Economic Water Productivities Along the Dairy Value Chain in South Africa: Implications for Sustainable and Economically Efficient Water-use Policies in the Dairy Industry Enoch Owusu-Sekyere ⁎, Morné Erwin Scheepers, Henry Jordaan Department of Agricultural Economics, University of the Free State, PO Box/Posbus 339, Bloemfontein 9300, South Africa abstract article info Article history: Received 11 June 2016 Received in revised form 3 October 2016 Accepted 15 December 2016 Available online xxxx The global water scarcity situation is a major issue of concern to sustainable development and requires detailed assessment of water footprints and water productivities in all sectors of the economy. This paper has analysed economic water productivities along the dairy value chain in South Africa. The findings reveal that the value added to milk and water as it moves along the value chain varies from stage to stage; with the highest value being attained at the processing level, followed by the retail and farm gate levels, respectively. Milk production in South Africa is economically efficient in terms of water use. Feed production accounts for about 98.02% of the total water footprint of milk with 3.3% protein and 4% fat. Feed production is economically efficient in terms of cost and water use. Value addition to milk and economic productivity of water are influenced by pack- aging design. Not all economically water productive feed products are significant contributors to milk yield. Fu- ture ecological footprint assessments should take into account the value added to output products and economic water productivities along the products' value chain, rather than relying only on water footprint estimates. © 2017 Elsevier B.V. All rights reserved. Keywords: Economic water productivity Dairy industry Water efficiency Water footprint Water policies Value addition 1. Introduction The global water scarcity phenomenon has become a major issue of concern to governments, organisations, policy-makers, water-users and water managers. A significant proportion (two-thirds) of the world's population faces difficulties in getting freshwater (Mekonnen and Hoekstra, 2016). The pressure on freshwater resources arises as a result of population growth, climate change, pollution of existing water re- sources, urbanisation, among other things (Jefferies et al., 2012). In many parts of the word, quantities of water supply do not meet the quantity demanded by the various sectors of the economies. Food pro- duction has been identified as the major user of the available scarce water resources; accounting for about 86% of all global water use (IWMI, 2007). However, given the fact that food production is vital for human survival and the essential role that water plays in food produc- tion, there is the need to design strategies and methods to make effi- cient use of water in all sectors, particularly in agriculture which uses most of the world's water. Based on this, two internationally accepted concepts of water footprint have been developed; the water footprint concept as described by Hoekstra et al. (2011) and the Life Cycle Assess- ment (LCA) as described in the ISO standards. The water footprint (WF) approach introduced by Hoekstra (2003) is gaining prominence be- cause it gives a comprehensive assessment of freshwater use, and quan- tifies and maps water consumption and pollution in relation to production or consumption. The concept of water footprint in the Life Cycle Assessment approach (LCA) has also been applied in many studies (Ridoutt et al., 2014; Zonderland-Thomassen et al., 2014). Various authors have assessed water footprints of products in the agricultural sector. Ridoutt et al. (2014) and Zonderland-Thomassen et al. (2014) assessed the water footprint of beef cattle and sheep produc- tion systems in Australia and New Zealand, respectively. In China, water availability footprint of milk and milk products from large-scale farms has been assessed by Huang et al. (2014). Matlock et al. (2012) exam- ined the potential water use, water stress, and eutrophication impacts from US dairy activities. Environmental impacts associated with fresh- water consumption along the life cycle of animal products was analysed by De Boer et al. (2013) in the Netherlands. Amarasinghe et al. (2010) assessed water footprints of milk production in India. Water footprint analyses of milk production in Germany and Argentina have been ex- amined by Drastig et al. (2010) and Manazza and Iglesias (2012), respectively. The growing body of literature is limited to quantification of water footprint indicators and, to some extent, the environmental impact. The economic aspect of water footprint indicators has received little at- tention, particularly in the semi-arid and arid regions of southern Africa. Meanwhile, Hoekstra et al. (2011), and Pérez-Urdiales and García- Ecological Economics 134 (2017) 22–28 ⁎ Corresponding author. E-mail addresses: kofiwusu23@gmail.com (E. Owusu-Sekyere), MorneErwinScheepers@gmail.com (M.E. Scheepers), JordaanH@ufs.ac.za (H. Jordaan). http://dx.doi.org/10.1016/j.ecolecon.2016.12.020 0921-8009/© 2017 Elsevier B.V. All rights reserved. Contents lists available at ScienceDirect Ecological Economics journal homepage: www.elsevier.com/locate/ecolecon