China's Inter-regional Trade of Virtual Water: a Multi-regional Input-output Modeling

This study focuses on the measure of inter-regional trade of virtual water, defined as the freshwater consumed for producing traded goods and services, to explain the relationship between China’s regional virtual water and the increasing water demand. By using the multi-regional input-output (MRIO) tables of 2002 and 2007 with the regional sectoral water use, this study analyzes virtual water in trade, domestic trade in virtual water, and the regional trade balance of virtual water. The results show that: (1) water use efficiency has increased in China; (2) the major source of the regional virtual water in trade are domestic inter-regional trade; and (3) a region’s virtual water depends on its water resources availability, economic structure, as well as the region’s position in domestic supply chain.