Are virtual water calculations helpful in informing regional water policy?

The concept of "virtual water," or the amount of water used to produce a good, has been useful for water scarce societies looking to preserve and efficiently allocate their water resources. For example, if a country with an arid climate determines that the wheat they consume can be produced somewhere else, the country may choose to import wheat instead of growing it domestically. This can save water for other uses like drinking water.    
 
But what happens when the value of different water uses are hard to distinguish? Should a region grow cotton or devote more land for corn? To shed light on these questions, regions can pair the concept of virtual water with that of opportunity costs, the tradeoffs of different uses. A study in Natural Resources examined the case of West Texas, an agricultural region, to better understand the tradeoffs that arise from different water priorities, both within the region and across time.
 
The study area sits atop the southern portion of the extensive Ogallala aquifer, which is the major water supply of much of the Great Plains. Uniquely, the southern portion of the aquifer recharges the water taken from it at an extremely slow rate. Therefore, the freshwater it contains can be thought of as a finite resource. This has led to active regulation of groundwater use in the region with the goal of maintaining the resource for future use.
 
While dry, it does occasionally rain in West Texas. To isolate the demand for extracted groundwater, the researchers from Texas Tech University utilized precipitation and meteorological data to estimate the amount of rainwater taken up by plants. Subtracting this water from a crop's total water needs gave the researchers an estimate of the amount of groundwater used to irrigate each crop.   
 
Using market prices for different commodities, the researchers determined how valuable the groundwater use was for each crop. Outside of the relatively small peanut growing sector, cotton generated the most revenue per cubic meter of groundwater used. According to the study, if water is scarce in the future, the region may do well to encourage the growing of these more productive crops.
 
The cattle industry provides an interesting aside. While cattle themselves need relatively little water compared to crops, water needs to grow feed for cattle can be quite high. The revenue generated per volume of water used to grow this feed is low when compared to cotton and other food crops. This would suggest that the region should import their feed from elsewhere and save groundwater for higher value water-efficient uses. As it turns out, West Texas does exactly that. The region imported 74 percent of its feed over the last decade. In this case, the actual water management decision in the region aligns with policy informed by the virtual water concept. 
 
Regardless of the crop, irrigating crops with groundwater increased revenues throughout the region. However, the researchers note that without considering uses outside agriculture, the picture is incomplete. For example, irrigation of cotton resulted in an average of $0.19 increase in revenue per cubic meter of water used. In comparison, citizens of Lubbock, the largest city in the region, pay between $0.71 and $1.57 per cubic meter for residential use, and would likely be willing to pay much higher amounts if water became scarce.
 
Since the region's water resource is essentially nonrenewable, withdrawing water now removes the option to use it later. How should the region value future needs? The researchers suggest prioritizing groundwater for future domestic use while also promoting high-value crops that require minimal irrigation. Regardless of how the region moves forward, the concept of virtual water is only meant to maximize efficiency across the region. Where water is scarce, policies will always create tradeoffs that make some better off and some worse off. West Texas and other similar regions must make difficult decisions that often go beyond finding the most efficient outcome.