Is industrial structure determined on water endowment in China? An empirical study of 31 provinces between 2011 and 2021

The interaction between water resources and industrial development remains inadequately comprehended in China. This study aims to explore the influence of water resources on industrial structure and its underlying mechanisms. The study establishes a theoretical mechanism framework based on the resource curse and blessing theory, examines the influence of water endowment on industrial structure, and investigates its influencing mechanism by using panel data from 31 provinces in China between 2011 and 2021. The study finds that, between 2011 and 2021, the national water-industry coordination gradually increased and remained uncoordinated. Water endowment and industrial structure exhibit a U-shaped relationship with spatial spillover effects. Water endowment reverses the industrial structure in water-scarce regions, while it promotes it in water- abundant regions. Both the curse and blessing of water resources are identified in China, and 30 provinces are "cursed". The water-industry coordination plays a moderating role in the influence of water endowment on industrial structure, mitigating the effects of both the water resource curse and blessing. It expands the range of influence of the reverse effect and can shift the water resource curse to the water resource blessing. It is therefore proposed to employ water resources as an effective instrument to facilitate regional industrial upgrading, reinforce advanced agglomeration industry system, promote industrial structure adaptation to water resources, and strengthen the implementation of "Determining Industry on Water". The paper illustrates the different water- industry interactions in water-scarce and water-abundant regions and the role of water-industry coordination in transforming the resource curse into the resource blessing.