Trade openness has been shown to decrease irrigation water use in agriculture, yet it is unclear if this relationship holds for national groundwater use and depletion. We therefore use econometrics methods to quantify the causal impact of trade openness on groundwater use and depletion on a global scale. First, we retrieve groundwater use and depletion data from PCR-GLOBWB, which we disaggregate by modeling daily crop water demands annually for 26 crop types. Using a 2-stage least squares instrumental variables approach, we then quantify the causal impact of trade openness on both total and crop-specific groundwater use and depletion. We instrument for trade openness using geographic variables. Furthermore, we exploit time-series variation of trade agreements to go beyond a cross-sectional analysis. This enables us to use an unbalanced panel of countries for the time period, allowing us to use fixed effects and better control for unobservable heterogeneity. Understanding the impact of trade openness on groundwater use and depletion enables us to make informed decisions regarding global trade policies. Additionally, by studying crop-specific scenarios, our results identify critical crops significantly impacting global groundwater use and depletion. This work has scientific and policy relevance as we strive to untangle causal relationships between global food supply chains and water resources.
