Regional Development in Conditions of Limitation of Water Resources: Correlation Interconnections

Received August 10, 2018 Revised from September 03, 2018 Accepted November 17, 2018 Available online December 15, 2018 The main idea of the article is to study the problem of regional development in the conditions of limited water resources. The subject of the study is theoretical and methodological provisions and applied practical recommendations for the regulation of regional development in the conditions of limited water resources. The purpose of the article is to determine the connection between water supply (water potential) of Ukrainian regions and their specialization in production and trade in the conditions of water resource constraints and determine the further prospects for regional development. In the study have been used traditional and special methods of research, including: historical and logical method, method of abstraction and analogy, system analysis methods and the method of correlation analysis. For calculations was used the biserial correlation method based on the point of biserial relation coefficient of Pearson. The article presents a hypothesis about the need to change the paradigm of regulation of regional development regulation on the basis of water-efficient water use and identified the territories of Ukraine with the general water risk. It is determined that Ukraine is the world's largest exporter of food products, along with the USA, Australia and Russia, that requires significant water resources. It has been proved that there is no link between the water supply (water potential) of the regions and production and trade with grain and leguminous plants. It is possible to assume that such conditions have arisen due to the existence of land resources (black earth) on the territory of the country, and also that in Ukraine there are other more important problems of effective regional water use. JEL classification: P11, P25, Q56, Q57, Q58, G18. DOI: 10.14254/1800-5845/2018.14-4.4

The main idea of the article is to study the problem of regional development in the conditions of limited water resources. The subject of the study is theoretical and methodological provisions and applied practical recommendations for the regulation of regional development in the conditions of limited water resources. The purpose of the article is to determine the connection between water supply (water potential) of Ukrainian regions and their specialization in production and trade in the conditions of water resource constraints and determine the further prospects for regional development. In the study have been used traditional and special methods of research, including: historical and logical method, method of abstraction and analogy, system analysis methods and the method of correlation analysis. For calculations was used the biserial correlation method based on the point of biserial relation coefficient of Pearson. The article presents a hypothesis about the need to change the paradigm of regulation of regional development regulation on the basis of water-efficient water use and identified the territories of Ukraine with the general water risk. It is determined that Ukraine is the world's largest exporter of food products, along with the USA, Australia and Russia, that requires significant water resources. It has been proved that there is no link between the water supply (water potential) of the regions and production and trade with grain and leguminous plants. It is possible to assume that such conditions have arisen due to the existence of land resources (black earth) on the territory of the country, and also that in Ukraine there are other more important problems of effective regional water use.

INTRODUCTION
Over the past decades, the concepts of food security, energy security and access to natural resources have been widely discussed. However, for the moment, more researchers are recognizing that the environment and security are interconnected. In particular, on the example of water resources, it can be argued that the deficit of fresh water represents both a direct and an indirect threat to safety, since, on the one hand, this deficit creates a dangerous situation, and on the other hand, it is fraught with potential conflicts. The most serious security threat is associated with water deficit and it is not wars for water resources, but rather an aspect of human security that could endanger both state security and international security. However, it has to be taken into account that not only a water deficit generates a conflict, but the conflict itself can lead to a lack of water. Conflicts have direct consequences for water resources, for example, in the form of water pollution. So, the waters of the Danube river were polluted during the conflict in the former Yugoslavia, in Bosnia and even more so during the war in Kosovo. Also, dams and barrages, pumping stations and sewers can be damaged during war actions. In today's conditions it is necessary not to compete with each other, trying to provide ourselves with water resources but to cooperate.
With the growth of water deficit in a number of countries, recently due to global warming, a number of strategies have been developed to overcome it, which include savings on water consumption, salt removal of saltish or salty sea water. Another alternative to minimize water consumption is to import wet industry products for agriculture, industry and energy. This thesis is explained with the concept of "virtual water", which was developed in 1993. The creator of the "virtual water" concept which is related to measuring the volume of water embodied in the products and trade of food and other commodities is the professor of London University John Antony Allan (1998). He proposed a formula for calculating the amount of water which is required for production of a particular product. This concept helps to understand how much water is needed in order to create different goods and services.
According to this concept, all virtual water can be divided into "blue" it is surface water, or groundwater, which is evaporated in the production of products, "green" it is rain water, which is usually evaporated in production and "grey" which is the volume water contaminated during the production process, that is determined by calculating the volume of water required for the dilution of pollutants entering to natural water systems during the production process up to obtaining water quality that meets the standards (based on the Official site of water footprint, 2017). The concept of virtual water set a start for additional research and development in this area. Later, the Professor of University of Twente in the Netherlands, Arjen Y. Hoekstra proposed the concept of a "water footprint" in 2002. According to this theory, the water footprint represents the entire water consumed by the region, including the virtual one.
