Systemic Input-Output Computation of Green and Blue Virtual Water ‘Flows’ with an Illustration for the Mediterranean Region

The term virtual water refers to the volume of water used in the production of a commodity or service. Accordingly, virtual water ‘trade’ is the amount of water ‘embedded’ in commodities being transferred from one place to another as a consequence of trade. This paper argues that the conventional methods so far adopted for the computation of virtual water ‘flows’ (based on Hoekstra and Hung 2002) have considered only direct water usage and not sufficiently distinguished between blue and green water resources. This has brought about flawed estimates of virtual water ‘flows’, thereby limiting the usefulness of the virtual water concept as a tool for informing water policy. A novel approach for computing virtual water ‘flows’ which applies the Input–output (IO) methodology to account for both direct and indirect water consumption, and simultaneously distinguishes between the different typologies of water, is presented. The study upholds that the integration of these two methods can not only provide a more robust framework for quantifying virtual water ‘flows’, but also enhance the relevance of the concept as a tool for water resource management policy. The implications of these alternative estimation methods are here illustrated using data referring to 11 Mediterranean economies and 7 internationally traded agricultural commodities.