Nexus Between Water Consumption and Economic Output for the Metallic and Non‐Metallic Mineral Products Sector: An Empirical Analysis at the Enterprise Level

Abstract

AbstractWith rapid urbanization and industrialization in China, the demand for mineral products and subsequent water consumption have significantly increased, posing challenges to sustainable economic growth due to escalating water scarcity. Few studies have explored the nexus between water use and economic output from the enterprise perspective. This study focuses on the metallic and non‐metallic mineral products sector, quantifying the nexus between water consumption and economic output at the enterprise level, analyzing the heterogeneity of water consumption elasticity of economic output across different regions and sub‐sectors, and identifying key sub‐sectors within each region that are highly dependent on water consumption. The results indicate that for the metallic and non‐metallic mineral products sector, a 1% increase or decrease in water consumption leads to a corresponding increase or decrease in economic output by 0.096%. Water consumption elasticity of economic output varies from 0.056 to 0.131 according to the regions. And it ranges from 0.048 to 0.104 for different sub‐sectors. This study identifies regions and sub‐sectors where economic output is highly dependent on water resources. The findings may help tailor policies to measure the value of water, especially in the context of potential water shortages.