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Policy Analysis

From water use to water scarcity footprinting in environmentally extended input-output analysis Bradley George Ridoutt, Michalis Hadjikakou, Martin Nolan, and Brett A Bryan Environ. Sci. Technol., Just Accepted Manuscript • DOI: 10.1021/acs.est.8b00416 • Publication Date (Web): 18 May 2018 Downloaded from http://pubs.acs.org on May 18, 2018

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Environmental Science & Technology

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From water use to water scarcity footprinting in

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environmentally extended input-output analysis

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Bradley G. Ridoutt,*,†,‡ Michalis Hadjikakou,§ Martin Nolan,⊥ and Brett A. Bryan§

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Food, Clayton South, Victoria 3169, Australia

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Africa

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§

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Australia

Commonwealth Scientific and Industrial Research Organisation (CSIRO), Agriculture and

University of the Free State, Department of Agricultural Economics, Bloemfontein 9300, South

Deakin University, School of Life and Environmental Sciences, Burwood, Victoria 3125,

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⊥CSIRO

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ABSTRACT: Environmentally extended input-output analysis (EEIOA) supports environmental

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policy by quantifying how demand for goods and services leads to resource use and emissions

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across the economy. However, some types of resource use and emissions require spatially-

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explicit impact assessment for meaningful interpretation, which is not possible in conventional

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EEIOA. For example, water use in locations of scarcity and abundance is not environmentally

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equivalent. Opportunities for spatially-explicit impact assessment in conventional EEIOA are

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limited because official input-output tables tend to be produced at the scale of political units

Land and Water, Urrbrae, South Australia 5064 Australia

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which are not usually well aligned with environmentally relevant spatial units. In this study,

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spatially-explicit water scarcity factors and a spatially disaggregated Australian water use

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account were used to develop water scarcity extensions that were coupled with a multi-regional

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input-output model (MRIO). The results link demand for agricultural commodities to the

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problem of water scarcity in Australia and globally. Important differences were observed

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between the water use and water scarcity footprint results, as well as the relative importance of

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direct and indirect water use, with significant implications for sustainable production and

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consumption-related policies. The approach presented here is suggested as a feasible general

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approach for incorporating spatially-explicit impact assessment in EEIOA.

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TOC/Abstract Art

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INTRODUCTION

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As the global community searches for solutions to the many complex and interrelated

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environmental sustainability challenges,1 environmentally extended input-output analysis

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(EEIOA) has developed into an important assessment tool.2,3 Input-output tables reflect the sale

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and purchase relationships between different economic sectors and regions. They reveal the

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interconnected nature of modern economies. When these monetary tables are supplemented with

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data describing resource use and emissions, the resulting models can be used to assess the

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economy-wide, or full-supply-chain, environmental implications of demand for goods and

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services, and serve as a basis for mitigation policy. The most widely used application of EEIOA

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is in greenhouse gas (GHG) emissions accounting, also referred to as carbon footprinting.4-7 Of

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importance, EEIOA has shown that although many developed countries have been successful in

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reducing territorial GHG emissions over time, national consumption-based emissions have

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actually risen, indicating a displacement of emissions via international trade.8,9 This leakage of

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GHG emissions has undermined efforts to reduce total global emissions. EEIOA has also been

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used to study so-called rebound effects which can compromise GHG mitigation efforts.10-12

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Apart from GHG emissions, EEIOA has been used to investigate the production, consumption

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and trade relationships linked to a variety of other environmental concerns, including material

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use,13 biodiversity loss,14,15 water and land resource use16-19 mercury emissions,20,21 sulphur oxide

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emissions,22 ozone precursor emissions23 and various other air pollutants.24 At this point, a

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distinction must be made between global environmental impact categories and those that are

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regional or local in nature. Emission types that become well dispersed in the atmosphere and

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contribute equally to a global environmental phenomenon can be aggregated and compared

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regardless of where the emission occurred. The well-mixed GHGs are an example. However,

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other environmental impact categories require spatially-explicit assessment to be

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environmentally meaningful. For example, water use in a region of water abundance does not

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pose the same risks to human health and ecosystem quality as water use in a region of water

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scarcity.25-27 If water use from different regions is aggregated, the result becomes uninterpretable

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from the perspective of environmental sustainability.28 The same problems arise in relation to

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different types of land use, different types of material use that are not substitutable, and some air

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pollutants.

