The Influence of Urban Digital Development Index on Water Resource Utilization Efficiency—Based on System GMM Model Test

This study employs panel data for 275 Chinese cities from 2011 to 2021. Water use efficiency is measured as an aggregate city-level indicator via stochastic frontier analysis, while the level of digital economy development is quantified using principal component analysis. We then employ the system generalized method of moments to investigate the causal relationship between the digital economy and urban water use efficiency, and further identify industrial structure upgrading as the mediating role through which the digital economy affects water efficiency. The main findings are as follows: (1) The digital economy has a significant positive impact on urban water use efficiency. (2) Regional heterogeneity analysis shows that the digital economy presents a stronger positive effect on water use efficiency in eastern regions than in central and western regions. (3) Exploratory mechanism analysis indicates that industrial structure upgrading serves as the mediating role through which the digital economy improves urban water use efficiency. Based on the empirical findings, this paper draws targeted policy implications.