A factorial stepwise-clustering input-output model for unveiling water-carbon nexus from multi-policy perspectives

Water-carbon nexus exerts significant influence on environmental sustainability. The demand-side patterns of water-carbon nexus in supply chains have been extensively conducted. However, there is still research gap in unveiling supply-side complex relationships among various sectors from multi-policy perspectives. In this study, a factorial stepwise-clustering input-output (FSCIO) model is developed to uncover the complicated water-carbon nexus accompanied by analyses of multi-element, multi-sector and multi-policy. This is the first time that input-output analysis (IOA), stepwise cluster analysis (SCA) and factorial analysis (FA) are integrated to explore water-carbon nexus. Water-carbon flows along supply chains are tracked through IOA. SCA helps identify key sectors through evaluating the complexities in water-carbon nexus. FA helps examine different supply-side policies (i.e., input- and allocation-oriented policies, abbreviated as IOP and AOP) through quantifying the effects of multiple sectors and their interactions. We find that China's water-carbon characteristics in supply side differ greatly from those in demand side (e.g., construction is a significant final consumer and other service is more prominent as a primary supplier). The impacts of supply-side policies on different sectors vary significantly and AOP is generally better than IOP in the trade-off between water-carbon pressures mitigation and economic development. The effects of multiple sectors and their interactions on water and carbon shouldn't be neglected and the appropriate policy combinations could have good synergistic effects (e.g., IOP on electricity-gas-water supply, and AOP on chemical, machinery and other service). This study not only provides insight into the multifaceted features of China's water-carbon nexus, but also provides guidance for the supply-side policies.