What Induces the Energy-Water Nexus in China's Supply Chains?

Given energy and water scarcity, it is necessary to develop an in-depth understanding of the energy-water nexus in China for its sustainable development. Previous studies have focused on nexus accounting, synergy conservation, and system optimization, but its induction mechanism along the supply chains has not been uncovered. This paper proposes a top-down structural path analysis (SPA) and combines it with an environmental input-output model (EIOM) to identify the critical final demand, consumption sectors, and supply chain paths inducing the energy-water nexus. The results show that the largest final demand of water for energy production (WFE) is capital formation, while the largest final demand of energy for water supply (EFW) is urban consumption. The distribution of WFE at different production layers shows an inverted U shape. Most WFE is indirectly consumed by other sectors, such as construction, through three-step supply chain paths. In contrast, the distribution of EFW shows a L shape, and most EFW is directly consumed by the final demand. In addition, some critical supply chain paths inducing more WFE and EFW are identified. Finally, some policies targeting the energy-water nexus management are proposed, which are conducive to resource conservation and the sustainable supply of energy and water.