Spillover risk analysis of virtual water trade based on multi-regional input-output model -A case study

Abstract

Massive amounts of water embodied in commodities are transferred via interregional trade which increase the water scarcity risk of exporting region. This study proposed an integrated evaluation framework for sectoral physical water use risks and virtual water flow risks in Northeast China. The initial water use risks for different sectors by provinces were first assessed based on sectoral physical water consumption. Then based on the multi-regional input-output (MRIO) model, a virtual water trade network was established, and simultaneously the virtual scarce water in sectoral export of intermediate goods and final goods were accounted to investigate the virtual water flow risks by sectors. Finally, interprovincial embodied scarce water transfers between Northeast China and the rest of China were mapped, and by grafting the concept of ‘spillover risk’ to the virtual water trade, we analyzed the spillover risk difference of virtual water trade between regions. The results showed that the sectors of Agriculture (Ag) and Other manufacturing (OM) presented the highest risk of water use while Nonmetal mining (NmM) belonged to the potential high-risk sectors of water use for Northeast China. The sectors exported more virtual scarce water in intermediate goods also exported more in the final goods; and the sector of Manufacture of food products and tobacco processing (FP) was the largest contributor to the large exporting virtual scarce water for Liaoning and Jilin while Ag in Heilongjiang province was the largest exporter. The cumulative spillover risk index from rest of China to Liaoning province through virtual water trade is the highest; and the main risk spilt provinces to Northeast China were Xinjiang, Jiangsu, Anhui and Hebei province. The proposed risk framework for water utilization and trade may help promote the redistribution of water resources and explore pathways for sustainable management of water resources.