A Multi-Region Input-Output Approach to Account for the Virtual Water Metabolism of Cities

Abstract

Virtual Water is the amount of water embedded in a product or services and accounts for the direct and indirect water used along the production chain. It was initially identified as a tool to determine competitive advantage in international food trade. More recently it has been used as a sustainability indictor and risk assessment tool. Studies have analysed the Virtual Water content of specific products, particularly food but few have examined virtual water requirements at the regional scale. This thesis developed an approach to account for Virtual Water metabolism at a regional scale. The approach was used to examine the Virtual Water used and traded annually between industries within an urban economy. A multi-region input-output approach was developed to account for the flow of Virtual Water through the Auckland economy. The model consisted of 48 economic industries, made up of 9 primary (production), 26 secondary (manufacturing) and 13 tertiary (service) sector industries. The approach usefully identified key industries in the supply chain and external water pressures due to the Auckland regions economic production. The results highlighted the dominance of 4 thirsty industries, mainly in the manufacturing sector. These were Dairy product manufacturing, Meat and meat product manufacturing, Horticulture and fruit growing and Cultural and recreational services. Dairy product manufacturing and Meat and meat product manufacturing in particular rely heavily on Virtual Water provided from sources external to the region. This implies that the environmental impacts of production are externalised from Auckland. A large number of comparatively small water users source most of their water locally and many Auckland industries are heavily reliant on other Auckland industries for their Virtual Water supply. This means that attempts to manage the water use by Auckland industries should focus on a few key industries, and this will flow through the economy. Auckland’s economic production is heavily reliant domestic rather than international Virtual Water, suggesting that initiatives to blue the supply chain will directly contribute to a blue New Zealand.