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While the intent to broaden the application of EEIOA across multiple environmental impact

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categories is commendable, the reality is that EEIOA is presently limited in its ability to

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characterise environmental impacts that require spatially-explicit impact assessment. This is

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because EEIOA is based on input-output tables that are produced at the scale of political units

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(countries, states, provinces, etc.) and are therefore not usually aligned with environmentally

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relevant spatial units (e.g. river basin in the case of surface water use). The need to develop

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EEIOA models incorporating spatially-differentiated impact assessment has recently been

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emphasised in reference to the US economy.29

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Agriculture is an important sector of the world economy, both from the perspective of food

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security as well as employment and contribution to rural livelihoods. Agriculture is also a major

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source of environmental burden from land and water use as well as GHG, nutrient and other

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types of emissions.30-32 Concern about the environmental impacts of agriculture is compounded

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by the increasing world population and the shifts to resource-intensive patterns of food

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consumption that often accompany economic development (e.g. some diets high in animal-based

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foods). This has led to the emergence of sustainable diets as a focal point for food-system

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analysis and food policy,33 and numerous attempts to characterise lower environmental impact

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dietary patterns, many involving the application of environmental footprinting techniques such as

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life cycle assessment (LCA) and EEIOA.34 However, much of the evidence-base concerning the

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environmental impacts of food systems and diets lacks policy insight because resource use that

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requires spatially-explicit impact assessment is aggregated as though it were contributing to a

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global impact category.34

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Globally, and in many individual countries, agriculture is the most important sector of the

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economy in terms of water use35, and is therefore critical to addressing problems related to water

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scarcity. Water scarcity is also a major international concern, identified in the United Nation’s

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Sustainable Development Goal 6,36 although the incidence of water scarcity can vary greatly

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both within and between countries, complicating the application of EEIOA. In this research,

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water scarcity extensions incorporating high-resolution impact assessment were developed for a

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broad range of agricultural and industrial sub-sectors for use in a customised EEIOA and

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compared to conventional water use estimates. To our knowledge, the resulting national water

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scarcity footprint based on EEIOA is the first of its kind. The example we demonstrate, for the

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large and diverse Australian agricultural sector, is viewed as a paradigm for extending the use of

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EEIOA where environmental impact categories require spatially-explicit impact assessment.

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METHODS

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General approach. Conventional EEIOA involves the supplementation of an input-output

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table with satellite data-sets describing natural resource use or emissions to the environment that

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are directly associated with the operations of each industry sector or sub-sector defined in the

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table. The approach taken in this study was to spatially differentiate each industry sector and

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evaluate resource-use by applying spatially-explicit impact assessment models from the field of

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process LCA.37 In this way, the input-output table was able to be supplemented with satellite

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data sets containing LCA impact category indicator results for each industry sector, rather than

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inventory-level results for natural resource use. The sector-level impact category indicator results

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were subsequently propagated through the input-output model to produce economy-wide impact

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category indicator results relating to demand for goods and services (Figure 1). This approach is

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generalizable to any environmental concern where spatially-explicit impact assessment is needed

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to inform reliably about environmental impact.38 The example demonstrated in this study is a

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water scarcity footprint.39 A description of the individual model components and data sources

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follows.

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[Figure 1] Agricultural water use. The production of 23 irrigated and non-irrigated agricultural

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commodities was mapped on high spatial resolution (0.01 degree, about 1.1 km) for the year

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2006 by Marinoni et al.40 This mapping exercise included modelled estimates at the grid cell

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level for production, revenues, costs and profit at full equity, based on the integration of data

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from a wide range of census, multi-temporal satellite, farm handbook and other sources

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following methods detailed in Bryan et al.41 As a part of this process, national agricultural water

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use statistics42 were spatially disaggregated to land use and commodity type. Here, agricultural

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water use refers to the volume of water applied for irrigation that has been sourced from surface

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or groundwater bodies. This is sometimes referred to as blue water, as distinct from green water,

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the soil moisture derived from natural rainfall over agricultural lands, which was not considered.

