Because water and air are basic resources for economic development, deciding how to consume these resources is an urgent issue for sustained economic growth. Since water resources are spatially concentrated in some regions of China, in this paper, we verify whether a balanced environmental burden can be achieved through interregional trade. To this end, we calculate a virtual water matrix among regions in China using a novel interregional input-output model and draw the following six conclusions. First, China’s water resources are unevenly distributed in the south of the country under the Yangtze River Basin. Second, the overconsumption of water resources relative to supply occurs in North China (i.e., Beijing, Tianjin, and Hebei) and East China (i.e., Jiangsu and Shanghai). Third, North and East China alleviate the burden of water resources by importing virtual water. Fourth, even water-rich regions such as Guangdong and Sichuan import a considerable amount of virtual water from across China, placing a burden on the country’s water resources. Fifth, regions such as Ningxia and Inner Mongolia that suffer from water shortages export virtual water, also placing a burden on China’s water resources. Finally, because net exports of virtual water across China are large, international trade burdens water resources in the country even further. In summary, interregional trade has contributed to a decrease in the burden of water resources in North and East China, while this burden has become unbalanced in Inner Mongolia, Sichuan, Guangdong, and Ningxia. Therefore, the spatial reallocation of agricultural activities that consume the most water resources is required.
JEL Classification: Q25, Q51, R11, R15