Analysis of Virtual Water Trade Flow and Driving Factors in the European Union

The inefficient application of water resources has become an urgent problem restricting the world's sustainable development. Virtual Water Trade opens a new perspective on improving water resource utilization efficiency. Based on a multi-regional input-output model and the logarithmic mean Divisia index, the virtual water flows between 2000-2014 in 43 countries and regions have been evaluated, and the driving forces of changes in virtual water flows for the European Union were revealed. During the study period, the total amount of virtual water flow continued to increase. The United Kingdom is a net virtual water importer that depends on the European Union significantly. There was a large amount of virtual water flow from the European Union to the United States during 2000-2012. However, China gradually seized the share of virtual water from European Union exports after 2012. Economic effects and virtual water intensity effects are the most significant drivers of virtual water flows. The difference is that the economic effect positively drives virtual water flows, while the virtual water intensity effect negatively influences. The results reveal the nature of the United Kingdom in the virtual water trade and can provide post-Brexit recommendations.