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The use of surface and groundwater was not differentiated. In summary, this data source

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provided an account of irrigation water use and water use intensity (in L per $ of total sector

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output) by each agricultural commodity. For water use in each grid cell, the spatially-relevant

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water scarcity characterization factor was subsequently applied, as explained below (Water

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scarcity satellite data sets, Equation 1).

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Industrial sector water use. National water use statistics for 2013/2014 for each industry sub-

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sector43 and describing net water use (withdrawals minus return flows; also termed “water

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consumption”), were spatially disaggregated on the basis of number of businesses in each region,

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using data describing counts of Australian businesses,44 reported at the level of Statistical Area

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Level 4 (SA4) by the Australian Bureau of Statistics (ABS). At this spatial scale, the ABS

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divides the country into 106 regions with population in the range 100,000 to 500,000. This

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approach did not recognise differences in the size of individual businesses within an industry

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sub-sector. Similarly, it did not recognise possible differences in water use efficiency between

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businesses within the same industry sub-sector. In total, spatially disaggregated data for 75

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industrial sectors were produced, including utilities such as water, gas and electricity suppliers.

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Landless agricultural sectors, poultry farming for eggs, poultry farming for meat, and pig

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farming, were treated separately since they were not included in the agricultural water use data

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mentioned above. Total direct water use in each of these 3 agricultural sectors was obtained by

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multiplying water use per unit of production45-47 by total production,48-50 which was then spatial

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disaggregated to the same SA4 level on the basis of business counts, as described above.

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Water scarcity satellite data sets. General requirements for the calculation of a water scarcity

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footprint are described in ISO14046:2014.39 No particular set of water scarcity characterisation

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factors is prescribed. As such, three different indicators, with distinctly different conceptual basis

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and model structure, were used to develop the water scarcity extensions. Firstly, a modified form

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of the Water Stress Index of Pfister et al.51 was applied. Individual characterisation factors were

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divided by the global average value52 such that water scarcity footprint results are expressed

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relative to water use at the global average level of water stress. This method (denoted WSIWORLD-

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EQ),

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wide range of studies in different parts of the world and is also the default method recommended

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by the Australian Life Cycle Assessment Society.53 Secondly, the AWARE54 method was

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applied, with the AWARE agricultural factors used in relation to agricultural water use and the

based on a modification of the water withdrawal to availability ratio, has been applied in a

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AWARE non-agricultural factors used in other cases. The AWARE method was chosen because

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it is the product of an important international collaboration known as the Life Cycle Initiative

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(see www.lifecycleinitiative.org). The AWARE indicator is based on an assessment of the

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relative level of water remaining in an area once demand by humans and aquatic ecosystems has

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been met. The third method applied (denoted WSIHH,EQ) was a recently developed water scarcity

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index that integrates results from models that separately assess the impacts of water consumption

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on human health and ecosystem quality.55 Detailed information about the data, equations and

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assumptions underpinning each model is available in the associated references.51-55 For the water

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scarcity indicators, vector files were rasterized to the same spatial resolution as the irrigation

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water use (0.01 degree).

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For each agricultural and industry sector a national water scarcity footprint extension was

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calculated for each indicator i. For each agricultural and industry sector (j), direct water use

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(WU) in each spatial unit k was multiplied by the relevant local water scarcity characterization

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factor (CF), and the individual results were summed as follows:

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DWSF, = ∑ , ∗ CF,

(1)

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where DWSFi,j is the direct water scarcity footprint extension using indicator i for agricultural or

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industry sector j.

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Input-output analysis. A tailored national Supply Use Table (SUT) in Australian dollars

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(basic prices) for the year 2013 with 101 sectors (including 23 land-based and three landless

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agricultural sectors) was generated using the Australian Industrial Ecology Laboratory56,57 engine

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on the basis of official national-scale input-output tables and Australian National Accounts from

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the ABS.58 The chosen IO classification was tailored to the available DWSF data for 23 land-

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based agricultural sectors (23 irrigated and non-irrigated agricultural commodities) and 78

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industrial and service sectors (including the landless agricultural sectors producing eggs,

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chickens and pigs). This follows the ABS Australian and New Zealand Standard Industrial

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Classification (ANZSIC). Water use and water scarcity footprint intensities (in L/$ of output in

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2006 AUD) were adjusted for inflation on the basis of producer price indices for each

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agricultural subsector59 to ensure compatibility with the 2013 IO table (see SM1 for all input

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datasets and price adjustments).

