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Virtual water describes water embedded in the production of goods and offers meaningful insights about the complex interplay between water, trade, and sustainability. In this Review, we examine the trends, major players, traded products, and key drivers of virtual water trade (VWT). Roughly 20% of water used in global food production is traded virtually rather than domestically consumed. As such, agriculture dominates VWT, with livestock products, wheat, maize, soybean, oil palm, coffee, and cocoa contributing over 70% of total VWT. These products are also driving VWT growth, the volume of which has increased 2.9 times from 1986 to 2022. However, the countries leading VWT contributions (with China, the United States, the Netherlands, Germany, and India, accounting for 34% of the global VWT in 2022) have remained relatively stable over time, albeit with China becoming an increasingly important importer. VWT can mitigate the effects of water scarcity and food insecurity, although there are concerns about the disconnect between consumers and the environmental impacts of their choices, and unsustainable resource exploitation. Indeed, approximately 16% of unsustainable water use and 11% of global groundwater depletion are virtually traded. Future VWT analyses must consider factors such as water renewability, water quality, climate change impacts, and socio-economic implications. 

Global groundwater resources are under strain, with cascading effects on producers, food and fibre production systems, communities and ecosystems. Investments in biophysical research have clarified the challenges, catalysed a proliferation of technological solutions and supported incentivizing individual irrigators to adjust practices. However, groundwater management is fundamentally a governance challenge. The reticence to prioritize building governance capacity represents a critical ‘blind spot’ contributing to a low return on investment for research funding with negative consequences for communities moving closer towards resource depletion. In this Perspective, we recommend shifts in research, extension and policy priorities to build polycentric governance capacity and strategic planning tools, and to reorient priorities to sustaining aquifer-dependent communities in lieu of maximizing agricultural production at the scale of individual farm operations. To achieve these outcomes, groundwater governance needs to be not only prioritized but also democratized.