The Economic Impact of Water Vulnerability on Corporate Sustainability: A Perspective of Corporate Capital Cost
Abstract
:1. Introduction
2. Literature Review
2.1. The Socio-Economic Impact of Water Vulnerability
2.2. Environmental Factors Affecting Corporate Capital Costs
2.3. Government Water Governance
2.4. Review
3. Hypothesis
3.1. The Impact of Water Vulnerability on Corporate Capital Cost
3.2. The Moderating Effect of Government Water Governance
4. Study Design and Data Description
4.1. Sampling
4.2. Construction of Variables
4.2.1. Water Vulnerability
4.2.2. Capital Cost
4.2.3. Water Governance
4.2.4. Control Variables
4.3. Model and Estimate Method
5. Empirical Analysis
5.1. Descriptive Analysis
5.2. Results of Main Regression
5.3. Robustness
5.4. Endogeneity Tests
5.5. Channel Analysis
5.6. Moderating Effect
5.7. Heterogeneity
5.7.1. Industrial Heterogeneity
5.7.2. Firm Heterogeneity
6. Discussion and Conclusions
7. Limitation and Future Research
Author Contributions
Funding
Data Availability Statement
Conflicts of Interest
References
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Dimensions | Items | Data Sources |
---|---|---|
Sensitivity | Absolute value of annual precipitation variation | China Water Resources Statistical Yearbook |
Absolute value of annual total water resources variation | China Water Resources Statistical Yearbook | |
Exposure | GDP per capita | China Statistical Yearbook |
Share of GDP in primary production | China Statistical Yearbook | |
Water resources per capita | China Statistical Yearbook | |
Total water resources/total area of the region | China Water Resources Statistical Yearbook, China Urban and Rural Construction Statistical Yearbook | |
Total water resources/total annual rainfall | China Water Resources Statistical Yearbook | |
Proportion of high-quality surface water | China Water Resources Statistical Yearbook, China Environmental Statistical Yearbook | |
Ratio of water resources supply to demand | China Urban and Rural Construction Statistical Yearbook | |
Proportion of groundwater supply | China Water Resources Statistical Yearbook | |
Water consumption of CNY 10,000 of GDP | China Water Resources Bulletin | |
Water consumption of CNY 10,000 of industrial value added | China Water Resources Bulletin | |
Water consumption by urban residents for domestic use | China Water Resources Bulletin | |
Water consumption for agricultural irrigation | China Water Resources Bulletin | |
Hazard | Regional population affected/National population affected in the year | Bulletin of flood and drought disasters in China |
Regional direct economic losses/National losses in the year | Bulletin of flood and drought disasters in China | |
Area of crops affected in the region/National damage in the year | Bulletin of flood and drought disasters in China | |
Population with drinking water difficulties in the region/National population affected in the year | Bulletin of flood and drought disasters in China | |
