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.

King's College London and the SOAS, University of London 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 . Allan 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.

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.

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