Accounting for re-exports substantially reduces China’s virtual water demand through agricultural trade

Abstract

Traditional methods of assessing virtual water (VW) trade usually overestimate the foreign VW used by a country as the imported VW can also be re-exported and used by the countries other than the initial importer. Due to its ability to provide better estimates of transboundary resource use, the global value chain (GVC) method can provide more precise guidelines for the global policy debate over sustainable resource use. Here, we use GVC analysis based on multi-regional input-output tables to quantify the embodied trade of virtual blue and green water for China in the major agricultural sectors and agro-based industries. We find that China is a net importer of blue VW (2.9 billion m³) and green VW (57.9 billion m³) through agricultural commodities. Our results reveal that a large portion of imported blue (37%) and green (17%) VW is re-exported by China and consumed in other countries, representing the overestimated parts of China's VW import use. These ratios are even higher for individual commodities, including 44% for blue VW for cotton and 22% for green VW for grains. This work demonstrates the importance of improved accounting in VW trade to achieve the sustainable use of global water resources and equitably share responsibility between producers, intermediates, and end-users.