Analysis of the virtual water flow: an approach based on the trade balance of Mato Grosso do Sul

Abstract: The allocation of water resources has attracted the attention of the most diverse segments of modern society. Generally, in regions characterized by agriculture, such as the state of Mato Grosso do Sul (MS), the use of water in the production process becomes more intensive, so as to reflect on the use of natural resources. The idea of "virtual water" is based on the concept of water embedded in the products, and has attracted growing interest from the national and international community in view of the need to improve the management of water resources. Therefore, the main objective of this article is to analyze the balance of virtual water resulting from the international trade of the South-Mato Grosso State and the rest of the world in order to verify the surplus or deficit balance in relation to its main products marketed abroad. In order to verify if the virtual water balance is favorable or unfavorable to the State, one should measure the exchange ratios in the product-to-product trade using the methodology of the calculation of the Water Footprint proposed by Hoekstra et al. (2011) as well as the backward and forward chaining indicators defined by the input-output matrix in order to understand the behavior of water demand in the state economy. The results point to a deficit in the balance of water transactions between this State and the other economies with which it markets its products.