Research on blockchain-enabled sustainable operations and government intervention strategies in high-water-consumption industries Open Access

Water resources are essential for maintaining ecosystem balance and ensuring sustainable development of human society (Agarwal et al. 2023). Water-intensive industries, including textile, paper, chemical, metallurgical, power generation, and food processing sectors, depend heavily on these resources. Consequently, water conservation strategies in these sectors are critical for resource preservation (Leng et al. 2024). As industrial upgrading progresses, enterprises face the concurrent challenges of transforming and upgrading their operations while also protecting water resources (Yuan et al. 2023). To address these challenges, companies must not only invest in technological innovation and industrial upgrades but also prioritize water-saving strategies to ensure sustainable resource utilization (Bashir et al. 2024; Shah et al. 2024). It is important to note that technological advancements can complement traditional water-saving initiatives by reducing manufacturing process water footprints. For example, in mining operations, dry or semi-dry processing technologies demonstrate significant water consumption reductions compared to conventional wet processing methods (Zhu et al. 2024). Similarly, in power generation and heavy industries, the implementation of air-cooling systems in lieu of water-cooling systems reduces thermal power plant water consumption (Yang et al. 2024). To achieve sustainable development, enterprises must consider these factors and strive to balance technological innovation with water conservation. Furthermore, government intervention in resource-intensive industries is essential for ensuring rational resource utilization and conservation (Wang et al. 2024). However, determining optimal intervention strategies to promote industrial development while protecting water resources remains a significant policy challenge.

Recent studies have highlighted the effectiveness of digital technologies, including blockchain, in documenting product water footprints and enhancing sustainable water conservation efforts (Ahmed & MacCarthy 2023). Currently, an increasing number of enterprises are implementing blockchain technology to facilitate sustainable industrial development (Dong et al. 2022; Kang et al. 2024). For instance, notable implementations include Ecolab's blockchain-based water management system, which enables real-time analytics and traceable water consumption records, and IBM's blockchain-enabled smart water management initiatives. The inherent characteristics of blockchain technology – distributed ledger architecture, consensus mechanisms, and cryptographic properties – provide novel approaches for enhancing transparency and efficiency in water resource management (Cao et al. 2024). Both theoretical and empirical studies have demonstrated that blockchain implementation significantly improves production process transparency, enhances consumer trust, reduces inter-organizational transaction costs, and eliminates requirements for third-party verification (Biswas et al. 2023; Xu et al. 2023). These advancements have attracted substantial attention from both academic researchers and industry practitioners.

Water conservation represents a multidimensional process that scholars have examined from diverse perspectives, including water resource assessment and analysis (Saravani et al. 2024), regulatory framework development and enhancement (Ouyang et al. 2024), and water-saving technology advancement and implementation (Far & Ashofteh 2024; Shah et al. 2024). Additionally, significant research attention has focused on environmental impacts of water resource utilization (Bagiouk et al. 2024), and strategies for water resource management and the optimal behaviors of different societal decision-makers (Cao et al. 2024; Leng et al. 2024). Enterprise technological innovation research has extensively examined innovation typologies and strategic frameworks (Saka-Helmhout et al. 2024), decision-making processes and models (Yuan & Li 2024), resource allocation and management (Song et al. 2021), and risk management (Eid et al. 2024). Furthermore, research on the application of blockchain technology to the traceability of industrial production and operational processes is increasingly emerging. Contemporary studies in this domain examine blockchain feasibility for product traceability (Ahmed & MacCarthy 2023), the critical role of blockchain in data security (Hui et al. 2024), implications of blockchain implementation for enterprise operations and development (Biswas et al. 2023), blockchain's role in operational efficiency enhancement and transaction cost reduction (Fang et al. 2024), and its capacity to improve information transparency and consumer trust (Ma & Hu 2022).

Several limitations exist in the current literature. First, while government guidance and regulation play a crucial role in enterprise operations and development (Leng & Qi 2024), there is insufficient quantitative analysis of government interventions in water-saving decision-making within high-water-consumption industries. Second, technological innovation and industrial upgrading influence manufacturing processes and product water footprints; however, existing research on enterprise water conservation strategies inadequately addresses the interrelationship between technological innovation and water conservation decisions, particularly regarding the impact of innovations on product-level water efficiency. Third, although blockchain technology demonstrates potential for reducing intermediate costs and enhancing consumer trust in water-intensive industries (Bhubalan et al. 2022), the mechanisms by which blockchain influences government intervention strategies and stakeholder decision-making remain inadequately understood. Moreover, the economic and operational conditions necessary for successful blockchain implementation have not been systematically identified.

