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The onset of climate change is expected to result in variations in weather patterns which can exacerbate water scarcity issues. This can potentially impact the economic productivity of nations as economic activities are highly dependent on water especially for agricultural countries. In response to this, the concepts of virtual water and water footprint have been introduced as metrics for measuring the water intensity of products, services and nations. Researchers have thus looked into virtual water trade flows as a potential strategy for alleviating water scarcity. The paper aims to discuss these issues.

Environmentally extended input-output models (IOMs) are often used to analyze interactions between economic and ecological systems. This work thus develops a multi-regional input-output model for optimizing virtual water trade between different geographic regions in consideration of local environmental resource constraints, product demands and economic productivity.

A case study on agriculture crop production and trade in different regions of the Philippines is utilized to demonstrate the capabilities of the model. The results show that the optimal strategy does not necessarily limit a water-scarce region to produce less water-intensive crops.

The model uses an input-output framework whose fixed coefficients reflect a fixed technological state. As such, the model is best used for short-term projections, or projections for mature technological state (i.e. where no major gains in efficiency or yield can be foreseen).

The proposed modeling framework can be used in any geographic region (provided relevant statistical data are available for calibration) to provide decision support for optimal use of limited water resources.

The model proposed in this work has general applicability to the optimal planning of agro-industrial systems under water footprint constraints. This modeling approach will be particularly valuable in the future, as climate change causes changes in precipitation patterns and water availability.