An Assessment of the Water–Energy Nexus for China: Are There Significant Spatial Decouplings that Lead to Water Scarcity?

A water–energy nexus exists in all regions where people rely on these natural resources for survival. This nexus can create interactions among regions, where flows of energy influence water supply in other areas and affect water scarcity. Given the spatial context of the water–energy relationship, we present a simple water–energy nexus framework. The relationships are explored using a two-stage least-squares model (IV-2SLS) to quantify the effects of decoupling between water consumed for energy use and total water consumption on water scarcity, from the perspective of spatial interaction between 30 regions (provinces) in China. The analysis yields three important results for water management. First, spatial interaction does not significantly reduce water scarcity during the period examined. Second, the interaction between spatial interaction and the decoupling of water consumed for energy production and total water consumption is negative, indicating support for water saving. Third, considering differentiated energy endowments, the moderated effects of decoupling between water consumed for energy trade and total water consumption under spatial interaction have the potential to reduce water scarcity in provinces with higher energy production levels. However, the same results are not found in provinces with lower self-sufficiency levels. In conclusion, reducing water scarcity requires expanding the scale and frequency of virtual water use with energy resources, implementing water-saving energy production, and adopting measures tailored to regional energy endowments.