Effects of virtual water strategy on water conservation and socioeconomic development in water-scare regions

Abstract

Strategies based on virtual water have become a controversial measure to alleviate pressure on the water resource in regions with scarce water. Advocates of this approach highlight its potentially low cost and high efficiency, whereas opponents criticize its over-simplification and neglect of important factors other than water. Detailed analysis of the strategy's effects on water use and socioeconomic development is essential to fully understand the strengths and weaknesses of the strategy, and to support its reasonable and scientific implementation. In the present study, we defined three virtual water strategy scenarios (i.e., reduce agricultural production, increase agricultural imports, and reduce production and increase imports simultaneously) and developed a computable general equilibrium model to simulate the effects of the scenarios. We chose China's Bohai Bay area, a rapidly developing region with scarce water, for a case study. We found that the virtual water strategy was a double-edged sword: it improved water conservation (water use decreased by 3.6%, 6.9%, and 3.2% under the three scenarios, respectively), but had negative effects on economic development, employment, and economic welfare. The scenario that only increased agricultural imports had the greatest negative impact on socioeconomic development, whereas the scenario that simultaneously decreased production and increased imports most effectively balanced the economic development and water conservation requirements.