Water-energy scarcity nexus risk in the national trade system based on multiregional input-output and network environ analyses

Abstract

The risk of economic loss caused by water and energy scarcity can be transferred via economic trading activities. In this study, a network-based framework was proposed to assess the water/energy scarcity risk nexus in a national trade system based on the multiregional input–output analysis (MRIOA) and the information-based network environ analysis (NEA). The initial risk of water and energy scarcity for different sectors in each province was first estimated based on the regional water stress index (WSI), energy stress index (ESI), and water and energy consumption intensity. The initial risk of water-energy scarcity nexus was also accounted for by combining the intensity-based weighting schemes. Additionally, information-based NEA technique was applied to ascertain the distributed control relationships in the currency flow networks of the MRIO table. Then, the integral water scarcity risk transmission network, the integral energy scarcity risk transmission network and the integral water-energy scarcity nexus risk transmission network can be established via combining the corresponding initial risk and the control allocation matrix. Finally, a case study was conducted in China to quantify the propagation of water-energy scarcity risk among different regions and sectors, which considers both direct risk and integral risk, in the national trade system. The results showed that there are significant differences between the initial risk and integral risk of water-energy scarcity due to indirect effects and amplification effects in the network. Moreover, this study highlights that economic trade could transfer local water/energy scarcity to distant regions in the national economic system, i.e., local water/energy scarcity could not only cause economic loss locally or in adjacent regions, but also have tele-connected influences over geographically distant regions via the national supply chain. Hence, the economic incentives for local water or energy system management are increasingly inadequate compared with the needs of a resilient economy. The proposed water-energy scarcity risk nexus assessment framework can provide a network-based insight for identifying vulnerable provinces and sectors of water and energy scarcity to strengthen the resilience of the national economy and boost the synergies of water and energy management.