Virtual Water, An Overview: Trade meets Sustainability

Navigating H2O Sustainability: Managing Virtual Water Flows for a Greener Future

By Ana Yong

What is Virtual Water (VW)?

According to Water Footprint Calculator, VW is ‘the water “hidden” in the products, services and processes people buy and use every day. Virtual water often goes unseen by the end-user of a product or service, but that water has been consumed throughout the value chain, which makes creation of that product or service possible’.

The term was coined by John Anthony Allan (British geographer and Emeritus Professor at King’s College London) in 1993. He was subsequently awarded the 2008 Stockholm Water Prize for his concept.

Virtual Water: 3D image of a water bottle on a lake with a large tree beyond
Image by Ana Yong created in Dream.AI

Difference between Water Footprint (WF) and VW

The Water Footprint Calculator states that even though both WF and VW can mean the water used to create a product, the WF definition could be used more broadly. This means that an item’s WF may be separated into the following three types of water: blue, grey and green. In addition, by analyzing the product’s WF, one is able to conclude if the production process is supportable within its local water and environmental factors.

IUSS defines “green water being evapotranspired rainwater from soil, blue water used for irrigation and grey water contaminated by agrichemicals”.

Sketch over photo describing Irrigation, Evaporation, and Leaching
Source: IUSS

If you are interested in knowing how water footprint is measured, please refer to the Water Footprint Network’s Water Footprint Assessment Manual which was published in 2011 with the aim of establishing a global standard in measuring WF. In a nutshell, the manual recognizes the WF of a product as not only “the volume of freshwater used to produce the product, measured over the full supply chain” but also multiple factors like water utilization volumes by source, and contaminated water volumes by categories of pollution, amongst others (page 24).

Significance of VW to Sustainability

Since VW refers to the total amount of water consumed in the manufacture of goods and services, it is also helpful to understand the concept of VW Trade. An article entitled “Virtual water trade: Economic development and independence through optimal allocation” published in Agricultural Water Management (Volume 275) on 1 January 2023 states that VW Trade “uncovers the hidden flow of water in traded commodities between countries”.

Maithri Aquatech’s article called “Virtual Water Trade” (updated 25 May 2022) mentions that certain countries may choose to import water intensive products (hence, raising VW imports) as a way to ease the strain on local water supplies. Hence, VW trade encompasses a larger perspective on water sustainability.

The same article also asserts that the main gross VW exporting countries are USA, China, India, Brazil, Argentina, Canada, Australia, Indonesia, France and Germany while the chief gross VW importers consist of the USA, Japan, Germany, China, Italy, Mexico, France, the UK and the Netherlands.

Globally, the industries which utilize VW the most are agricultural produce, livestock, and industrial commodities.

Pie graph showing use of VW by industries, mostly agriculture (67%)
International utilization of VW by industries.
Source: Maithri Aquatech

From 2020-21, India’s agricultural exports grew by more than 17% which generated $41.25 billion in foreign exchange. While this is good news, the surge in export trade translates into the annual drinking water requirements of 1.5 million people (1,500 villages with a population of 1,000 each).

Hence, VW trade is the worldwide transfer of water resources through commerce and has far-reaching implications as shown in the diagram below:

Virtual water and it's many potential positive outcomes
Source: Water International Volume 43, 2018 – Issue 6 : Virtual Water: Its Implications on Agriculture and Trade

Global Virtual Water Trade (VWT)

Cropin’s article entitled “Virtual Water Trade in the Context of Agricultural Production” (15 September 2021) shows that certain crops like rice requires 1,358,732 million cubic meters (m3) of water per year. Hence, a country might choose to import rice instead of growing it so that its local water supplies could be protected. This works well for the importing country but if the exporting nation is already experiencing a strain on its water reserves, then exporting a water rich crop like rice could further jeopardize water sustainability in the country.

An article by EOS called “Rethinking the Concept of Virtual Water in the Global Trade Market” (17 December 2020) provides an illustration that shows that countries importing wheat from Alberta, Canada (blue) has a net gain in cubic meters of VW because more VW is required to cultivate the same amount of wheat in their own countries (red). Overall, there was an average net gain of 4.897 m3 (8.657 – 3.760) of VW globally.

