtual water trade: A study for China (1978–2008). Water Research, 94, 73–85. https://doi.org/10.1016/j.watres.2016.02.037
Zilberman, D. (2014). The economics of sustainable development. American Journal of Agricultural Economics, 96(2), 385–396. https://doi.org/10.1093/ajae/aat075
Zilberman, D., Gordon, B., Hochman, G., & Wesseler, J. (2018). Economics of sustainable development and the bioeconomy. Applied Economic Perspectives and Policy, 40(1), 22–37. https://doi.org/10.1093/aepp/ppx051
Ang, B. W. (2015). LMDI decomposition approach: A guide for implementation. Energy Policy, 86, 233–238. https://doi.org/10.1016/j.enpol.2015.07.007
Arto, I., Andreoni, V., & Rueda-Cantuche, J. M. (2016). Global use of water resources: A multiregional analysis of water use, water footprint and water trade balance. Water Resources and Economics, 15, 1–14. https://doi.org/10.1016/j.wre.2016.04.002
Aznar-Sánchez, J. A., Belmonte-Ureña, L. J., Velasco-Muñoz, J. F., & Manzano-Agugliaro, F. (2018). Economic analysis of sustainable water use: A review of worldwide research. Journal of Cleaner Production, 198, 1120–1132. https://doi.org/10.1016/j.jclepro.2018.07.066
Aznar-Sánchez, J. A., Velasco-Muñoz, J. F., Belmonte-Ureña, L. J., & Manzano-Agugliaro, F. (2019). The worldwide research trends on water ecosystem services. Ecological Indicators, 99, 310–323. https://doi.org/10.1016/j.ecolind.2018.12.045
Bae, J., & Dall’erba, S. (2018). Crop production, export of virtual water and water-saving strategies in Arizona. Ecological Economics, 146, 148–156. https://doi.org/10.1016/j.ecolecon.2017.10.018
Cai, X., Wallington, K., Shafiee-Jood, M., & Marston, L. (2018). Understanding and managing the foodenergy-water nexus-opportunities for water resources research. Advances in Water Resources, 111, 259–273. https://doi.org/10.1016/j.advwatres.2017.11.014
Chaudhry, A. M. (2018). Improving on-farm water use efficiency: Role of collective action in irrigation management. Water Resources and Economics, 22, 4–18. https://doi.org/10.1016/j.wre.2017.06.001
Chaudhry, A. M., & Barbier, E. B. (2013). Water and growth in an agricultural economy. Agricultural Economics, 44(2), 175–189. https://doi.org/10.1111/agec.1200
Dainys, J., Jakubavičiūtė, E., Gorfine, H., Pūtys, Ž., Virbickas, T., Jakimavičius, D., Šarauskienė, D., Meilutytė-Lukauskienė, D., Povilaitis, A., Bukantis, A., Kažys, J., & Ložys, L. (2019). Predicted climate change effects on European perch (Perca fluviatilis L.) – A case study from the Curonian Lagoon, south-eastern Baltic. Estuarine, Coastal and Shelf Science, 221, 83–89. https://doi.org/10.1016/j.ecss.2019.03.020
D’Ambrosio, E., De Girolamo, A. M., & Rulli, M. C. (2018). Assessing sustainability of agriculture through water footprint analysis and in-stream monitoring activities. Journal of Cleaner Production, 200, 454–470. https://doi.org/10.1016/j.jclepro.2018.07.229
De Girolamo, A. M., Miscioscia, P., Politi, T., & Barca, E. (2019). Improving grey water footprint assessment: Accounting for uncertainty. Ecological Indicators, 102, 822–833. https://doi.org/10.1016/j.ecolind.2019.03.040
Drysdale, K. M., & Hendricks, N. P. (2018). Adaptation to an irrigation water restriction imposed through local governance. Journal of Environmental Economics and Management, 91, 150–165. https://doi.org/10.1016/j.jeem.2018.08.002
Fedulova, S., Komirna, V., Naumenko, N., & Vasyliuk, O. (2019). Regional development in conditions of limitation of water resources: correlation interconnections. Montenegrin Journal of Economics, 14(4), 57–68. https://doi.org/10.14254/1800-5845/2018.14-4.4
Hoekstra, A. Y., Chapagain, A. K., Aldaya, M. M., & Mekonnen, M. M. (2011). The water footprint assessment manual. Setting the global standard. Earthscan from Routledge.