Adaptivity | Wastewater treatment rate | China Urban and Rural Construction Statistical Yearbook |
Water reuse rate | China Urban and Rural Construction Statistical Yearbook | |
Ratio of protected arable land | China Water Resources Statistical Yearbook | |
Protection of population ratio | China Water Resources Statistical Yearbook | |
Effective utilization rate of irrigation water | China Water Resources Bulletin |
Region | 2019 | 2020 | 2021 | 2022 | 2023 | Mean |
---|---|---|---|---|---|---|
North China | 0.343 | 0.338 | 0.293 | 0.331 | 0.278 | 0.317 |
Northeast China | 0.319 | 0.320 | 0.312 | 0.275 | 0.273 | 0.300 |
Northwest China | 0.332 | 0.312 | 0.310 | 0.295 | 0.274 | 0.305 |
Eastern China | 0.232 | 0.195 | 0.189 | 0.186 | 0.179 | 0.196 |
South-Central-China | 0.192 | 0.183 | 0.177 | 0.162 | 0.159 | 0.175 |
Southwest China | 0.143 | 0.140 | 0.131 | 0.130 | 0.119 | 0.133 |
Variables | Mean | S.D. | Min | Max |
---|---|---|---|---|
r_debt | 0.009 | 0.025 | −0.097 | 0.063 |
r_equity | 0.038 | 0.035 | 0.001 | 0.207 |
Water_Vul | 0.193 | 0.091 | 0.065 | 0.392 |
Water_Ins | 0.002 | 0.001 | 0.000 | 0.005 |
Water_Inv | 0.006 | 0.004 | 0.001 | 0.026 |
ROA | 0.056 | 0.045 | 0.002 | 0.228 |
BM | 0.629 | 0.247 | 0.122 | 1.189 |
SIZE | 22.343 | 1.246 | 20.114 | 26.140 |
LEV | 0.401 | 0.183 | 0.064 | 0.837 |
TOVER | 5.666 | 0.738 | 3.674 | 7.196 |
SHR | 0.155 | 0.107 | 0.017 | 0.521 |
LGDP | 10.718 | 0.679 | 8.499 | 11.615 |
GGROWTH | 5.986 | 2.017 | 0.500 | 9.300 |
Water_Vul | r_equity | r_debt | Water_Ins | Water_Inv | ROA | BM | SIZE | LEV | TOVER | SHR | LGDP | GGROWTH | |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Water_Vul | 0.045 | 0.043 *** | −0.164 ** | −0.1034 *** | −0.124 *** | 0.055 *** | 0.099 *** | 0.049 *** | −0.032 *** | 0.027 *** | −0.472 *** | −0.079 *** | |
r_equity | 0.013 | 0.020 ** | −0.022 ** | 0.0083 | 0.561 *** | 0.437 *** | 0.425 *** | 0.113 *** | −0.308 *** | 0.157 *** | 0.028 *** | −0.069 *** | |
r_debt | 0.038 *** | 0.049 *** | −0.004 | 0.0048 | −0.054 *** | 0.062 *** | 0.082 *** | 0.050 *** | −0.032 *** | −0.014 | −0.039 *** | 0.001 | |
Water_Ins | −0.205 *** | −0.024 ** | −0.003 | 0.1284 *** | 0.024 ** | −0.047 *** | −0.055 *** | −0.021 ** | 0.075 *** | −0.021 ** | 0.228 *** | 0.060 *** | |
Water_Inv | 0.055 *** | 0.001 | 0.018 * | 0.171 *** | 0.000 | −0.004 | 0.036 *** | 0.012 | 0.039 *** | 0.013 | −0.468 *** | 0.129 *** | |
ROA | −0.108 *** | 0.368 *** | −0.044 *** | 0.016 | −0.028 *** | −0.338 *** | −0.091 *** | −0.382 *** | −0.105 *** | 0.130 *** | 0.123 *** | 0.015 | |
BM | 0.078 *** | 0.434 *** | 0.072 *** | −0.052 *** | 0.017 *** | −0.372 *** | 0.518 *** | 0.396 *** | −0.273 *** | 0.087 *** | −0.067 *** | −0.079 *** | |
SIZE | 0.133 *** | 0.455 *** | 0.083 *** | −0.052 *** | 0.040 *** | −0.077 *** | 0.532 *** | 0.525 *** | −0.352 *** | 0.124 *** | −0.132 *** | −0.037 *** | |
LEV | 0.057 *** | 0.167 ** | 0.046 *** | −0.015 | 0.035 *** | −0.366 *** | 0.394 *** | 0.532 *** | −0.051 *** | 0.026 *** | −0.070 *** | −0.027 *** | |
