Water transfer infrastructure buffers water scarcity risks to supply chains.

• This study addresses if inter-basin water transfer transmit or buffer water scarcity. • This is a first national analysis of inter-basin water transfer and supply chain nexus. • Water transfer infrastructure increasingly supports supply chains of China. • Water transfer overall reduced virtual scarce water embedded in supply chains of China. • Changing water scarcity exposure due to water transfer showed spatial heterogeneity. Inter-basin water transfer (IBWT) infrastructure has been expanding to deliver water across China to meet water demands in populated and industrial areas. Water scarcity may threaten the ability to produce and distribute goods through supply chains. Yet, it is not clear if IBWTs transmit or buffer water scarcity throughout supply chains. Here we combine a national database of IBWT projects and multi-region input-output analysis to trace water transferred by IBWT and virtual scarce water (scarcity weighted water use) from IBWT sourcing basins to production sites then to end consumers. The results indicate that production and final consumption of sectoral products have been increasingly supported by IBWT infrastructure, with physically transferred water volumes doubling between 2007 and 2017. Virtual scarce water is about half of the virtual water supporting the supply chain of the nation. IBWT effectively reduced virtual scarce water supporting the supply chains of most provinces, with the exposure to water scarcity reduced by a maximum of 56.7% and 15.0% for production and final consumption, respectively. IBWT Infrastructure development can thus buffer water scarcity risk to the supply chain and should be considered in water management and sustainable development policy decisions. [Display omitted] [ABSTRACT FROM AUTHOR]