Modeling Hydrologic-Economic Interactions for Sustainable Development: A Case Study in Inner Mongolia, China

Water shortages are major constraints on economic development in water-deficient regions such as Inner Mongolia, China. Moreover, macroscale interactions between water resources and the regional economy remain unclear. This study addresses this problem by building a network-based hydro-economic model that integrates ecological, economic, social, and environmental data into a coherent framework. We assessed the relationship between water resources and economic performance under different water-saving and climate change scenarios. The results showed that both water-saving policies and increased water availability due to climate change can increase economic productivity. Water saving can also mitigate the negative impact of climate change-driven decreased rainfall by restoring the gross domestic product (GDP) to 97.3% of its former level. The interaction between water resources and economic productivity depends on specific factors that affect water availability. A trade-off relationship exists between economic development and water protection and was more discernible when the total GDP reached 10,250 billion CNY. When the trade-off ratio reaches 6:1, economic output decreases because of a lack of ecological water resources, even if further stress is placed on the objective. Thus, this study demonstrates the effect of water resources on economic growth and highlights the need for improved water management in water-deficient regions.