Relationship between energy production and water resource utilization: A panel data analysis of 31 provinces in China

Abstract

The systematic study of the relationship between energy production and water resource utilization is crucial for China to relieve the energy-water crisis and achieve sustainable use of them. This work explores the causal relationship between energy production and water resource utilization in China, using panel data of 31 provinces over the period 2000–2014. This study have applied a panel unit root test, cointegration test, vector error correction model (VECM) and Granger causality approaches to examine the long-run and short-run relationship between the variables. The results show that: (1) There is a long-run bidirectional Granger causality relationship between energy production and water resources utilization, but a short-run unidirectional relationship between two variables, i.e. the water resource utilization is the short-run Granger reason for the change in energy production; (2) the increases in industrial added value, population and ratio of the secondary industry value added to GDP have a positive effect on both energy production and water resource utilization; (3) industrial water use will fall by about 0.12% if the rate of industrial waste-water reuse increases by 1%, which shows that the progress of water-saving technology can reduce industrial water usage effectively. Our findings indicate that government should implement strict water constraint strategies and promote water conservation technology for the sustainable development of energy and water resources in China.