The amount of virtual water can be calculated not only for individual products, but also for the person, enterprise, region and country as a whole. Since not all the products are consumed and produced in the same country, the concept of "water footprint" is used in the research. The water footprint consists of two parts: the use of inland water resources and the use of water resources from sources located outside of the country. The water footprint includes water intake from surface and underground water sources and the use of ground water in agricultural production. The concept of "virtual water" allowed to have a new look at issues of effective water use and water policy. Among the Ukrainian researchers who develop virtual water issues, the following scientists from the Institute of Natural Resources and Sustainable Development of the National Academy of Sciences of Ukraine can be mentioned: M. Khvesyk (2014) By definition of M. Khvesyk ("Virtual water: a myth or reality?"), stored in the product and its value, the water moves from the place of production to the final consumer. In the conditions of the global economy, the distances that goods overcome are thousands of kilometers. If to take into Svitlana Fedulova, Vitalina Komirna, Nataliia Naumenko and Oksana Vasyliuk / Montenegrin Journal of Economics, Vol. 14, No. 4 (2018), 057-068 59 account the trade turnover between countries and continents, trade performance will be very high.
No less significant are the volumes of water components, as well as their monetary expression. Virtual water flows are formed on the basis of export-import operations.
It should be noted that a large number of reports on the state of the environment and assessment of the state of water resources, which contain various materials and rich statistical information are published in Ukraine. At the same time, the analysis of all national and regional publications highlights the efficiency of water use shows that today there is not enough information available, and its relevance for effective political decisions is still low. The purpose of the article is to determine the connection between water supply (water potential) of regions of Ukraine and their specialization in production and trade in the conditions of water resource constraints and determine the further prospects for regional development.

BACKGROUND OFREGULATION PARADIGM CHANGE OF REGIONAL DEVELOPMENT FOR EFFICIENT REGIONAL WATER USE IN REGIONS
Due to the non-homogenous geographical distribution of natural resources, demand for water and crude oil may not always be satisfied with the local supply. Water is usually not transported directly over long distances. Despite the fact that some cases of direct export of water are already fixed, there is neither a world market nor a standard global water price. Instead, the international trade in water-based goods, the so-called virtual water market, already exists (Oki, Yano and Hanasaki, 2017;Wichelns, 2010;Perelyot, 2010 and data of the Report of the High Level Panel on Financing Infrastructure for a Water-Secure World, 2015). As a rule, it is considered that trade with "real water" between territories without moisture is impossible due to long distances and associated costs, also because water as a production resource is required in a considerable volume (Oki, Yano and Hanasaki, 2017). International water trade through the construction of channels and the redistribution of river flows is very limited due to huge capital expenditures.
It should be noted that the problems of export-import of "virtual water" are extremely worried by the Food and Agriculture Organization of the United Nations (FAO) (data of the Official site of Food and Agriculture Organization of the United Nations, 2018), the World Water Institute (SIWI) (data of the Official site of World Water Institute, 2018), the World Resources Institute (WRI) (data of the Official site of Institute of World Resources, 2018) and many European researchers. More we refresh on our memory the statement of the World Bank Vice-President I. Seragildina: "Wars of the XXI century will be wars for water," which he pronounced in 1995 (Dinar, 2007). For arid countries, the import of virtual water (first of all, in the form of agricultural products, which accounts up to 70-90% of water consumption, can be a good means of reducing domestic demand for water and, thus, mitigating the internal water shortage. It should be noted that there are many factors that affect the flow of water-based products, which are many times more important than water supply itself. Thus, the question becomes more important the issue about water availability determines the specialization of the region in the export or import of water-based products in the actual practice of international trade (Chuprov, 2016). A study conducted in 2003 by H. Yang and co-authors (Yang et al., 2003), who, after analyzing the data for countries in Africa and Asia, confirms that for most countries, the degree of water availability is not a significant factor affecting international trade. However, after reaching a certain threshold for a shortage of water, the country begins to demand the import of cereals, exponentially increasing with the reduction of water resources. Later, researchers conclude that reducing water availability is an important factor in the growth of net imports of virtual water by countries in the region (Yang et al., 2007). A study of H. Young with co-authors allows us to trace the dynamics of the relationship between water resources supply and its trade specialization. Regarding the Ukrainian territories, in the light of the problems of development in the conditions of limited water resources, the riskiness of the Ukrainian territories notes the Institute of World Resources (WRI) (Ta-ble 1). According to the terminology of this Institute, the overall water risk determines areas where there is an increased risk associated with the use of water resources and represents the aggregate measure of all selected indicators by categories of physical, qualitative, regulatory and reputational risk (the explanation of these risks is given in Figure 1).  As can be seen from Table 1, the World Resources Institute (WRI) defines the territory of Ukraine with high water risk (3-4), including the temporarily occupied territory of the Autonomous Republic of Crimea, Kherson, Nikolaev, Donetsk, Lugansk (small part), Dnipropetrovsk (small part) and Odesa (small part) areas. At the same time, the researchers of the Institute for the Economy of Natural Resources and Sustainable Development of the National Academy of Sciences of Ukraine indicate that Ukraine, according to expert estimates, is distinguished by significant volumes of virtual water formation. In particular, the overall figure for exports is fixed at 19.5 billion m 3 , which exceeds the baseline volumes of water use in the country as a whole (Table 2). By import, the rate of virtual water is no longer so high and is limited to 1.84 billion m 3 (Khvesyk, Levkovska and Sunduk, 2014). Table 2 clearly demonstrates the predominance of virtual water exports over imports in Ukraine. 81.5% of this export is for agroindustrial complex, and only 18.5% refers to industry.
