The virtual water trade (also known as embedded or embodied water) is the hidden flow of water in food or other commodities that are traded from one place to another. The virtual water trade is the idea that when goods and services are exchanged, so is virtual water. Virtual water trade allows a new, amplified perspective on water problems: In the framewond balancing different perspectives, basic conditions, and interests. Analytically, the concept enables one to distinguish between global, regional, and local levels and their linkages. However, the use of virtual water estimates may offer no guidance for policymakers seeking to ensure that environmental objectives are being met.

For example, cereal grains have been major carriers of virtual water in countries where water resources are scarce. Therefore, cereal imports can play a crucial role in compensating local water deficit. However, low-income countries may not be able to afford such imports in the future which could lead to food insecurity and starvation.