Li, Y., Lu, L., Tan, Y., Wang, L., & Shen, M. (2017). Decoupling water consumption and environmental impact on textile industry by using water footprint method: A case study in China. Water, 9(2), 124. https://doi.org/10.3390/w9020124
Lin, C., Jeng, S., Tseng, M., & Wong, W. P. (2019). Sustainable development for zero-wastewater-discharge reproduction planning under quantitative and qualitative information. Management of Environmental Quality, 30(5), 1114–1131. https://doi.org/10.1108/MEQ-12-2018-0213
McCarl, B. A., & Hertel, T. W. (2018). Climate change as an agricultural economics research topic. Applied Economic Perspectives and Policy, 40(1), 60–78. https://doi.org/10.1093/aepp/ppx052
Mekonnen, M. M., & Hoekstra, A. Y. (2010). The green, blue and grey water footprint of crops and derived crop products (Value of Water Research Report Series No. 47). UNESCO-IHE, Delft, the Netherlands. http://www.waterfootprint.org/Reports/Report47-WaterFootprintCrops-Vol1.pdf
Miao, Z., Baležentis, T., Tian, Z., Shao, S., Geng, Y., & Wu, R. (2019). Environmental performance and regulation effect of China’s atmospheric pollutant emissions: Evidence from “Three Regions and Ten Urban Agglomerations”. Environmental and Resource Economics, 74, 211–242. https://doi.org/10.1007/s10640-018-00315-6
Miglietta, P., Morrone, D., & De Leo, F. (2018). The water footprint assessment of electricity production: An overview of the economic-water-energy nexus in Italy. Sustainability, 10(1), 228. https://doi.org/10.3390/su10010228
Miglietta, P., Toma, P., Fanizzi, F., De Donno, A., Coluccia, B., Migoni, D., Bagordo, F., & Serio, F. (2017a). A grey water footprint assessment of groundwater chemical pollution: Case study in Salento (southern Italy). Sustainability, 9(5), 799. https://doi.org/10.3390/su9050799
Miglietta, P. P., De Leo, F., & Toma, P. (2017b). Environmental Kuznets curve and the water footprint: An empirical analysis. Water and Environment Journal, 31(1), 20–30. https://doi.org/10.1111/wej.12211
Papadimitriou, L., D’Agostino, D., Borg, M., Hallett, S., Sakrabani, R., Thompson, A., & Knox, J. (2019). Developing a water strategy for sustainable irrigated agriculture in Mediterranean island communities – Insights from Malta. Outlook on Agriculture, 48(2), 143–151. https://doi.org/10.1177/0030727019841060
Richard, A., Casagrande, M., Jeuffroy, M. H., & David, C. (2018). An innovative method to assess suitability of Nitrate Directive measures for farm management. Land Use Policy, 72, 389–401. https://doi.org/10.1016/j.landusepol.2017.12.059
Rosegrant, M. W., Ringler, C., Zhu, T., Tokgoz, S., & Bhandary, P. (2013). Water and food in the bioeconomy: Challenges and opportunities for development. Agricultural Economics, 44(s1), 139–150. https://doi.org/10.1111/agec.12058
Schönhart, M., Trautvetter, H., Parajka, J., Blaschke, A. P., Hepp, G., Kirchner, M., Mitter, H., Schmid, E., Strenn, B., & Zessner, M. (2018). Modelled impacts of policies and climate change on land use and water quality in Austria. Land use Policy, 76, 500–514. https://doi.org/10.1016/j.landusepol.2018.02.031
Sears, L., & Lawell, C. Y. L. (2019). Water management and economics. The Routledge Handbook of Agricultural Economics, 269–284. https://doi.org/10.4324/9781315623351-16
Serban, A. C., Aceleanu, M. I., & Saseanu, A. S. (2017) Constraints of transition to ecological agriculture in a sustainable development society. Romanian Perspective. Transformations in Business & Economics, 16, 56–73.
