Direct and indirect vulnerability of economic sectors to water scarcity: A hotspot analysis of the Indian economy

Resource scarcity is capable of affecting economic activity. Though the dependence of direct users is easily acknowledged, indirect vulnerability imposed on downstream sectors of the economic system is not as easily understood. In the context of growing water scarcity across India, this study maps the dependence of prominent sectors of the Indian economy to the water‐withdrawal model of India (Bogra, Bakshi, & Mathur, 2016). From the suppliers' perspective, the results indicate that embodied water of the largest direct water‐withdrawing food sectors namely, Paddy, Wheat, and Sugarcane (PWS) is indirectly consumed mostly by the consumptive food sectors. However, from the users' perspective, even non‐food sectors exhibit a significant dependence on the embodied water of PWS. Further, blue‐water‐based structural path analysis (SPA) of Paddy and Wheat indicate significant contributions to Land transport, Construction, and Beverages, among others, whereas Land transport is important in terms of green water too. The out‐degree measure indicates a higher dependence of the economy on Electricity (blue water) and Forestry (green water) sectors. Specifically, infrastructural sectors exhibit a significant dependence on Electricity; whereas Forestry products contribute to non‐food sectors. State‐wise water‐scarcity indices (WSIs) indicate higher dependence of Electricity on scarce surface‐water flows of north‐western and central states, whereas forested areas in the north and north‐eastern parts of India exhibit lowest ground WSIs. By integrating regional flows with sectoral dependencies, it is observed that the risk to a reduction of the economy's throughput is higher from water withdrawn by Electricity compared to food sectors, PWS.