TOVER | −0.046 *** | −0.254 *** | −0.043 *** | 0.073 *** | 0.041 *** | −0.010 *** | −0.281 *** | −0.386 *** | −0.060 *** | −0.310 *** | 0.076 *** | −0.151 *** | |
SHR | 0.048 *** | 0.164 *** | −0.005 | −0.028 *** | 0.010 | 0.105 *** | 0.115 *** | 0.207 *** | 0.052 *** | −0.357 *** | −0.032 *** | 0.004 | |
LGDP | −0.450 *** | 0.005 *** | −0.033 *** | 0.130 *** | −0.544 *** | 0.108 *** | −0.073 *** | −0.128 *** | −0.077 *** | 0.053 *** | −0.040 *** | −0.109 *** | |
GGROWTH | −0.042 *** | −0.037 *** | −0.008 | 0.089 *** | 0.081 *** | 0.009 | −0.032 *** | −0.052 *** | −0.024 ** | −0.180 *** | 0.005 | −0.017 * |
Cost of Debt | Cost of Equity | |
---|---|---|
Water_Vul | 0.018 *** | 0.015 *** |
(3.12) | (2.92) | |
ROA | −0.017 ** | 0.459 *** |
(−1.88) | (3.56) | |
BM | 0.003 * | 0.065 *** |
(1.74) | (3.07) | |
SIZE | 0.001 *** | 0.005 *** |
(4.41) | (2.83) | |
LEV | −0.002 | 0.011 ** |
(−0.35) | (2.49) | |
TOVER | −0.001 * | 0.002 *** |
(−1.98) | (3.42) | |
SHR | −0.007 *** | −0.006 ** |
(−2.97) | (−2.12) | |
LGDP | 0.001 | 0.001 *** |
(1.03) | (2.79) | |
GGROWTH | 0.001 | 0.001 ** |
(0.01) | (2.23) | |
Constant | −0.013 | −0.185 *** |
(−0.35) | (−3.04) | |
Fixed Effects | Yes | Yes |
Obs | 12,363 | 12,363 |
Sample Change | PSM | |||
---|---|---|---|---|
Cost of Debt | Cost of Equity | Cost of Debt | Cost of Equity | |
Water_Vul | 0.021 *** (2.56) | 0.011 ** (2.49) | 0.032 ** (2.48) | 0.021 * (1.78) |
Controls | Yes | Yes | Yes | Yes |
Fixed Effects | Yes | Yes | Yes | Yes |
Constant | 2.413 * (1.75) | 1.460 ** (2.41) | 0.090 *** (2.81) | 0.011 (1.34) |
Obs | 8736 | 8736 | 11,476 | 11,476 |
Water_Vul | r_equity | r_debt | |
---|---|---|---|
Water_Vul | 0.010 ** (2.68) | 0.013 ** (1.88) | |
VUL_hat | −0.006 (−0.37) | −0.012 (−0.17) | |
SUN | 0.213 *** (4.59) | ||
Controls | Yes | Yes | Yes |
Constant | −1.175 *** (−3.46) | −0.179 *** (−5.68) | −0.016 * (−1.73) |
Obs | 12,361 | 12,361 | 12,361 |
r_debt | r_equity | |||||
---|---|---|---|---|---|---|
R1 | R2 | R3 | R4 | R5 | R6 | |
r_debt | KZ | r_debt | r_equity | KZ | r_equity | |
Water_Vul | 0.018 *** (3.12) | 0.035 ** (2.17) | 0.018 *** (3.35) | 0.015 *** (2.92) | 0.001 ** (2.03) | 0.011 *** (3.06) |
KZ | 0.030 ** (2.84) | 0.332 *** (2.98) | ||||
Controls | Yes | Yes | Yes | Yes | Yes | Yes |
Fixed Effects | Yes | Yes | Yes | Yes | Yes | Yes |
Constant | −0.013 (−0.35) | −0.043 (−0.68) | −0.012 (−0.93) | −0.185 *** (−3.04) | −0.614 (−0.54) | −0.172 ** (−2.16) |
Obs | 12,361 | 12,361 | 12,361 | 12,361 | 12,361 | 12,361 |
r_debt | r_equity | |
---|---|---|
Water_Vul | 0.019 *** | 0.065 *** |
(2.61) | (3.88) | |
Water_Ins | 0.097 | 0.179 |
(1.03) | (1.24) | |
Water_Vul × Water_Ins | 3.268 * | −1.854 |
(1.68) | (−0.98) | |
Water_Vul | 0.018 *** | 0.015 *** |
(2.75) | (2.94) | |
Water_Inv | 0.232 * | 0.087 |
(1.71) | (1.08) | |
Water_Vul × Water_Inv | −1.397 * | −0.166 |
(−1.67) | (−0.83) | |
Controls | Yes | Yes |
Fix Effects | Yes | Yes |
Obs | 12,363 | 12,363 |
r_debt | r_equity | |||||||
---|---|---|---|---|---|---|---|---|
