The “virtual water” metaphor was originally created by Professor Tony Allan in the early 1990s. It is defined as the volume of water required to produce a commodity, seems like the water is embedded in the production of a good or service. Therefore, it is also called “embedded water” or “embodied water”. For instance, it takes 1,300 cubic meters of water on average to produce one metric tonne of wheat. The precise volume can be more or less depending on climatic conditions and agricultural practice.
People pay attention to this invisible water probably because of the worldwide shortage of water supply, which raise the economic value of water. Virtual water does have actual significance. When there is a transfer of goods or services from one place to another, there is little direct physical transfer of water (apart from the water content of the product, which is quite insignificant in terms of volume). There is however a significant transfer of virtual water. From a country’s perspective, Haddadin has defined this water also as “exogenous water”.
Precisely, the term virtual water can be computed from two distinct approaches. One is from the production point of view and the other from the consumption point of view. The first approach quantifies virtual water as the real water used in the production of the commodity. Hoekstra and Chapagain defined the virtual-water content of a product (a commodity, good or service) as “the volume of freshwater used to produce the product, measured at the place where the product was actually produced”. It refers to the sum of the water use in the various steps of the production chain. It is production site specific, as it depends on the production conditions, including place and time of production and local water use efficiency. In the second approach, the virtual water content is defined as the amount of water that would have been required to produce the product in the place where the product is used. Hence it is consumption site specific. The second concept is particularly useful if we think of how much water we can save by importing a commodity instead of producing it ourselves. In the current study we adopt the first definition of virtual water, which has the advantage that it has a straightforward empirical basis.
Not only agricultural products contain virtual water – most studies to date have been limited to the study of virtual water in crops – but industrial products and services also contain virtual water.