Vulnerabilities of the EU’s Economy

This new study addresses the dependency of the EU’s economy upon external water resources and assesses its related vulnerabilities to hydrological extremes (current drought and water scarcity) that are occurring outside its borders. Climate change is leading to increased water scarcity and drought in many parts of the world. This has implications for the European Union (EU) because a lot of the water intensive goods consumed or used there are produced abroad. This makes the EU’s economy dependent on water resources well beyond its borders since when a country imports water intensive goods, indirectly it also imports virtual water (water needed to produce the imported goods). This study maps the EU’s global dependency on water resources outside its borders in terms of virtual water imports and assesses how water scarcity and drought may disrupt supplies of key food crops that it imports. The EU uses approximately 668 km3 of water for all of the goods it produces, consumes and exports, annually. Around 38% of that water comes from outside its borders, which means that the EU’s economy is highly dependent on the availability of water in other parts of the world. In the near future, supplies of certain crops to the EU could be disrupted due to water scarcity in other parts of the world; a large portion of the water used in producing soybeans, rice, sugarcane, cotton, almonds, pistachios and grapes for import to the EU comes from areas with significant or severe levels of water scarcity. Although the immediate risks to the EU’s economy are due to current water scarcity levels, any disruption to rainfall patterns that occur in the future, due to the effects of climate change in the countries of origin of key crops, could have a far greater impact. This is because as much as 92% of the EU’s total external water demand from agriculture is attributed to green water use, availability of which has relatively higher vulnerability to drought.