Song, M., Fisher, R., & Kwoh, Y. (2019). Technological challenges of green innovation and sustainable resource management with large scale data. Technological Forecasting and Social Change, 144, 361–368. https://doi.org/10.1016/j.techfore.2018.07.055
Statistics Lithuania. (2019). Indicator Database. Retrieved April 1, 2019, from https://osp.stat.gov.lt/statistiniu-rodikliu-analize#/
Tian, H., Lu, C., Pan, S., Yang, J., Miao, R., Ren, W., Yu, Q., Fu, B., Jin, F.-F., Lu, Y., Melillo, J., Ouyang, Z., Palm, & C., Reilly, J. (2018). Optimizing resource use efficiencies in the food–energy–water nexus for sustainable agriculture: From conceptual model to decision support system. Current Opinion in Environmental Sustainability, 33, 104–113. https://doi.org/10.1016/j.cosust.2018.04.003
Toma, P., Miglietta, P. P., Zurlini, G., Valente, D., & Petrosillo, I. (2017). A non-parametric bootstrapdata envelopment analysis approach for environmental policy planning and management of agricultural efficiency in EU countries. Ecological Indicators, 83, 132–143. https://doi.org/10.1016/j.ecolind.2017.07.049
Tsolakis, N., Srai, J., & Aivazidou, E. (2018). Blue water footprint management in a UK poultry supply chain under environmental regulatory constraints. Sustainability, 10(3), 625. https://doi.org/10.3390/su10030625
UN-Water. (2018). The United Nations World Water Development Report 2018: Nature-Based Solutions for Water. United Nations Educational, Scientific and Cultural Organization, Paris, France. http://unesdoc.unesco.org/images/0026/002614/261424e.pdf
Velasco-Muñoz, J., Aznar-Sánchez, J., Belmonte-Ureña, L., & López-Serrano, M. (2018a). Advances in water use efficiency in agriculture: A bibliometric analysis. Water, 10(4), 377. https://doi.org/10.3390/w10040377
Velasco-Muñoz, J., Aznar-Sánchez, J., Belmonte-Ureña, L., & Román-Sánchez, I. (2018b). Sustainable water use in agriculture: A review of worldwide research. Sustainability, 10(4), 1084. https://doi.org/10.3390/su10041084
Wang, J., Ma, Y., & Collins, A. R. (2019). Measuring benefits of rural-to-urban water transfer: A case study from Puyang River basin, China. Chinese Journal of Population Resources and Environment, 17(4), 352–358. https://doi.org/10.1080/10042857.2019.1613628
Xu, W., & Lowe, S. E. (2018). An integrated analysis of the effects of local water institutions on irrigated agriculture outcomes in the arid western United States. Applied Economics, 50(15), 1761–1776. https://doi.org/10.1080/00036846.2017.1374539
Xu, Y., Huang, K., Yu, Y., & Wang, X. (2015). Changes in water footprint of crop production in Beijing from 1978 to 2012: A Logarithmic Mean Divisia Index decomposition analysis. Journal of Cleaner Production, 87, 180–187. https://doi.org/10.1016/j.jclepro.2014.08.103
Zhao, C., & Chen, B. (2014). Driving force analysis of the agricultural water footprint in China based on the LMDI method. Environmental Science & Technology, 48(21), 12723–12731. https://doi.org/10.1021/es503513z
Zhao, C., Chen, B., Hayat, T., Alsaedi, A., & Ahmad, B. (2014). Driving force analysis of water footprint change based on extended STIRPAT model: Evidence from the Chinese agricultural sector. Ecological Indicators, 47, 43–49. https://doi.org/10.1016/j.ecolind.2014.04.048
Zhao, X., Tillotson, M. R., Liu, Y. W., Guo, W., Yang, A. H., & Li, Y. F. (2017). Index decomposition analysis of urban crop water footprint. Ecological Modelling, 348, 25–32. https://doi.org/10.1016/j.ecolmodel.2017.01.006
Zhuo, L., Mekonnen, M. M., & Hoekstra, A. Y. (2016). The effect of inter-annual variability of consumption, production, trade and climate on crop-related green and blue water footprints and interregional virtual water trade: A study for China (1978–2008). Water Research, 94, 73–85. https://doi.org/10.1016/j.watres.2016.02.037
Zilberman, D. (2014). The economics of sustainable development. American Journal of Agricultural Economics, 96(2), 385–396. https://doi.org/10.1093/ajae/aat075
Zilberman, D., Gordon, B., Hochman, G., & Wesseler, J. (2018). Economics of sustainable development and the bioeconomy. Applied Economic Perspectives and Policy, 40(1), 22–37. https://doi.org/10.1093/aepp/ppx051