Based on resources flowing theory and virtual water concept, this research constructs an extended input-output model to analyze the structural relationships among economic activities in Zhangy City and their physical relationships with water resources. This model allows us to trace the transformation of various products and to calculate the level of the virtual water contents of each sector's product, thus offering the possibility of studying the water movement and transformation in a socio-economic system. It is shown that the consumption of physical water resources and the transformation and movements of virtual water in farming sectors become the main body of water cycle in the socio-economic system in the study area. The imported products are characterized by relative lower virtual water contents and the virtual water following from other regions is little. The lower consumption of farming products in the study area has caused large amounts of farming products and virtual water following out of the study area. From the view of regional sustainable development, strengthening the consumption level of farming products appear to be the practical means to reduce the export of virtual water and increase utilization rate of the limited water resources.

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