Optimal Allocation of Water Resources Considering Virtual Water Trade: A Case Study of the Yellow River

Abstract Water can be redistributed physically and virtually. We explored water allocation optimization to mitigate water stresses by constructing a physical-virtual dual water system and optimizing the 1987 Yellow River water allocation scheme. We calculated the virtual water volume, identified the virtual in-basin, out-of-basin, and export water volumes, and compared the total regional water demand (i.e., combined physical and virtual water volumes) with regional water planetary boundaries to optimize basin water allocation schemes. Virtual water accounted for > 90% of the total regional demands, whereas physical flows did not significantly impact them. Moreover, allocation quotas for Qinghai and Inner Mongolia should be reduced by 0.113 and 1.005 billion m 3 , respectively, for sustainability. Furthermore, improving the efficiency of water-intensive sectors and limiting virtual water outflows from heavy industry to out-of-basin sectors are vital to water intensification. Increased attention should be directed toward physical-virtual water demands than the current focus on supply-oriented water allocation.