Virtual Water

Virtual Water

Virtual water trade (also known as trade in embedded or embodied water) refers to the hidden flow of water if food or other commodities are traded from one place to another. For instance, it takes 1,600 cubic meters of water on average to produce one metric tonne of wheat. The precise volume can be more or less depending on climatic conditions and agricultural practice. Hoekstra and Chapagain have defined the virtual-water content of a product (a commodity, good or service) as "the volume of freshwater used to produce the product, measured at the place where the product was actually produced". It refers to the sum of the water use in the various steps of the production chain.

Professor John Anthony Allan from King’s College London and the School of Oriental and African Studies introduced the virtual water concept, to support his argument that countries in the Middle East can save their scarce water resources by relying more on import of food. For his contributions he was awarded the 2008 Stockholm Water Prize. In his awarding, the Stockholm International Water Institute (SIWI) stated that "Virtual water has major impacts on global trade policy and research, especially in water-scarce regions, and has redefined discourse in water policy and management. By explaining how and why nations such as the US, Argentina and Brazil ‘export’ billions of litres of water each year, while others like Japan, Egypt and Italy ‘import’ billions, the virtual water concept has opened the door to more productive water use."

Allan (2005) stated: "The water is said to be virtual because once the wheat is grown, the real water used to grow it is no longer actually contained in the wheat. The concept of virtual water helps us realize how much water is needed to produce different goods and services. In semi-arid and arid areas, knowing the virtual water value of a good or service can be useful towards determining how best to use the scarce water available."

There are, however, significant deficiencies with the concept of virtual water that mean there is a significant risk in relying on these measures to guide policy conclusions. Accordingly, Australia's National Water Commission considers that the measurement of virtual water has little practical value in decision making regarding the best allocation of scarce water resources.