Trends and environmental impacts of virtual water trade

Abstract

Virtual water describes water embedded in the production of goods and offers meaningful insights about the complex interplay between water, trade and sustainability. In this Review, we examine the trends, major players, traded products and key drivers of virtual water trade (VWT). Roughly 20% of water used in global food production is traded virtually rather than domestically consumed. As such, agriculture dominates VWT, with livestock products, wheat, maize, soybean, oil palm, coffee and cocoa contributing over 70% of total VWT. These products are also driving VWT growth, the volume of which has increased 2.9 times from 1986 to 2022. However, the countries leading VWT contributions (with China, the United States, the Netherlands, Germany and India accounting for 34% of the global VWT in 2022) have remained relatively stable over time, albeit with China becoming an increasingly important importer. VWT can mitigate the effects of water scarcity and food insecurity, although there are concerns about the disconnect between consumers and the environmental impacts of their choices, and unsustainable resource exploitation. Indeed, approximately 16% of unsustainable water use and 11% of global groundwater depletion are virtually traded. Future VWT analyses must consider factors such as water renewability, water quality, climate change impacts and socioeconomic implications. The trade of virtual water — the water associated with the production of traded goods — acts as a mechanism for the distribution of water resources between different countries. This Review discusses the major participating countries and industries, and current trends. It concludes by exploring how the analysis of virtual water could be further refined.