To address the identified gaps and deficiencies, this study examines how technological innovation and water conservation strategies under government intervention can promote sustainable development in high-water-consumption industries, with particular focus on blockchain implementation. The key contributions of this study are as follows: (1) We develop a tripartite differential game model analyzing technological innovation and water conservation decision-making in high-water-consumption industries under government intervention, comparing scenarios with and without blockchain implementation. The model accounts for dynamic changes in technological advancement and water-saving efficiency of the product. This approach offers a novel perspective for dynamic optimization modeling, yielding innovative decision-making strategies for governments and enterprises in the high-water-consumption industry. (2) We conduct systematic analysis of the interactions between enterprise technological innovation and water conservation efforts under government intervention. This study derives optimal government intervention strategies and identifies best practices for manufacturers' technological innovation and water conservation initiatives, as well as retailers' promotional strategies. (3) We investigate the mechanisms through which blockchain technology promotes sustainable development in high-water-consumption industries, examining its transformative potential. The study identifies economic parameters conducive to successful blockchain implementation in these industries. This research provides both theoretical foundations and practical guidelines for sustainable development in high-water-consumption industries, demonstrating significant practical applicability and value.

The paper is structured as follows: Section 2 presents the research framework and fundamental assumptions. Section 3 develops the theoretical model and analytical framework. Section 4 describes the numerical simulation methodology and presents detailed analytical results. Section 5 discusses the theoretical and practical implications of the findings. Section 6 concludes with key insights and managerial implications.

Consider a two-tier supply chain comprising manufacturers and retailers in a water-intensive industry. Manufacturers produce goods that are subsequently distributed through retailers. In the context of industrial upgrades and environmental protection initiatives, manufacturers are incentivized to pursue technological innovation and implement water conservation measures to enhance both product sophistication and water use efficiency. Simultaneously, government agencies establish reward and penalty mechanisms based on the technological advancement metrics and demonstrated water conservation outcome. Retailers strategically align their operations with manufacturers' innovation decisions through various promotional mechanisms aimed at stimulating consumer demand. At the sales level, market demand is significantly influenced by consumer preferences for water-efficient products and perceived transparency of water conservation performance.

Drawing upon field investigations and empirical data from water-intensive industrial sectors, including steel, thermal power generation, petroleum refining, textiles, and papermaking, this study synthesizes the relevant policies and regulations implemented by the Chinese government. Based on prior research findings (Liu et al. 2020; Xu et al. 2023), theoretical models are constructed.

Retailers, as consumer-facing entities, demonstrate an increased propensity to adopt blockchain technology. In practice, platforms, such as Tmall and JD.com, have developed their proprietary blockchain-based product traceability systems. However, the implementation of these blockchain services necessitates recurring operational costs, denoted as ⁠, which must be considered in the retailers' cost structure.

The Nash equilibrium for feedback strategy is derived through the Hamilton–Jacobi–Bellman (HJB) equation. The proof procedure is described in the Supplementary material. Proposition 1 characterizes the optimal equilibrium strategy and benefits of the government, manufacturers, and retailers, as well as the optimal trajectory of the product's advanced technological level and product water-saving level in the absence of blockchain implementation.

For this tripartite differential game control system, the Nash equilibrium feedback strategy is derived using the HJB equation. The solution employs backward induction methodology within the Stackelberg game framework. As the solution procedure parallels that of the previous section, it is omitted to avoid redundancy. Proposition 2 presents the equilibrium results derived from the solution analysis.

Corollary 1. Regardless of whether blockchain is implemented or not, the government should adopt intervention strategies in high-water-consumption industries (⁠ and ⁠).

Corollary 1 establishes the fundamental requirement for governmental oversight in promoting technological innovation and water conservation within high-water-consumption industries. Such interventions would not only incentivize manufacturers to pursue technological advancements and industrial upgrades, thereby enhancing the technical content of their products and sustaining competitive advantages, but would also encourage the adoption of water-saving technologies. This, in turn, would improve the efficiency of water resource utilization and contribute to environmental sustainability.

Corollary 2 demonstrates blockchain technology's significant impact on stakeholder behavior in water-intensive industries under government intervention. Blockchain's transparency and immutability provide retailers with verified information platforms, enhancing product visibility and market competitiveness through readily verifiable authenticity and compliance metrics. This is because consumers and regulators can readily verify the authenticity and compliance of products, thereby boosting market competitiveness. Additionally, the adoption of blockchain technology has motivated governments to increase subsidies to companies, as it allows for more precise monitoring of subsidy usage, ensuring alignment with sustainable development goals, such as water conservation and technological innovation. Moreover, the impact of blockchain on manufacturers' behavior is influenced by both its benefits and the associated collaboration costs. When manufacturers encounter lower costs in blockchain collaboration, they mitigate the information asymmetry and transaction expenses. This facilitates access to accurate data on market demand, technological trends, and policy directions, thereby improving manufacturers' efficiency in obtaining information and incentivizing investments in technological innovation and water conservation. However, high implementation costs may constrain innovation and conservation initiatives through reduced information-seeking and investment incentives.

