Summary The paper addressees the issue - why has there been no war over water when many economies in arid regions have only half the water they need and many leading figures, King Hussein, Boutros Boutros Gali, have warned that there would be a water war? It will show that the Middle East region has been able to access water in the global system via trade. Economic systems, not the evidently inadequate hydrological systems, have solved the water supply problem for the region. Water in the global trading system is know a ‘virtual water’. It is the water embedded in key water-intensive commodities such as wheat. The international wheat trade is a very effective and highly subsidised global trading system (ABARE 1989, LeHeron 1995) which operates to the advantage of water and food deficit countries. The problem The comparative disadvantage in economic terms of the Middle East and North Africa with respect to water is an extreme and classic case. Perceptions of the problem It is a paradox that the water pessimists are wrong but their pessimism is a very useful political tool which can help the innovator to shift the eternally interdependent belief systems of the public and their politicians. The water optimists are right but their optimism is dangerous because the notion enables politicians to treat water as a low policy priority, delay innovation, and thereby please those who perceive that they are prospering under the old order.
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