In the coming decades, Australia's water resources will be stretched not only by climate and domestic consumption but also through export. Australia will not physically export water; rather, it will virtually export water through its agricultural exports, mostly to China. Consumption shifts in China, a free trade agreement between Canberra and Beijing, and increased Chinese investment in foreign agricultural activities will drive up agricultural trade between China and Australia. Australia, already the driest inhabited continent, is expected to experience more extreme droughts in the future, making water a precious commodity. A small overall population and progressive water regulations in basins already experiencing water stress will mitigate the impact, but Australia's role as a virtual water exporter will partially reverse efforts to avoid increased water stress.