Reduction and reallocation of water use of products in Beijing

The virtual water concept has received significant attention through manifesting the role of human activities such as consumption and international trade on water resources. However, few studies have focused on how the interactions of local supply chain exert impact on local water resources associated with virtual water flows. In this study, we introduce an indicator which is attached to the virtual water concept, termed the “internal water use of products” (IWUP), to examine the direct and indirect water use from local water supply for goods and services in Beijing for the years 1997, 2000, 2002, 2007, and 2010. This indicator links the pressure on local water resources to the final products with sectoral details, highlighting the importance of economic analysis in local water resource management. A structural decomposition analysis revealed that the increase in economic water productivity would have caused Beijing's IWUP to decrease by 196% from 1997 to 2010, if other determining factors remained constant. Such great efficiency improvements have allowed Beijing to fulfill its objectives of economic growth, whilst in the meantime reducing the water used in production. However, we also found that production structure adjustment would increase the IWUP, mainly due to a shift from agricultural and industrial sectors to service sectors.