Unveiling the inequalities in virtual water transfer in China: The environmental and economic perspectives

Abstract

To alleviate the geographical mismatch between supply and demand of water resources, virtual water trade had attracted extensive attention. Many studies had estimated the virtual water flow and measured the virtual water inequality using Environmental Input-Output (EIO) model. However, EIO model ignores the feedback effect in the trade, which may lead an overestimation or underestimation of virtual water transfer. Moreover, while considering the relation between economic benefits and environmental costs, the studies of virtual water inequality are still limited in both number and methodology. Here, to address these gaps, we recalibrated the virtual water and value-added transfer in China's 30 provinces in 2017 using a new Environmental Spillover-Feedback Effects (ESFEs) model, and then measured the inequality between virtual water transfer and the resource endowments taking the value-added into account. Our results show that the virtual water transfer of half of provinces changed exceeding 50 %, with a maximum of 428 %. The ratio of net virtual water outflow to one-way virtual water inflow (which is called virtual water plunder index in this study) in Xinjiang is up to 935 %, which directly contributing to the inequality among regions. Moreover, the virtual water transfer in different regions is not compensated equally from the perspective of economy. As a result, some regions are getting both water resources and economic benefits, while others are getting the opposite. Our study highlights the importance of considering both the pressure on water resources and economic benefits when measuring the virtual water inequality. Our findings support policymakers in developing adequate responses, i.e., clarifying regional responsibilities of virtual water trade, building a whole industrial chain, and balancing the transfer of value-added and virtual water.