For years, Saudi Arabian-owned agriculture company, Almarai, has been buying up California land – along with its precious Colorado River water rights – to grow and ship alfalfa back to the Kingdom as dairy cow feed. Because water scarcity is a significant issue in California, some people are concerned with the trade in water-intensive goods, like alfalfa, which is essentially the virtual water trade of this crop.
The situation in Blythe, California is one where Almarai purchased land with senior water rights, thus freeing them from most water allocation restrictions and making the water relatively cheap.
To reduce the pressure on their minuscule water supply, Saudi Arabia banned the cultivation of many thirsty crops within its arid boundaries. Instead, the country’s strategy to deal with the ban has been to buy cheap land with good access to water resources to grow sufficient feed for the 93,000 cows.
As explained in The Guardian:
“In 2012, they acquired 30,000 acres of land in Argentina, and in 2014, they bought their first swath of land in Arizona. Then, in 2015, they bought 1,700 acres in Blythe – a vast, loamy, agricultural metropolis abutting the Colorado river, where everything but the alfalfa seems cast in the hue of sand. Four years later, the company owns 15,000 acres – 16% of the entire irrigated valley.”
As water supplies become less reliable and demands more acute, more countries might use virtual trade to overcome water stress.