Rethinking Virtual Water Trade in the Circular Economy for Sustainable Production and Consumption

Abstract

This chapter rethinks virtual water trade, the water embedded in traded goods, through the lens of the circular economy to clarify when trade supports, or undermines, sustainability in water-scarce contexts. The chapter develops a conceptual framework for circular virtual water governance that aligns trade-driven virtual water flows with resource-efficient and equitable production and consumption. The framework integrates blue, green, and grey water footprint accounting; supply-chain and life-cycle perspectives to identify hotspots and prevent problem shifting; and a feedback-oriented governance logic linking producers, consumers, policymakers, and sustainability indicators. Circular interventions are mapped to CE principles (reduce, reuse/reallocate, recycle) via examples including irrigation efficiency, treated wastewater reuse, pollution prevention, eco-design, and traceability. The chapter concludes with policy and research priorities to operationalize circular VWT strategies that strengthen water security, food security, economic resilience, and environmental integrity.