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The national single-region SUT was then augmented with a 26-sector rest of the world (RoW)

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region and associated AUS-RoW trade flows. This adjustment was carried out using 2013 data

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from the simplified Eora26 multi-regional input-output (MRIO) database,2,3 by aggregating all

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nations other than Australia to create a two-region MRIO matrix with full sets of economic

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transactions and trade flows between 101 AUS commodities, 101 AUS industries and 26 RoW

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industries (n = 228) (see Figure S1). This level of RoW sector resolution was deemed appropriate

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since, for the Australian agricultural sectors, inputs from outside Australia are few and of minor

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importance from a water footprint perspective (e.g. only 3.7 ± 3.4% of sectoral water use on

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average occurs outside Australia, see SM3). Water scarcity extensions were calculated for the

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RoW region by converting the Eora 2013 water use extensions using published WSIWORLD-EQ,

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WSIHH-EQ and AWARE factors for agriculture and other economic sectors51-55 to ensure

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consistency with national scarcity-adjusted water use per sector estimated in Equation 1. Full

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supply chain water scarcity footprints were subsequently calculated as Leontief Type I

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multipliers using the standard Leontief quantity model,60,61 as per the following equation:

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TWSF = F I − A

(2)

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where TWSF is a matrix containing the resulting total water scarcity footprints (TSWFs) per $1

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of economic output of each sector of the economy, F is a matrix of direct intensity factors

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derived by concatenating DWSF from equation 1 with the RoW extensions and then dividing by

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each sector’s total economic output x, I is an n-by-n identity matrix, and A is the n-by-n

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technology matrix. I − A is the standard Leontief Inverse (L).

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TWSFs for agricultural sectors were converted to water use/scarcity per kg of product for each

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agricultural sector on the basis of monetary to physical transformation factors (total output in

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relation to total production for each sector). This was based on data from Marinoni et al.40 and

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Bryan et al.41 reflecting inter-annual variability in commodity yields and prices over a period of

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ten years (see SM1 for conversion factors). TWSFs were finally decomposed by post-

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multiplying a diagonal matrix of each DSWF indicator with L to reveal the upstream

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contribution from all other sectors to each sector’s water scarcity footprint.61 The decomposition

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analysis was used to highlight the percentage of upstream water impacts from four key parts of

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the supply chain: direct impact from the sector itself, upstream contribution from other

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agricultural sectors, upstream contribution from other AUS sectors (non-agricultural), and water

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embedded in imports from the RoW. All direct and total water scarcity footprints in addition to

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decomposition results for all indicators are available in SM2 and SM3. The SI also contains links

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providing free access to the IO tables and source code used in the analysis.

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Uncertainty analysis. To account for the significant inter-annual variability in rainfall, crop

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yields, sector output and resulting water use intensities across all economic sectors, a historical

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timeseries (2005-2015) of water use intensity data across agricultural, industrial and service

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sectors was calculated on the basis of the data available from the ABS on gross sectoral values62,

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sectoral water use42,43 and producer price indices59 to enable conversion of all intensity values to

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2013 prices42,43,62 (see SM1). The coefficient of variation for each of the water use extensions

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(DWSFi) was calculated as the standard deviation over the mean of the historical water use

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intensity across agricultural commodities, industry sectors and service sectors. This varied from

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as low as 14% for fruit and nuts to as high as 47-49% for broadacre crops such as cereals,

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oilseeds and legumes (see SM 1).

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To assess the combined effect of uncertainty in historical water intensities on derived total

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water footprints, a uniformly distributed random sample (chosen as a conservative approximation

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of the distribution due to a scarcity of sufficient data points) covering the minimum and

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maximum values over the 2005-2015 period (see SM 1), was used to perform a Monte Carlo

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uncertainty analysis with 1000 simulation runs. The input to each simulation was a random

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combination of water use intensities within each sector’s historical range (see SM1 for sector

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uncertainty ranges). Each random sample was used to create a new F matrix as an input into

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Equation 2. The resulting median, 5th percentile and 95th percentile values were taken as the

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average, lower and upper uncertainty boundaries respectively. Full results for all agricultural

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sectors are available in SM2. Other sources of uncertainty include uncertainties in the underlying

