Abstract
By applying a structure path analysis to a two-region social accounting matrix, this study indicated that a rise in the water supply in Shanghai would allow many non-water sectors both in Shanghai and other regions to significantly improve. By testing five hypotheses, the results further illustrated that a direct effect significantly contributed most of the increase in the output of production in Shanghai, especially for the electric power and general industry sectors, when Shanghai’s water supply was available. Direct effects were also significant in terms of the influence of the water supply in Shanghai on the factorial income of labor in Shanghai. For urban and rural households, additional income basically came from additional employment of general labor workers, but urban households benefited from more diverse paths than rural households to yield this increase. In Shanghai, the electric power and general industry sectors were the most important intermediate poles within the paths with more than one intermediate pole transmitting a significant part of the global influence as indirect effects. Furthermore, electric power acted as a crucial intermediate pole, working in indirect cross-regional paths to create a significant relationship between the water supply in Shanghai and sectors in other regions.
JEL Classification: C63, R11, R58