Thus, Ukraine, supplying grain abroad, outputs significant volumes of virtual water over its borders, which is not so much in imported goods. According to the researches of the Institute of Natural Resources of Economics and Sustainable Development of the National Academy of Sciences of Ukraine, in the regional dimension, the main load on virtual water falls predominantly on the southeastern regions of the country. The problem is the occupation of the territories of Donetsk and Luhansk regions and the annexation of the Crimea, as they created significant flows of virtual water. These leading regions serve as a kind of "global gate" for virtual water flows (Khvesyk, Levkovska and Sunduk, 2014). According to researchers from the University of Leiden (the Netherlands), as of 2017, Ukraine is the world's largest food exporter, along with the United States (mainly South America), Australia and Russia. But the main importers of food products are Western Europe, Asia and Africa and the Middle East (Bacon, 2017). The same opinion is shared by researchers at the Institute of Natural Resources and Sustainable Development of the National Academy of Sciences of Ukraine, who claim that Ukraine is now among the three world grain exporters (after the USA) and has a significant place in the export of metallurgical products.
Among the sectors of the economy of Ukraine, the largest consumers are energy, metallurgy, chemical and petrochemical industries, which simultaneously belong to the main polluting industries in the industrial sector of the economy. According to the State Agency of Water Resources and the State Committee of Statistics of Ukraine, Dnipropetrovsk, Zaporizhzhya, Donetsk, Kherson and Kyiv regions (Table 3) belong to the five largest consumers of water in Ukraine, which confirms the opinion that they are the main exporting regions of virtual water. The industrial need of these five regions (out of the 24 existing in Ukraine and the Autonomous Republic of Crimea) is almost 63.3% of the total use of fresh water by regions (Fedulova and Komirna, 2017).
It should be noted that in Dnipro basin is created a diversified economic complex, which includes industry, agriculture, hydropower, communal services, water transport, fisheries. Here is concentrated about 43% of industrial production of Ukraine (Fedulova, 2017).
Water content of gross national product is in 3-5 times higher than in industrialized countries of Europe, which testifies to inappropriate water use and low efficiency of existing production equipment. Today, the volumes of water use in river basins virtually reached the upper limit, resulting in a contradiction between the demand for water and the possibilities to meet it, not only in terms of quantity but also in quality (Khvesyk, 2013).  Regions  1990  1995  2000  2005  2010  2011  2012  2013  2014  2015  2016  Ukraine  30201 20338 12991 10188  9817 10086 10507 10092  8710  7125  7169  Regions  Dnipro  3599  2752  1756  1579  1361  1407  1429  1349  1359  881  1055  Donetsk  3419  2548  1751  1508  1467  1479  1445  1354  1135  936  926  Zaporizhzhya  4598  2635  1702  1076  1099  944  1186  1237  1146  1150  1081   Kyiv  2131  1496  1132  812  902  925  1028  866  808  706  664  Kherson  2161  1131  639  610  770  963  1083  1074  1062  1037  But, returning to the assessment of the overall water risk by the World Resources Institute (Table 1) raises the question of if such water export loading on the virtual water could be endured by Kherson, Donetsk, and Dnipropetrovsk regions and the temporarily occupied territory of the ARC. These territories are classified as "High risk (3-4)". It should be noted that agricultural products are low value added goods. In our view, it's necessary to have more balanced approach to the formation of strategic areas of economic activity and their forms. Thus, the conducted theoretical analysis of the functioning of regional socio-economic systems allows us to ascertain the change in the paradigm of regulation of regional development on the basis of water-efficient regional water use.

