How do Multi-Scale Virtual Water Flows of Large River Economic Belts Impact Regional Water Distribution: Based on a Nested Input-Output Model

As key water suppliers and natural channels, large rivers have prospered production and trade. However, the emerging trade brought virtual water flows, which will change the physical water distribution. Accordingly, previous policies for water resources management at different scales should be adjusted to take this into account. Taking the Yangtze River Economic Belt (YREB) as a case study, a multi-scale analysis framework is here constructed to analyze the internal, domestic inter-regional and cross-border virtual water flow patterns. That is the base for the following policy design discussions. The World’s and Chinese Muti-regional Input-output tables are nested and drivers for regional differences in virtual water flows are further disentangled by Structural decomposition analysis (SDA). Results show that current virtual water flows in the large-river economic belts worsen water distribution inequality if no management controls are implemented. Within the basin, net virtual water flows from the water-deficient reaches to upstream regions with abundant water. At an inter-regional scale, the YREB absorbs a net import of 8.44 × 109 m3 from the north with water shortage, but supplies about 6.7 × 108 m3 to the south. From a cross-border perspective, water stress in the YREB is strengthened by developed countries and alleviated by new emerging countries. Industrial structure effect and scale effect decide the direction of virtual water flows at a national scale, while regional structural effect counts more at a global scale. The water embodied in trades matters when carrying out water rights allocation, water transfer projects and water border adjustment mechanisms.