Do environmental regulation and urbanization help decouple economic growth from water consumption at national and subnational scales in China?

Moving to economic growth without water consumption growth is essential to sustainability of both water and economy. This work is aimed to estimate the decoupling state between economic growth and water consumption and then to investigate the effects of urbanization and environmental regulation on water consumption at national and subnational scales using panel data of 30 provinces in China from 2004 to 2019. The decoupling results show that (i) there are only two types between China’s water consumption and economic growth: weak decoupling (80%) and strong decoupling (20%); (ii) the weak decoupling has transitioned to strong decoupling after 2013; and that (iii) the decoupling degree of the water-poor region is weaker than that of the water-rich region. The results of causal relationships estimation show that an average 1% increase in urbanization level and environmental regulation leads to 0.3359% and 0.0104% drop in water consumption, respectively, which indicates that urbanization and environmental regulation have inhibited water consumption at the national scale. At the subnational sale, the effects of environmental regulation and urbanization on water consumption are heterogeneous. An average 1% increase in environmental regulation led to only a 0.0161% drop in water consumption in the water-poor region, whereas an average 1% increase in urbanization level led to only a 0.9838% drop in water consumption in the water-rich region. This means that the inhibition of environmental regulation on water use appears in the water-poor region, while the inhibition of urbanization is more prominent in the water-rich region. Graphical abstract: [Figure not available: see fulltext.].