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input-output tables and trade flows with the RoW, and in the factors used to pass from monetary

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to physical units. These have not been quantified but it has been shown that these errors tend to

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be random and result in a reduced final error once they have been aggregated.63,64

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RESULTS AND DISCUSSION

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Water footprint of agricultural commodities. For some Australian agricultural commodities,

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water scarcity footprint results (incorporating impact assessment) differed markedly from water

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use results, highlighting the important insights gained through spatially-explicit impact

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assessment modelling (Figure 2). For example, total water use for sugarcane cultivation,

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including supply chain water use, was 38.4 L kg-1, compared to a water scarcity footprint of 4.7

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L-eq kg-1 (WSIWORLD-EQ model, Figure 2, SM2). Similarly, tropical stone fruit (e.g. mango,

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avocado) and plantation fruit (e.g. banana) had water scarcity footprint results that were more

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than 80% below the results for total water use. This is explained by these agricultural industries

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being predominantly located in regions of low water scarcity. In other cases, water scarcity

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footprint results were similar to or exceeded total water use results, reflecting water use in

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regions with water scarcity similar to or exceeding the global average (e.g. rice, water use 1138

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L kg-1, water scarcity footprint 1382 L-eq kg-1, WSIWORLD-EQ model, Figure 2). These results

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underscore the importance of evaluating water use in the context of local water scarcity. Some

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crops requiring irrigation are grown in water scarce regions and others are not.65,66

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[Figure 2]

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The water scarcity footprint results differed greatly depending on the particular water scarcity

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impact model used (Figure 2), with the UNEP-SETAC-recommended AWARE model delivering

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results much larger than the other two models by a factor of more than 100. Nevertheless, the

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different indicator results were highly correlated (Spearman’s rank correlation 0.95-0.98). For

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example, the most water-use intensive crops, cotton (3101 L kg-1), tree nuts (1748 L kg-1) and

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rice (1138 L kg-1), were always among the most water-scarcity-footprint intensive crops,

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regardless of the particular water scarcity impact model used. Cotton had the highest water-

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scarcity-footprint intensity with the WSIHH_EQ and AWARE models (969 and 2.82E+05 L-eq kg-1

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respectively) and the third highest water-scarcity-footprint intensity with the WSIWORLD-EQ model

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(607 L-eq kg-1). Winter cereals and winter legumes were consistently among the lowest water-

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scarcity-footprint intensive crops. The relative consistency of results obtained using the different

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indicators means that all three indicators are considered reliable for informing an organisation’s

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internal decision-making aimed at reducing water scarcity impacts. However, the differences in

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absolute values obtained using the different indicators mean that results obtained with different

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indicators are not directly comparable. Overall, crops with higher water scarcity footprints were

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clearly distinguishable from crops with lower water scarcity footprints, taking the uncertainty in

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water scarcity quantification into account (Figure 2). Once an organization becomes aware that a

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particular purchased commodity makes a large contribution to the organization’s water scarcity

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footprint, further investigations would be needed to evaluate response options.

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Critically, the contribution of supply chain water use to the total cradle-to-farm-gate water

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scarcity footprint also varied substantially between sectors (SM3). For some sectors, especially

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those relying heavily on irrigation, the indirect water use contributed less than 10% of the water

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scarcity footprint (e.g. rice; Figure 3). In other cases, supply chain water use contributed over

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90% of the water scarcity footprint. An example was egg production where direct water use for

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livestock servicing was relatively minor and more than 95% of the water scarcity footprint was

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in the supply chain, largely related to feed production. Plantation fruit was an interesting

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example where 37% of water use was in the supply chain, but 70 to 85% of the water scarcity

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footprint was in the supply chain, depending on the particular water scarcity indicator used

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(Figure 3, SM3), reflecting higher water scarcity associated with the production of inputs. These

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results highlight the importance of considering how an industry sector relies on inputs coming

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from higher water scarcity locations. They also have significant implications with respect to each

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sector’s on-site versus upstream responsibility, which, if based on water use as opposed to water

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scarcity indicators, may lead to an undesirable policy outcome (such as increased water use in

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regions with high water scarcity).

