Virtual water (also known as embedded water, embodied water, or hidden water) refers, in the context of trade, to the water used in the production of a good or service. For instance, it takes 1,300 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".[1] 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 was the creator of the virtual water concept,[2] which measures how water is embedded in the production and trade of food and consumer products. For his contributions he was awarded the 2008 Stockholm Water Prize.[3] 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.
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It is essential to recognize that virtual water is cumulative. To produce one kilogram of wheat about 1000 liters of water are needed, but for beef about 15 times as much is required. The majority of the water that we consume is embedded in food:[4]
Not only is there virtual water in food, but it is in various products in common use:[5]
Industrial goods also contain embodied water. One needs to understand how internal water resources are being used to produce cars, bicycles, teacups, and the like - particularly because industry usually uses only blue water for production (though rainwater harvesting is becoming more common). On average, a 1.1 tonne passenger car has about 400,000 liters of water embedded in it. This fact is compiled from several different resources including the UNESCO-IHE study[6] and the Australian Food & Grocery 2003.[7] Another source suggests Australian cars require one million litres of water, though this is from using a different method.[8] The construction of a house, using a combination of methods, requires about 6 million litres of water.[9]
The virtual-water content of a product consists of three components, called green, blue and grey components.[10]
The ‘green’ virtual-water content of a product is the volume of rainwater that evaporated during the production process. This is mainly relevant for agricultural products, where it refers to the total rainwater evaporation from the field during the growing period of the crop (including transpiration by the plants and other forms of evaporation).
The ‘blue’ virtual-water content of a product is the volume of surface water or groundwater that evaporated as a result of the production of the product. In the case of crop production, the blue water content of a crop is defined as the sum of the evaporation of irrigation water from the field and the evaporation of water from irrigation canals and artificial storage reservoirs (although for practical reasons the latter component has been left out from our studies). In the cases of industrial production and domestic water supply, the blue water content of the product or service is equal to the part of the water withdrawn from ground or surface water that evaporates and thus does not return to the system where it came from.
The ‘grey’ virtual-water content of a product is the volume of water that becomes polluted during its production. This can be quantified by calculating the volume of water required to dilute pollutants emitted to the natural water system during its production process to such an extent that the quality of the ambient water remains beyond agreed minimum water quality standards.
The distinction between green and blue water originates from Falkenmark (2003).[11] It is relevant to know the ratio of green to blue water use, because the impacts on the hydrological cycle are different. Both the green and blue components in the total virtual-water content of a product refer to evaporation. The grey component in the total virtual-water content of a product refers to the volume of polluted water. Evaporated water and polluted water have in common that they are both ‘lost’, i.e. in first instance unavailable for other uses. It is said ‘in first instance’ because evaporated water may come back as rainfall above land somewhere else and polluted water may become clean in the longer term, but these are considered here as secondary effects that will never take away the primary effects.
Once all the virtual water is added up, what is eaten and used in products of consumption, along with the daily use of water out of the tap, gives a better idea of a water footprint. Water footprints are used to give nations a better consumption-based indicator of water use. However, this water use indicator is, by definition, a loose indicator or actual water loss of a country. Since this water is usually kept in the region from which it was "used," the water use impact is generally perceived to be negligible.
Virtual water trade refers to the idea that when goods and services are exchanged, so is virtual water. When a country imports one tonne of wheat instead of producing it domestically, it is saving about 1,300 cubic meters of real indigenous water. If this country is water-scarce, the water that is 'saved' can be used towards other ends. If the exporting country is water-scarce, however, it has exported 1,300 cubic meters of virtual water since the real water used to grow the wheat will no longer be available for other purposes. This has obvious strategic implications for countries that are water-constrained such as those found in the Southern African Development Community (SADC) area [12][13][14]
Daniel Zimmer, Director of the World Water Council, in his presentation at the session on "virtual water trade and geopolitics" at the 2003 World Water Forum in Kyoto:
Water-scarce countries like Israel discourage the export of oranges (relatively heavy water guzzlers) precisely to prevent large quantities of water being exported to different parts of the world.
In recent years, the concept of virtual water trade has gained weight both in the scientific as well as in the political debate. The notion of the concept is ambiguous. It changes between an analytical, descriptive concept and a political induced strategy. As an analytical concept, virtual water trade represents an instrument which allows the identification and assessment of policy options not only in the scientific but also in the political discourse. As a politically induced strategy the question is, whether virtual water trade can be implemented in a sustainable way, whether the implementation can be managed in a social, economical and ecological fashion, and for which countries the concept offers a meaningful option.
The data that underlie the concept of virtual water can readily be used to construct water satellite accounts, and brought into economic models of international trade such as the GTAP Computable General Equilibrium Model.[15] Such a model can be used to study the economic implications of changes in water supply or water policy, as well as the water resource implications of economic development and trade liberalisation.
In sum, virtual water trade allows a new, amplified perspective on water problems: In the framework of recent developments from a supply-oriented to a demand-oriented management of water resources it opens up new fields of governance and facilitates a differentiation and balancing of different perspectives, basic conditions and interests. Analytically the concept enables to distinguish between global, regional and local levels and their linkages. This means, that water resource problems have to be solved in problemsheds[16][17] if they cannot be successfully addressed in the local or regional watershed. Virtual water trade can thus overcome the hydro-centricity of a narrow watershed view. According to the proceedings of a 2006 conference in Frankfurt, Germany, it seems reasonable to link the new concept with the approach of Integrated Water Resources Management.
Key shortcomings of virtual water measures are that the concept:
The deficiencies with the concept of virtual water mean that 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.[19]
Other limitations more specific to the MENA (Middle East & North Africa) region include:
Some researchers have attempted to use the methods of energy analysis, which aim to produce embodied energy estimates, to derive virtual, or embodied water estimates.[8]
