Applying the Input-Output Method to Account for Water Footprint and Virtual Water Trade in the Haihe River Basin in China

Abstract

The virtual water strategy which advocates importing water intensive products and exporting products with low water intensity is gradually accepted as one of the options for solving water crisis in severely water scarce regions. However, if we count the virtual water embodied in imported products as the water saved for a region, we might overestimate the saving by including the virtual water that is later re-exported in association with the proceeded products made from the originally imported products. This problem can be avoided by accounting for the saved water through calculating water footprint (WF) in domestic final consumptive products. In this paper, an input-output analysis (IOA) based on the water footprint accounting framework is built to account for WF and virtual water trade of final consumptive products in the water stressed Haihe River basin in China for the year 1997, 2000, and 2002. The input-output transaction tables of the three years are constructed. The results show WF of 46.57, 44.52, and 42.71 billion m(3) for the three years, respectively. These volumes are higher than the water used directly in the corresponding years in the basin. A WF intensity (WFI) indicator is then used to assess if the economic activities in the basin are consistent with the virtual water strategy. The temporal change of the WFI is also decomposed by the index number analysis method. The results showed that the basin was silently importing virtual water through the trade of raw and processed food commodities under the background of the whole economic circulation.