Ziyuan Kexue (Jan 2024)

The impact of digital finance on water use intensity in China and mechanisms

  • MA Hailiang, GUO Jinxuan, HE Zhengqi, ZHANG Changzheng

DOI
https://doi.org/10.18402/resci.2024.01.01
Journal volume & issue
Vol. 46, no. 1
pp. 1 – 14

Abstract

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[Objective] Digital finance based on information technology provides a new opportunity for the construction of a water-saving society. Effectively release the dividend of water saving and emission reduction brought by the development of digital finance is an important issue for promoting the development of the Chinese-style modernization. [Methods] Based on panel data from 30 provinces in China from 2011 to 2020, this study empirically tested the relationship between digital finance development and water resource utilization using methods such as fixed effect and mediation effect models. [Results] (1) The development of digital finance has an inhibitory effect on water use intensity, which is mainly achieved by improving the coverage and depth of use of digital finance, and the result is still valid after robustness tests such as substitution of variables, instrumental variable method, and limited information maximum likelihood method. (2) From the perspective of transmission pathways, technological innovation and industrial structure adjustment have played a significant mediating role between digital finance and water use intensity, but the mediating role of industrial structure upgrading is not significant. (3) From the perspective of heterogeneity, digital finance has a positive impact on water use efficiency in the eastern region; Meanwhile, digital finance has a significant inhibitory effect on the water use intensity of the primary and secondary industries, but the impact on the water use intensity of the tertiary industry is not significant; Regions with favorable water endowments are more likely to reap the benefits of digital finance. [Conclusion] Therefore, it is necessary to strengthen the construction of digital finance, actively innovate financial services, and give full play to the enabling role of digital finance in resource utilization according to local conditions and production policies.

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