Evaluating Losses from Water Scarcity and Benefits of Water Conservation Measures to Intercity Supply Chains in China

The severe water scarcity in China poses significant economic risks to its agriculture, energy, and manufacturing sectors, which can have a cascading effect through the supply chains. Current research has assessed water scarcity losses for global countries and Chinese provinces by using the water scarcity risk (WSR) method. However, this method involves subjective functions and parameter settings, and it fails to capture the adaptive behaviors of economies to water scarcity, compromising the reliability of quantified water scarcity loss. There is a pressing need for a new method to assess losses related to water scarcity. Here, we develop an agent-based complex network model to estimate the inter-regional and intersectoral impacts of water scarcity on both cities and basins. Subsequently, we evaluate the supply chain-wide economic benefits of four different water conservation measures as stipulated by the 14th Five-Year Plan for the Construction of a Water-Saving Society. These measures include increasing the utilization rate of recycled water in water-scarce cities, reducing the national water consumption per industrial value-added, and implementing agricultural and residential water conservation measures. Results show that direct losses constitute only 9% of the total losses from water scarcity. Approximately 37% of the losses can be attributed to interregional impacts. Among the water-scarce cities, Qingdao, Lanzhou, Jinan, and Zhengzhou pose a significant threat to China's supply chains. Agricultural water conservation yields the highest amount of water savings and economic benefits, while residential water conservation provides the highest economic benefit per unit of water saved. The results provide insights into managing water scarcity, promoting cross-regional cooperation, and mitigating economic impacts.