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[Figure 3] The complete accounting of supply chain water use (i.e. all economic sectors) is an important

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feature of EEIOA and one that distinguishes the approach from process-based LCA where a

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system boundary is established as one of the modelling choices. As such, the water scarcity

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footprints reported in this study exceed those reported using process LCA. For example, milk

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production in south-eastern Australia, which represents approximately two thirds of national

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production, was reported as 87.7 L-eq L-1 using process LCA and the WSIWORLD-EQ model,67

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which is about 60% of the value reported in this study using EEIOA. A difficulty in making

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direct comparisons is that process LCA results typically apply to a selected supply chain and not

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a complete national industry. Supply chain water use is an important feature of livestock

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production and when fully accounted, the water scarcity footprints of Australian poultry and pig

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production (45.3 and 44.4 L-eq kg-1 live weight respectively, WSIWORLD-EQ model, Figure 2)

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exceeded the water scarcity footprint of lamb production, but not beef cattle production (19.4 and

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53.5 L-eq kg-1 live weight respectively).

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Implications for sustainable consumption and production patterns. The United Nations

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Sustainable Development Goal 12 highlights the need to pursue responsible consumption and

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production in order to address global environmental challenges such as water scarcity (Target

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6.4).36 At the global level, 69% of water withdrawals are to the agricultural sector, and in the

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continents of Asia and Africa the proportions are even higher, exceeding 80%.35 As such, the

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agricultural sector and the food system are focal points to address water scarcity. Water use

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efficiency is a longstanding goal in agriculture with gains achievable through means such as

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water use efficient crop varieties, improved irrigation technologies and farming systems.68

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Attention has also been drawn to the need for responsible consumption of food and changes to

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dietary patterns as a way of mitigating water scarcity.33

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The assessment of the water scarcity impacts of diets is a challenging endeavour due to the

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very large number of individual foods being consumed. In the Australian national dietary survey

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more than 4,500 individual foods were recorded.69 In addition, agricultural production systems

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for the same commodity can differ greatly, as can the local environmental contexts where

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production occurs. Due to this complexity, sustainable diet studies almost always report water

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use rather than contribution to water scarcity, which is the actual environmental concern.34 A

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common conclusion is that water savings can be achieved by reducing the fraction of animal

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products in the diet or by adopting vegetarian diets.70-73 Mekonnen and Hoekstra74 argued that

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the water footprint of any animal product is larger than the water footprint of crop products with

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equivalent nutritional value. Figure 2 reports water footprint results for agricultural commodities,

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and even though the data does not include post farm-gate processing, it is evident that the

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abovementioned generalisations about plant and animal foods cannot be supported when impacts

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on water scarcity are taken into consideration, at least not in the Australian context. Poultry was

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found to have a farm-gate water footprint of 45.3 L-eq kg-1 live weight (WSIWORLD-EQ model,

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Figure 2). With a carcase yield of 70%, the water footprint of retail poultry cuts rises to around

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65 L-eq kg-1. This is still well below the farm-gate water footprint of Australian rice, summer

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legumes, summer oilseeds, citrus, stone fruit (e.g. peach, nectarine), tropical stone fruit, nuts and

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grapes. Considering lamb, with a carcase yield of 47% and a recovery of prime cuts of 86% of

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the carcase,75 the water footprint of retail cuts is then around 48 L-eq kg-1, lower than poultry and

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even lower than the farm-gate water footprint of Australian vegetables.

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However, the main purpose of this article was not to compare the water footprints of retail-

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ready foods. Our contribution is primarily to highlight the importance of using environmentally-

330

relevant metrics to inform sustainable consumption and production policies. By coupling input-

331

output analysis with water scarcity footprint extensions incorporating spatially-explicit impact

332

assessment, it becomes possible to assess the economy-wide implications of policies and

333

interventions in relation to the environmental concern of water scarcity, rather than water use. In

334

the same way that this study has called into question some common assumptions about

335

sustainable foods, the application of EEIOA with water scarcity footprint extensions could

336

provide important insights into other consumption domains, including materials and energy

337

sources. It is also important to note that any interventions aimed at reducing water scarcity

338

impacts need to be also evaluated in terms of impacts on other environmental impact categories

339

(such as GHG emissions), as well as wider social and economic concerns.

