Understanding virtual water flows: A multiregion input-output case study of Victoria

This article explains and interprets virtual water flows from the well-established perspective of input-output analysis. Using a case study of the Australian state of Victoria, it demonstrates that input-output analysis can enumerate virtual water flows without systematic and unknown truncation errors, an issue which has been largely absent from the virtual water literature. Whereas a simplified flow analysis from a producer perspective would portray Victoria as a net virtual water importer, enumerating the water embodiments across the full supply chain using input-output analysis shows Victoria as a significant net virtual water exporter. This study has succeeded in informing government policy in Australia, which is an encouraging sign that input-output analysis will be able to contribute much value to other national and international applications.