What induced the decline of water intensity in Chinese industries: 1996 to 2006?

Index number analysis is often used to study the leading factors of energy intensity, the change of industrial structure and sectoral energy intensity. Water is the same essential resource for many economic sectors and the issue of water scarcity is significantly pronounced in China. This paper aims to study the change of Chinese industrial water intensity during the period from 1996 to 2006, using LMDI (Logistic Mean Decomposition Index) analysis. The findings show that the industrial water intensity has been decreasing from 1996 to 2006. To probe into the inner driving force, it is found that the technology effect which leads to the enhancement of sectoral water efficiency is the most important factor while the structural shift toward the water-intensive sector curbs the decrease of water intensity, to some extent. Therefore, speeding technology upgrade and adjusting the industrial structure is the strategy of water sustainable use and construction of the water-saving society.