## 3 Analysis of Virtual Water Trade  
The third area of investigation was the analysis of virtual water trade, because imports and exports can influence the overall water security of a region [48]. The literature was consulted to develop an effective approach to identify the main crops/trade goods contributing to the export of virtual water. Water Embodied in Bilateral Trade (WEBT) and Multi-Regional Input-Output Analysis (MRIO) were used to calculate the embodied water because these methods are traditionally used for energy and carbon footprints as two input-output top-down approaches [56; 57; 58; 59]. The bottom-up approaches do not consider the entire industrial supply chain, therefore the results are highly impacted by the recorded data set and the total water footprint can vary by as much as 48% [60; 61]. The main exports involving major water content are agricultural products. A basic assessment of virtual water content was performed to estimate the virtual water export. The trade data of the top ten imports and exports were collected from the FAOSTAT website for the year 2014 (latest available data). The mainstream agricultural products were identified, and the calculation of water trade was performed accordingly (refer Equation (4)). The proportions of green, blue, and grey water in each export commodity were calculated. \[\text{Volume }\times\text{Virtual water content }=\text{Volume of Virtual Water} \tag{4}\]  
Australia's total export of green virtual water was 26.5 km\({}^{3}\), of blue virtual water was 6.4 km\({}^{3}\), and of grey virtual water was 3.6 km\({}^{3}\), thus totaling 36.5 km\({}^{3}\). By comparison, the import of green virtual water was 1.6 km\({}^{3}\), of blue virtual water was 0.184 km\({}^{3}\), and of grey virtual water was 0.078 km\({}^{3}\), for a total water footprint of 1.8 km\({}^{3}\). Thus, in 2014 Australia indirectly exported 35 km\({}^{3}\) of water, which represents a significant indirect loss of freshwater. The total export value data was obtained from the FAO website [62]. For the calculation of usable water value, green water was not counted because green water must be consumed at the location at which the precipitation occurs (refer Equation (5)). Therefore, the usable water value comprised only blue and grey waters [11; 59]:  
\[\text{{Usable Water Value}}=\frac{\text{Total Export Value}}{\text{(Total Blue Water Export+Total Grey Water Export)}} \tag{5}\]  
According to the Australian Department of Foreign Affairs and Trade, Australia's exports of services and goods totaled $330.3 billion. Iron ore is Australia's largest export commodity [63; 64; 65; 66]. Because of Australia's natural resources, coal and natural gas are also significant export resources. About 65% of all agricultural products produced in Australia are exported for a relatively lower economic benefit. Some of the exported products are the most water-intensive crops produced, such as cotton (98% exported on a three-year average). Despite covering 58% of Australian land and accounting for 59% of water consumption, none of the agricultural products are among Australia's top five exports. Furthermore, agricultural products contribute only 2.7% of GDP and account for 2.5% of employment [67; 68]. Australia has GDP of $1.561 trillion and per capita GDP of $68,973, and was ranked fifth in the world in 2014 in the latter measure according to data released by the AustraliaBureau of Statistics and Department of Foreign Affairs, Trade, and Industry [65; 69; 70]. Analysis indicated sheep meat is the most efficient water value agricultural product (14.90 $/ML) as it requires minimal or no blue water usage. The second highest value added agricultural product was found to be wine grapes (5.72 $/ML). The lowest usable water values were obtained for cotton lint (0.48 $/ML), rice (0.53 $/ML), and raw sugar centrifugal (0.69 $/ML), due to the obvious reason of the high consumption of blue water and low export value. The analysis clearly indicates a need to consider the usable water value at the strategic level.