Hydro-Economic Risk\nand Resilience to Supply Chain\nWater Scarcity in Chinese Cities

Present understanding on virtual scarce water embedded\nin supply\nchains has primarily focused on water quantities. Yet assessing the\npotential economic cost of and resilience to water scarcity along\nthe supply chain is critical for making informed water and supply\nchain decisions. We quantified water scarcity risks and resilience\nat the city level, since fine-grained studies can better capture the\nhighly varied water resource availability, demand and socio-economic\ndevelopment across China. To do this, we used an income-based multiregional\ninput-output approach between 2007 and 2017, which allows the economic\nimpacts of water scarcity along supply chains to be comprehensively\nassessed. The results show that supply chains amplify potential local\neconomic risks by three times nationally, with the amplification effect\nreaching ten times in some cities. The resilience to water scarcity,\ntaking into account multiple dimensions including the impact of physical\nwater transfer, varies across different cities and is negatively correlated\nto water scarcity risks. This suggests the importance of addressing\ncorrelated risk and resilience dimensions to enhance hydro-economic\nsecurity of cities. Our analysis highlights those cities facing both\nhigh hydro-economic risk and low resilience, primarily located in\nNorth, Northeast, and East China, which national policies may prioritize\nto enhance their preparedness against water scarcity.