Regional assessment of water-energy nexus in China’s industrial sector: An interactive meta-frontier DEA approach

Water and energy resource are inextricably linked. Rapid industrialization has led to severe water and energy shortage as well as environmental issues in China. In industrial sector, industrial production and wastewater treatment are two interdependent subsystems. Accordingly, understanding the internal operation performance of the two subsystems as well as assessing their coordination level are of great importance for sustainable water and energy usage. From the perspective of production efficiency, this paper aims to explore industrial water-energy nexus in China by proposing an interactive meta-frontier network DEA approach. The proposed approach is applied to assess the industrial water and energy utilization efficiency in the processes of industrial production and wastewater treatment from 2011 to 2015 in China. The results show that although eastern and central regions have high industrial production efficiency, most regions have relatively low wastewater treatment efficiency. In addition, the nexus degree of eastern region maintains a relatively high level and shows a stable improvement, while the rest two regions perform relatively worse. Comparing the central and western region, the industrial production technology of central region is better yet the wastewater treatment efficiencies of western region are higher, which results in higher nexus degree of western region. Based on the empirical results, policy implications are given in terms of national level, regional level and provincial level, respectively.