METHODIC APPROACH TO RESEARCH: CORRELATION INTERCONNECTIONS
It is known that the largest volumes of water use in the world forms the production of grain and agricultural products. Data from the State Statistics Committee indicate that Ukraine can indeed be considered one of the largest exporters of grain and sunflower in the world (Figure 2). The data are given without taking into account the temporarily occupied territory of the ARC, the city of Sevastopol and the temporarily occupied territories of Donetsk and Luhansk. Svitlana Fedulova, Vitalina Komirna, Nataliia Naumenko and Oksana Vasyliuk / Montenegrin Journal of Economics, Vol. 14, No. 4 (2018), 057-068 63 Compared to 1990 the highest rates of growth were observed in the production of grain and leguminous crops in Ukraine and sunflower, respectively, 121.38% and 475.94%, it means that over the years of independence, grain and legume production is increased in 1.2 times, while sunflower almost in 4.8 times If to investigate in the context of the last 10 years, then from 2007 to 2017 grain and legume production has already increased in 2.1 times, that is, we have a tendency for increase of this production. The studied dynamics since 1940 indicates that over the years, Ukraine has only increased grain and legume production from 26419.7 thousand tons in 1940 up to 61916.7 thousand tons in 2017 (in 2.3 times) and sunflower from 946.5 thousand tons in 1940 and up to 12235.5 thousand tons in 2017 (in 13 times) (Figure 3). This production burden falls on arid southeastern regions of Ukraine. As it was already described, some of these areas are referred by the Institute of World Resources to high risk water regions (High risk (3-4), the Crimea (temporarily occupied), Kherson, Nikolaev, Donetsk (part of the territory is occupied), Luhansk a small part of the territory is occupied), Dnipropetrovsk (a small part), Odesa (a small part). The peculiarity is that these regions have a critically   Statistical Collection, 2017. 1 The data are given without taking into account the temporarily occupied territory of the ARC, the city of Sevastopol and the temporarily occupied territories of Donetsk and Luhansk.
So taking into account the increase of the agrarian potential described above, in Ukraine since 1990 and up to date there has been a significant reduction in water use (compared with 1990 almost in four times) and a corresponding reduction in the technogenic load on water objects (Figure 4). There are several reasons for this: the one first is the reduction of national production, happened due to the reorientation of production to the domestic market during the crisis of 1991-1996, and the second one is moral and physical aging of wastewater treatment equipment and systems, which also led to a decline in national production, and, of course, the third one, the use of water-efficient technologies in recent years has to be taken into account (technology of consistent recycled water supply in productions, closed technologies). However, the ecological state of surface and underground sources of water supply is not improving. There is a significant geochemical pollution of water with heavy metals, products of oil refining, mineral fertilizer residues. Every year, large amounts of inadequately cleaned municipal and industrial sewage are discharged into surface water objects of the country, which is the result of significant volumes of such waste and inefficiency of water treatment systems.
Until the beginning of the armed conflict in 2014, there was another region in Ukraine that consumed water much more than other regions it was the Autonomous Republic of Crimea. By the end of 2013, the water consumption of the ARC was 7.62% of the total water use; at the same time, in Dnipropetrovsk region it was 13.37%; in Donetsk 13.42%; Zaporizhzhya 12.26%; Kiev 8.58%; Kherson 10.64%. For the rest of regions there was no more than 2-3% of the total water use, except Kyiv (5.76%). Thus, for 25 years, the most significant consumers in Ukraine are Dnipropetrovsk, Zaporozhzhya, Donetsk, Kherson and Kyiv regions and the Autonomous Republic of Crimea during when the territory was not occupied. From statistics it is clear that water consumption in Ukraine has decreased considerably, almost in 4 times. A marked increase in water use is observed in the Kherson region since 2003. Donetsk region consumes sea water as considerable part, it is almost the only area that uses seawater for production needs (practically 60% of regional water use). Sometimes seawater is still used by the Odesa region, they use 2-3% of the regional water use and Kherson region, that is 0.1%.According to statistical data Kyiv slightly behind for water use, but still consumes more than other regions.
The described tendencies suggest that, indeed, in the regions of Ukraine, the degree of water availability (the water potential of the region) is not a significant factor affecting the trade with grain and legumes, which production requires significant water resources. In the fact that Ukraine is the poorest country in water resources in Europe, such trends are embarrassing and require Svitlana Fedulova, Vitalina Komirna, Nataliia Naumenko and Oksana Vasyliuk / Montenegrin Journal of Economics, Vol. 14, No. 4 (2018), 057-068 65 scientific substantiation of rational water use in regions. The proof of the author's assumption is the lack of a correlation between the average arithmetic values for 10 years of production of grain and leguminous crops by regions of Ukraine (thousand tons) and the value of average many years resources of river runoff in the regions (km 3 /year). The calculations were not used data on the Autonomous Republic of Crimea due to its temporary occupation and lack of data.

RESULTS
For calculations was used such a method of correlation analysis of biserial correlation using a point biserial correlation coefficient of Pearson (Table 4).
where 1 x -the average value for X objects with the value "unit" by Y;