Industrial Heterogeneity | Firm Heterogeneity | Industrial Heterogeneity | Firm Heterogeneity | |||||
R1 | R2 | R3 | R4 | R5 | R6 | R7 | R8 | |
Water_Vul | 0.004 (0.36) | 0.022 *** (2.67) | 0.020 ** (2.45) | 0.016 ** (2.02) | 0.010 (1.10) | 0.013 ** (1.88) | 0.002 (0.19) | 0.024 *** (2.86) |
Controls | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
Fix Effects | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
Obs | 3246 | 9015 | 4001 | 8360 | 3246 | 9015 | 4001 | 8360 |
Chow Test | 3.01 ** | 2.75 * | 3.72 ** | 4.72 *** |
Panel A—Water Regulation | ||||||||
r_debt | r_equity | |||||||
Industrial Heterogeneity | Firm Heterogeneity | Industrial Heterogeneity | Firm Heterogeneity | |||||
R1 | R2 | R3 | R4 | R5 | R6 | R7 | R8 | |
Water_Vul | 0.004 (0.34) | 0.023 *** (3.57) | 0.024 ** (1.98) | 0.017 ** (2.21) | 0.014 (0.17) | 0.013 ** (2.11) | 0.002 (1.09) | 0.026 *** (2.67) |
Water_Ins | 0.174 (0.39) | 0.076 (0.73) | 0.341 (0.12) | 0.036 (0.24) | 0.321 (0.81) | 0.055 (0.52) | −0.041 (0.18) | 0.220 (1.25) |
Water_Vul × Water_Ins | 1.752 (1.08) | 4.018 * (1.82) | 3.675 (1.59) | 3.481 * (1.92) | −2.404 (−1.69) | −2.410 (−1.42) | −4.966 (−1.59) | 3.147 (1.44) |
Controls | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
Fix Effects | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
Obs | 3246 | 9015 | 4001 | 8360 | 3246 | 9015 | 4001 | 8360 |
Chow Test | 4.44 ** | 4.15 ** | 3.96 ** | 4.88 *** | ||||
Panel B—Water Investment | ||||||||
r_debt | r_equity | |||||||
Industrial Heterogeneity | Firm Heterogeneity | Industrial Heterogeneity | Firm Heterogeneity | |||||
R1 | R2 | R3 | R4 | R5 | R6 | R7 | R8 | |
Water_Vul | 0.004 (0.34) | 0.022 *** (3.56) | 0.0210** (1.88) | 0.016 ** (2.08) | 0.112 (0.16) | 0.012 ** (2.09) | 0.001 (1.03) | 0.024 *** (2.64) |
Water_Inv | 0.090 (0.22) | 0.276 * (1.85) | 0.111 (0.37) | 0.302 * (1.94) | 0.346 (0.84) | −0.069 (−1.06) | −0.1131 (−0.17) | 0.220* (1.77) |
Water_Vul × Water_Inv | −0.184 * (−1.69) | 1.733 * (1.79) | −0.404 (−1.15) | −2.652 ** (−2.24) | −2.868 ** (−2.53) | 1.780 ** (1.98) | 0.256 (0.86) | 0.160 (0.44) |
Controls | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
Fix Effects | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
Obs | 3246 | 9015 | 4001 | 8360 | 3246 | 9015 | 4001 | 8360 |
Chow Test | 4.72 ** | 3.98 ** | 4.01 ** | 4.90 *** |
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Zheng, L.; Gao, P.; Wang, M. The Economic Impact of Water Vulnerability on Corporate Sustainability: A Perspective of Corporate Capital Cost. Water 2024, 16, 2560. https://doi.org/10.3390/w16182560
Zheng L, Gao P, Wang M. The Economic Impact of Water Vulnerability on Corporate Sustainability: A Perspective of Corporate Capital Cost. Water. 2024; 16(18):2560. https://doi.org/10.3390/w16182560
Chicago/Turabian StyleZheng, Liyuan, Pengqun Gao, and Mengjiao Wang. 2024. "The Economic Impact of Water Vulnerability on Corporate Sustainability: A Perspective of Corporate Capital Cost" Water 16, no. 18: 2560. https://doi.org/10.3390/w16182560