340

Implications for water footprint accounting. Organisations can contribute to water scarcity

341

directly through the water used in their operations. They can also contribute indirectly to water

342

scarcity through the consumption of purchased goods and services that required the use of water

343

during production (upstream water scarcity impacts). A further indirect contribution to water

344

scarcity can come from the demand for water associated with the use and disposal of an

345

organisation’s products (downstream water scarcity impacts). These indirect aspects are

346

important because for many organisations the major contributions to water scarcity are in the

347

value chain. If organisations focus exclusively on direct water use, they can be neglecting

348

significant opportunities for improvement. Furthermore, when organisations report to

349

stakeholders only on direct water use, they may be failing to disclose the most significant

350

contributions to the water scarcity problem. This situation is analogous to GHG emissions

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accounting where emissions occurring in the value chain are known as Scope 3 emissions.

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EEIOA is an effective methodology that is widely used to quantify Scope 3 emissions, resolving

353

the practical difficulties of quantifying the relationship between numerous purchased goods and

354

services and GHG emissions in the wider economy. The coupling of input-output analysis with

355

water scarcity footprint extensions, as demonstrated in this project, makes possible

356

organisational water scarcity footprint accounting. This would be a major advancement on

357

current practice which usually considers water use rather than water scarcity and excludes the

358

value chain dimension.

359

Implications for the development of EEIOA. Impact assessment is a longstanding practice in

360

the field of LCA and the number of available impact assessment models that are spatially

361

differentiated continues to increase.37 For some environmental aspects, the use of spatially-

362

explicit impact assessment is considered critical for meaningful environmental assessment. This

363

is particularly the case with water use.39 From the perspective of environmental impact, water

364

use in a region of water abundance cannot be directly compared to water use in a region of

365

scarcity. Generally, LCA studies involve a particular product system and it is feasible for

366

information to be compiled about specific locations where major production processes take

367

place, enabling application of spatially-explicit impact assessment models. High spatial

368

resolution modelling of emissions and resource use is a recent development in EEIOA.17,76-77

369

However, the transition to spatially-explicit impact assessment, using best practice impact

370

assessment models from the field of LCA, has yet to fully take place.

371

A novelty of the approach developed in this study was the application of impact assessment

372

models prior to input-output modelling. As such, the input-output table was augmented with life

373

cycle impact category indicator results for each sector. Conventionally, input-output tables are

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augmented with resource use or emissions data for industry sectors.2,3 This approach precludes

375

the application of spatially-explicit impact assessment models; once input-output modelling is

376

undertaken, spatial relationships are lost. The conventional approach is useful, but only for

377

global impact categories where spatially-explicit impact assessment is unnecessary. One solution

378

could be to spatially disaggregate the input-output table following the examples of sectoral

379

disaggregation – to increase the number of industry sub-sectors – or temporal disaggregation – to

380

estimate intra-year input-output matrices.78 However, apart from introducing additional bias, the

381

practical extent of spatial disaggregation would appear limited. While economic models, such as

382

gravity models, can be used to understand patterns of trade, in most cases there is no reliable

383

basis for estimating the intra-regional spatial origin of an array of specific commodities. Sub-

384

national multi-regional input output (MRIO) models usually operate at the scale of sub-national

385

administrative units or major regions, not at scales which are necessarily environmentally

386

relevant for impact assessment modelling.56,79 It is not presently conceivable that a MRIO model

387

would be constructed with individual regions on a 1.1 km2 grid – the spatial resolution employed

388

in this study. For some impact categories, especially those relating to land use impacts, high

389

spatial resolution of this kind is relevant. Therefore, the approach demonstrated in this article for

390

water scarcity, appears to be a feasible general approach for incorporating spatially-explicit

391

impact assessment into EEIOA.

392

Limitations of the study. Care was taken to ensure the highest quality input data possible at

393

every stage of the analysis. However, the study was limited by the quality of the underlying ABS

394

water use accounts, which are reported to have a relative standard error typically between 2 and

395

5% at the national level. In addition, the high spatial resolution map of agricultural water use

396

came from one specific time period. However, subsequent analysis showed that water use

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intensity in this period was close to the 12 year average and uncertainty analysis using Monte

398

Carlo techniques (see Methods) was carried out to establish combined error margins for each

399

individual agricultural commodity (SM2). The EEIOA methodology applied economic allocation

400

to partition flows in cases of co-production (e.g. milk and animals for slaughter in the dairy

401

sector). Alternative allocation procedures, as sometimes applied in LCA, can alter results. The

402

outputs of EEIOA are also indicative of average production and not marginal production and

403

need to be interpreted accordingly.

