Uncovering the risk spillover of agricultural water scarcity by simultaneously considering water quality and quantity

Abstract

Not only insufficient water quantity but also inadequate water quality can pose constraints on agricultural production and result in potential economic losses. Such economic losses in agriculture may adversely impact downstream producers through reduced input supplies. In this study, we developed an index assessing potential economic losses in agriculture under both quantity- and quality-induced water scarcity, termed integrated Agricultural Water Scarcity Risk (AWSR). Combining integrated AWSR with a multi-regional input-output model, we estimated the spillovers of integrated AWSR along supply chains. Our results showed that the intersectoral transmission of virtual integrated AWSR (sectoral spillovers in terms of integrated AWSR) were 5 times the virtual quantity-based AWSR. Pollution significantly intensifies the indirect supply-chain repercussions of agricultural water scarcity. Moreover, we identified some primary virtual integrated AWSR exporters (e.g., Jiangsu-vegetables and Shandong-swine, of which the integrated AWSR had considerable spillover effects on downstream sectors) and importers (e.g., Henan-chemical industry and Henan-textiles, which were vulnerable to upstream integrated AWSR), that could not be detected in quantity-based AWSR results. This study underscores the importance of water quality in the assessments of AWSR. Strategies to mitigate the spillovers of AWSR might be inefficient without the consideration of water quality.

Keywords: Input-output analysis; Spillovers; Water quality; Water scarcity.