Context

• Virtual water is water embedded in a product not in a real sense but in a virtual sense. It refers to the hidden or embedded water within products, including agricultural and industrial goods, that are traded between countries. 
• In essence, it represents the volume of water required to produce a particular product, including the water used directly in its production and the water indirectly used throughout its supply chain, such as for growing the raw materials or processing them.

Positive Impacts of Virtual Water Trade:

• Virtual water trade involves the international exchange of products, each carrying its virtual water content. 
• Some countries, due to their climate, water availability, or efficient water management practices, may produce goods with a lower virtual water content, while others may have higher virtual water content products.
• Virtual water trade can help optimize resource allocation. India can focus on industries and crops that are less water-intensive, ensuring efficient use of its limited water resources.

Negative Impacts:

• While virtual water trade can have several benefits, it also carries negative impacts and implications for water sustainability in India:
• Water Inequality: Virtual water trade can exacerbate water inequality within India. Regions with abundant water resources may prioritize cash crops or water-intensive industries for export, diverting water away from local communities and agriculture, which can lead to social and economic disparities.
• Loss of Water-Saving Technologies: Relying on virtual water trade may discourage the development and adoption of water-saving technologies and practices within India. This can hinder progress toward more sustainable water management.
• Hidden Water Footprint: Virtual water trade can mask the true water footprint of a nation’s consumption. India may appear to be reducing its direct water use, but it could still be contributing significantly to water stress and depletion in other parts of the world through its imports.
• Vulnerability to Global Water Supply Shocks: Depending heavily on virtual water trade can make India vulnerable to global water supply shocks. If a major trading partner faces a water crisis or disruptions in its supply chain, India’s access to essential goods could be jeopardized.
• A study found that India exported about 26 billion litres of virtual water on an average per annum between 2006-16. 
• Rice was the highest exported foodproduct, followed by buffalo meat and maize. In India, farmers rely heavily on groundwater for rice cultivation, and a kilogram of paddy requires about 15,000 litres of water. 

Implications for Water Sustainability in India:

• Dependency Risk: Over-reliance on virtual water trade can make India vulnerable to water scarcity in other countries. If key trading partners face a water crisis, it could disrupt the supply of essential goods.
• Water Efficiency: While virtual water trade can help address water scarcity, it should not be a substitute for improving water use efficiency domestically. India needs to invest in efficient irrigation systems, sustainable agriculture practices, and water recycling.
• Environmental Concerns: Some water-intensive exports may lead to the depletion of local water resources and environmental degradation in regions of production. India should consider the environmental impact of its virtual water trade.
• Policy and Governance: Effective governance and policies are crucial to ensure equitable distribution of water resources and to regulate virtual water trade to prevent negative impacts on local communities.

Way Forward

• India needs to integrate virtual water trade risks into the policy framework by:
  • Prescribing the limits of national VWT;
  • Establishing and listing the products/regions that need to be excluded from it;
  • Specifying the water types to be used;
  • Encouraging wastewater reuse and alternative means of water generation to avoid blue water depletion.