Hydro-Economic Risk and Resilience to Supply Chain Water Scarcity in Chinese Cities

Abstract

Present understanding on virtual scarce water embedded in supply chains has primarily focused on water quantities. Yet assessing the potential economic cost of and resilience to water scarcity along the supply chain is critical for making informed water and supply chain decisions. We quantified water scarcity risks and resilience at the city level, since fine-grained studies can better capture the highly varied water resource availability, demand and socio-economic development across China. To do this, we used an income-based multiregional input-output approach between 2007 and 2017, which allows the economic impacts of water scarcity along supply chains to be comprehensively assessed. The results show that supply chains amplify potential local economic risks by three times nationally, with the amplification effect reaching ten times in some cities. The resilience to water scarcity, taking into account multiple dimensions including the impact of physical water transfer, varies across different cities and is negatively correlated to water scarcity risks. This suggests the importance of addressing correlated risk and resilience dimensions to enhance hydro-economic security of cities. Our analysis highlights those cities facing both high hydro-economic risk and low resilience, primarily located in North, Northeast, and East China, which national policies may prioritize to enhance their preparedness against water scarcity.