404

The water scarcity models used were all spatially-explicit global models that may not reflect

405

changes in water scarcity that can occur briefly in specific localities.80 Modelling was based on

406

annual water use, not monthly water use. As such, it was not possible to apply monthly water

407

scarcity indicators. That said, monthly indicators are probably not relevant in the case of

408

groundwater use and in the case of surface water use from rivers where flows are managed by

409

reservoirs and other infrastructure. For the agricultural sector in Australia, inputs from outside

410

the country are few and their origin was summarized into one rest-of-world region. This was also

411

a necessity because high spatial resolution of water use is not a feature of current global MRIO

412

models. The application of high spatial resolution impact assessment models is reliant upon

413

having similarly high spatial resolution information about resource use. This is an important area

414

for future MRIO model development with several sub-national databases opening up this

415

possibility.79 Finally, the results presented in this study are cradle-to-farm-gate water scarcity

416

footprints only and do not include downstream food processing and distribution, final demand or

417

exports. Such modelling is the subject of ongoing research as the method introduced in this study

418

has significant implications for consumption-based footprints.

419

ASSOCIATED CONTENT

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Supporting Information.

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The following files are available free of charge.

422

SI - MRIO table structure and links to input-output tables and source code used in the analysis

423

(PDF)

424

SM1 - Input data – direct intensities and historical variation (XLXS)

425

SM2 - All footprint results with uncertainty margins (XLXS)

426

SM3 - Agricultural commodity decomposition results (XLXS)

427

AUTHOR INFORMATION

428

Corresponding Author

429

*Email: [email protected]

430

ORCID

431

Bradley G. Ridoutt: 0000-0001-7352-0427

432

Michalis Hadjikakou: 0000-0002-3667-3982

433

Brett A. Bryan: 0000-0003-4834-5641

434

Notes

435

Author contributions: B.G.R., M.H. and B.A.B. designed research; B.G.R., M.H. and M.N.

436

performed research; B.G.R. and M.H. analyzed data; B.G.R., M.H. and B.A.B interpreted

437

results; B.G.R. and M.H. wrote the paper, and all authors contributed substantially to revisions.

438

The authors declare no competing financial interest.

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ACKNOWLEDGMENT

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We acknowledge the financial support of CSIRO and Deakin University. We thank Javier

441

Navarro-Garcia and Oswald Marinoni for their work on the agricultural profit map from which

442

the production quantities and water requirements were taken. The input-output tables

443

underpinning this research were sourced from the Industrial Ecology Virtual Laboratory (IELab,

444

www.ielab.info), which is supported by the Australian Research Council (grant number

445

LE160100066). IELab data feeds and routines written by Manfred Lenzen, Arne Geschke and

446

Arunima Malik were used.

447

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Figure 1. General approach to EEIOA including spatially-explicit impact assessment, and examples of (A) winter cereal and (B) sugarcane. Data source for land use map: Bureau of Rural Sciences, Australia.81

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Figure 2. Life cycle (cradle-to-farm gate) water use and water scarcity footprint of Australian agricultural commodities. Water use refers to water from a surface or groundwater resource. Water scarcity footprint was calculated using 3 spatially-explicit impact assessment models: WSIWORLD-EQ, WSIHH,EQ and AWARE. See text for modelling details. Error bars for the national average value denote the 5th and 95th percentile of values generated following a Monte Carlo uncertainty analysis, sampling across the entire range of historical inter-annual water use intensity across all sectors of the economy. Results are expressed per kg of crop product and per kg live weight in the case of animals.

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Figure 3. Disaggregated water scarcity footprints for selected Australian agricultural commodities: apples, plantation fruit, eggs and rice. Water scarcity footprints were calculated using the WSIWORLD-EQ spatially-explicit impact assessment model. The direct component relates to direct water use in the producing industry sector. The indirect component relates to water use in the supply chain. For the purposes of presentation, the indirect component is grouped according to other agricultural sectors in Australia, non-agricultural sectors in Australia, and industry sectors from the rest of the world (RoW).

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