Virtual Water6
Source: EOS. Credit: Adapted from Masud et al., 2019,

MDPI’s article called “Virtual Land and Water Flows and Driving Factors Related to Livestock Products Trade in China” (27 July 2023) throws some light on China’s agricultural trade, in particular, animal products like beef, pork, and mutton from 1992 to 2018. Other factors examined include “the population of importing nations, China’s cultivated land area, and the livestock production index of importers and exporters”.

The graph below shows that the amount of virtual land of imported rice rose to almost 270 thousand hectares in 2016 while the amount of VW of imported rice rose to 1,800 (180 x 10) million cubic meters in the same year. Hence, it can be seen that China, being a major rice consuming nation, imports rice so that its domestic water resources are not strained.

Graph comparing virtual water to virtual land
Virtual land and virtual water utilized in the import and export of rice in China between 1992 to 2018.
Note: The unit of virtual land is thousand hectares, and the unit of virtual water is ten million cubic meters.
Data source: UN Comtrade, using HS1992 classification.
Image Source

Future Direction of Global Water Trade

An article entitled “Future changes in the trading of virtual water” by Nature Communications published 20 July 2020 states that with future water exports being concentrated in certain regions, virtual green and blue water exports are expected to triple “from 905 billion m3 and 56 billion m3 in 2010 to more than 3200 billion m3 and 170 billion m3, respectively, by the end of the century” due to an increase in the global population, amongst other factors.

The diagram below predicts the flow of VW by the year 2100. An example under column B shows major differences in virtual blue water trade in China, Pakistan, India, and the Middle East due to the reduction in water available for irrigation and transformations in populations throughout the century.

Countries trading virtual water
Virtual water trade fluxes by water type, region, and crop in 2100.
Source: Nature Communications
a Average global virtual green water trade (billion m3)
b Virtual blue water trade (billion m3)
c Virtual nonrenewable groundwater trade (billion m3)

An article by IOPscience called “Future evolution of virtual water trading in the United States electricity sector” published on 17 November 2021 in Environmental Research Letters, Volume 16, Number 12 measures the amount of VW used in the generation of electricity in the United States. Research has found that since the generated electricity is not always consumed at source and is sold elsewhere, the trade routes highlight the “geographical shift in water scarcity”. In this case, surges in VW trading are propelled by power generation expansion in the Western United States which leads to elevated VW trade to the east.

JSTOR Daily’s article entitled “Uneven Impacts: The Virtual Water Trade” (26 March 2023) highlights major inequalities between water-rich nations and their market partners. It is predicted that water-rich countries would start to reduce their exports when their local water resources begin to dwindle. Hence, the VWT is deemed to be an “unsustainable economic model”.


1. How Does VWT Work?

VWT involves the exchange of water-intensive products between countries, allowing them to save domestic water resources.

2. Can VW Contribute to Water Sustainability?

Yes, managing virtual water efficiently can contribute to water sustainability by optimizing water use in global trade and production.

3. What Are the Environmental Impacts of VW?

The environmental impacts include water consumption, land use, and pollution associated with the production and trade of water-intensive goods.

4. Is VW a solution to water scarcity?

While not the only available solution, VWT can help alleviate water scarcity by redistributing water-intensive production globally.

5. How Does VW relate to sustainable development?

VW is considered a new approach to address water shortage and safety issues, supporting the UN Sustainable Development Goal 6: Clean Water and Sanitation.

6. Can Individuals Reduce their VW Footprint?

Yes, individuals can reduce their VW footprint by making conscious choices in consumption, by buying locally produced merchandise since these items have a lower water footprint.

7. Can VW be negative?

Yes, negative VW signifies a product’s net contribution to water availability, indicating water savings in its production compared to alternatives.

8. Is there a relationship between VW and climate change?

Yes, VW has implications for climate change as water-intensive production processes contribute to the overall environmental footprint.

Last Word

The concept of VW has emerged as a crucial framework for understanding the intricate relationships between water, trade, and sustainability. It serves as a lens through which we can unravel the hidden water footprint embedded in the products and services that we utilize.

As we navigate the challenges of water scarcity and sustainable development, the VW concept remains a valuable tool for policymakers, businesses, and individuals to make informed decisions that contribute to a more water-conscious and resilient world.

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