Carbon and Water Flows Embodied in International Trade: A Review on Consumption-Based Analysis

A comprehensive literature review of virtual carbon and water flows is provided which is based on the consumption-based inventories in the international trade, by including single-country, bi-national, and multi-country trade. It is found that e.g., there are significant CO₂ gaps between producer’s and consumer’s emissions, the global emissions associated with consumption in many developed countries have increased with a large share of the emissions originating in developing countries. However, by International trade it may also be possible to reduce overall environmental pressure if such imported products are consumed that are produced with lower carbon intensity and water consumption than in the domestic industry. While results across current study are robust to be used in further application, more research is needed to towards the self-sufficient regions based on more efficient processes by combining surrounding countries/regions and to develop participation mechanism, market share of virtual carbon and virtual water between international trading partners.