Optimization of virtual water flow via grain trade within China

Abstract The irrational virtual water flow caused by grain trade makes water use efficiency low and further threatens grain security in China. However, optimizing the grain virtual water trade flow from the perspective of the economic value of water resources has rarely been carried out in current research. This paper proposes a linear optimization model considering opportunity cost to fill this gap. The current situation of grain virtual water trade is analyzed and we find an irrational trade mode which quantity and direction of grain virtual water trade in some provinces are not consistent with actual demand. Then, opportunity cost is added to the linear optimization model to adjust grain virtual water trade which shows several advantages compared to general linear optimization model. Results show that huge virtual flow is generated, up to 1179.24 billion cubic meters of water. And the economic value generated by grain virtual water trade can not only cover the transportation cost but can also eventually generate economic benefits of 7410 billion yuan. Finally, the relevant conclusions and implications of adjusting China’s grain virtual water trade are obtained.