Input-output analysis of virtual water transfers: Case study of California and Illinois

- Input-output analysis is applied to sectoral water use in California and Illinois.
- Virtual water transfers involving California and Illinois are quantified.
- Aquaculture and crops have the largest direct water use intensities.
- Low water use intensity services sector makes highest economic contribution.
- Domestic virtual water transfers are much larger than international transfers.

Increasing pressures on water resources in the two economically important states of California (CA) and Illinois (IL) have created a need for critical information related to sustainable water use and management. This paper applies input-output (IO) analysis to evaluate water use and quantify virtual water transfers involving the two states. Results show that aquaculture requires the largest input of direct water per unit of economic output, followed by crops, power generation, livestock, mining, services, domestic, and industry. Low water use intensity industry and services sectors contributed the largest proportions of value added and employee compensation. In 2008, the two states were net virtual exporters, with CA exporting 1.3 times the net export volume of IL. More than 72% of virtual water exports for each state originated from the high total water use intensity but low value added crops sector, with irrigation and rainfall contributing 99% and 97% of the crop-related exports for CA and IL, respectively. Virtual water export volumes were 59% for CA and 71% for IL when compared to actual water use. These results highlight the need to consider water use efficiency and opportunity cost when managing water under scarcity conditions.