Can virtual water trade save water resources?

At times, certain areas of China suffering from water shortages. While China’s government is spurring innovation and infrastructure to help head off such problems, it may be that some water conservation could help as well. It is well-known that water is embodied in traded goods—so called “virtual water trade” (VWT). In China, it seems that many water-poor areas are perversely engaged in VWT. Further, China is also engaging on the global trend of fragmentation in production, even as an interregional phenomenon. It seems some implications could be learned about conserving or reducing VWT, if we knew where and how it is practiced. From those implications, perhaps policies could be formulated. We employ China’s multiregional input-output tables straddling two periods to trace the trade of a given region’s three types of goods: local final goods, local intermediate goods, and goods that shipped to other regions and countries. We find that goods traded interregionally in China in 2012 embodied 30.4% of all water used nationwide. Nationwide, water use increased substantially over 2007-2012 due to greater shipment volumes of water-intensive products. In fact, as suspected, the rise in value chain-related trade was a major overall contributing factor. Coastal areas tended to be net receivers of VTW from interior provinces, although reasons differed, e.g. Shanghai received more to fulfill its final demand and Zhejiang for its value-chain related trade. In sum, the variety of our findings reveals an urgent need to consider trade types and water scarcity when developing water resource allocation and conservation policies.Peer reviewe