Water Pollution and Pollution–Control Capacity in Chinese Provinces: Panel Estimations of Provincial Environmental Kuznets Curves

China’s rapid industrialization and urbanization in recent decades have deteriorated its water resource quality. This study focused on water pollution in terms of the chemical oxygen demand (COD) and the levels of ammonia nitrogen in the industrial and household discharges of different Chinese provinces. Although the heterogeneity of environmental Kuznets curves (EKCs) from Chinese provinces has been studied, the positions of provincial EKCs (which reflect the province-specific pollution effects not affected by the provincial income levels) have not been investigated to date. Therefore, through a factor analysis of the heterogeneity of provincial pollution under the EKC framework, we investigated how the capacity shortage for pollution control contributes to the provincial pollution levels. We also evaluated the heterogeneity of the EKCs from the provinces in terms of their positions (not their shapes), using a fixed-effect model to extract the province-specific pollution effects. The capacity shortage for pollution control, as one of the pollution factors, accounted for (a) 30% of industrial COD and industrial ammonia nitrogen; (b) 60% of household COD; and (c) 80% of household ammonia nitrogen. Our results indicate that China still has a large capacity to mitigate water pollution via policies and by building the capacity for pollution control through the development and training of human resources.