The Concept Of ‘Virtual Water’ — A Critical Review

A Report Prepared For The Victorian Department Of Primary Industries

‘Virtual water’ is an estimate of the amount of water involved in the production of a particular product. The virtual water concept has been used to argue against the production and export of commodities that require ‘large’ volumes of water. Virtual water estimates have also been used as an indicator of environmental damage associated with water intensive activities.

It is understandable that people are genuinely concerned about how we use scarce resources, particularly given the unprecedented drought and climate change concerns. However, as our note demonstrates, there are a number of significant flaws in the virtual water concept that effectively render the concept meaningless. In particular, there is no link established between the measure of water use and environmental degradation. Consequently no conclusions can be drawn regarding the environmental benefits of moving from high to low water intensive production. In addition the virtual water concept makes no distinction between water that falls on rangelands or water within irrigation systems. As a consequence, the implied assumption that a shift from water intensive beef cattle production, less water intensive crops or horticulture, would lead to water savings is spurious.

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