In the Middle East andNorth Africa, water is of obvious importance to the individual
economies of theregion. Water certainly does not attract the interest of the global community -especially not of the Northern economies, along with their transnationalcorporations - in the way that oil does. There is little
transboundary oil, buttransboundary water forms the majority of water in a
region which has littlesoil water. Over 90% of the conventionally calculated water resources of theregion cross
international borders as surface flows. For the Egyptian economy,transboundary water is over 95% of its water budget. Syria and Iraq haveactually endured a dramatic reduction of almost 50% in the average flow of theEuphrates since the 1970s. They are anticipating additional reductions in theflow of the Tigris. The ownership of a water
resource enables water markets tobe developed. Such trade usually involves the lifting of water from agroundwater resource of recognized quality for human use for which the waterrights are individual and recognized. An individual or company signifies its"ownership" of the resource by charging a price for the water. Theidentification of sovereignty over water would massively improve the chancesfor stable and secure international relations over transboundary waters. Agreements over water arebeginning to be made (see Jordan-Israel Agreement of 1994 <6> and thePLO-Israel Interim Agreement of 1995 <7>). When water is a
major factor ofproduction in the economy, such as in agriculture, its role in the livelihoodsof a majority is palpable and the significance of such water in terms ofinternational relations makes water scarcity an easy focus for national andcommunal anxiety. The international trade inwater-intensive imported commodities is so effective that the impact of thesubstantial water deficit is not registered by the 300 million people livingthere. The only factors that could in future impede the economic solutionswhich would enable water deficits to be ameliorated are external to the region.Understanding the factorsaffecting global demand for
virtual water is the crucial issue forwater-deficit economies. Virtual water is the verysubstantial volume of water embedded in water-intensive commodities such asgrain. About 1,000 tonnes of water are required to produce a tonne of wheat. TheMiddle East and North Africa region was importing annually about 40 milliontonnes of grain and flour by the end of the 1990s. Such a volume reflects about20% of the region's annual water use and is equivalent to the water used eachyear by Egypt in its agricultural sector. Virtual water has, since the early1970s, ensured the economic stability of this major arid region in the world.
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