Unraveling the dynamics of water scarcity driven by industrial sector in China: assessment and decomposition of socioeconomic factors

Water scarcity poses a grave threat to China’s sustainable development, exacerbating inequalities in water access and utilization, which in turn widens disparities in societal well-being, wealth, and prosperity. Industrial water demand is a primary contributor to these disparities, necessitating scientific quantification of industrial-related water scarcity levels and their influencing factors across all levels. However, most existing quantitative studies on water scarcity rely on vulnerability indices, neglecting the water required for critical ecological functions and inadequately exploring scarcity drivers. Our study integrates a multi-regional input–output model with a water scarcity metric that accounts for environmental flows to quantify industrial-driven water scarcity. We decompose relevant socio-economic factors to map their influence on changes in water scarcity. Our findings reveal that China’s potential water scarcity initially increased by 3.32% and then decreased by 42% between 2012–2015 and 2015–2017. Economic scale effects first reduced potential scarcity by 134% but later increased it by 282%. Provincial-level water supply–demand structures significantly impact scarcity, with production efficiency consistently exerting a negative influence and economic scale a positive one. We also proposed targeted policy recommendations, including promoting the adoption of high-efficiency water-saving equipment and implementing tiered water pricing and differentiated pricing reforms. This work sheds light on China’s potential industrial water scarcity and informs water management decisions, facilitating coordinated cross-regional water resource supervision and sustainable policy formulation.