Corollary 3 establishes that blockchain implementation's efficacy in enhancing product technological advancement and water conservation is contingent upon specific operational parameters. Notably, when manufacturers in China encounter low cooperation costs associated with blockchain adoption, the technology demonstrates significant positive effects on both product technological sophistication and water conservation efficiency. Blockchain technology enables manufacturers to track and manage resource usage more effectively and optimize production processes, thereby fostering technological innovation and water conservation. Conversely, high implementation costs may diminish blockchain's beneficial effects, potentially creating economic constraints that impede investments in technological advancement and water conservation measures. Thus, blockchain's effectiveness as a catalyst for technological progress and water efficiency optimization is predicated upon favorable cost-benefit conditions within the operational environment.

Corollary 4. If is satisfied, the inequality is true; otherwise, ⁠.

Corollary 4 establishes the economic feasibility threshold for blockchain adoption by retailers. Specifically, it identifies the threshold level at which blockchain implementation becomes economically viable. Retailers are incentivized to adopt blockchain only if the cyclical costs associated with its implementation fall below this threshold. Conversely, if these costs exceed the threshold, the adoption of blockchain may become suboptimal, potentially exacerbating the financial pressure on retailers.

To enhance the clarity and rigor of theoretical findings, this section supplements the previously derived equilibrium results by conducting numerical experiments. These simulations examine the sensitivity of equilibrium strategies to key parameter variations, providing actionable insights for managerial decision-making. The paper industry was selected as a representative case of high-water-consumption industries. Furthermore, detailed data analysis and a summary of trends across other water-intensive sectors, such as textiles, food processing, chemicals, metallurgy, mining, and pharmaceuticals, were conducted. The findings reveal that the technological innovation and water-saving strategies observed in these industries align with those identified in the study industry. This alignment further validates the generalizability and rigor of the numerical analysis presented in this study.

Jiangsu J Paper Co., Ltd, a leading paper manufacturer, specializes in the production of double-sided, single-sided, and matte-coated paper products, with an annual production capacity exceeding 2 million metric tons. In recent years, companies have made significant investments in technological innovation, enhancing the technical content and added value of their products through the research and development of advanced technologies. Regarding water conservation, the J Paper has improved water use efficiency by implementing recycled water reuse, optimizing water consumption through precise management and monitoring, and providing water-saving education and training for its employees. Additionally, the company primarily distributes its paper products through major e-commerce platforms, including Taobao and JD.com.

A quantitative analysis was conducted utilizing multi-source data from Company J, evaluating the economic efficiency and technical performance of their water treatment facility's water conservation retrofit project. The analysis incorporated comprehensive financial documentation, operational performance indicators, and facility-specific water consumption metrics from their water treatment operations. This analysis was supported by one-on-one structured interviews with 42 key practitioners, including eight plant managers, 15 technical engineers, seven environmental compliance officers, and 12 operational staff. The technical transformation data included real-time monitoring records from IoT sensors, maintenance logs, and operational performance indicators, all verified through blockchain technology implementation (accuracy rate >98.5%). Primary data were analyzed using regression analysis to identify key influential factors and their corresponding correlation coefficients. The correlation coefficients were calculated with a confidence interval of 95%. The variance inflation factor test was conducted to check for multicollinearity, with all values falling below the threshold of 5.0, confirming the independence of our variables. To ensure parameter validity and comparability, dimensionless processing techniques were applied following established methodologies (Liu et al. 2011; Leng & Qi 2024). The baseline parameters are as follows: ⁠, ⁠, ⁠, ⁠, ⁠, ⁠, ⁠, ⁠, ⁠, ⁠, ⁠, ⁠, ⁠, ⁠, ⁠, ⁠, ⁠, ⁠, ⁠, ⁠, ⁠, ⁠, ⁠, ⁠. Note that the above notations represent relative changes or impacts rather than absolute values. In addition, to isolate the effect of blockchain implementation on earnings, the baseline parameter also assumes ⁠.

The data presented in Figure 3 illustrate that, as time (t) approaches infinity, the technological advancement and water-saving efficiency of products produced by high-water-consumption industries evolve dynamically, ultimately converging to steady-state values. The costs associated with blockchain collaboration for manufacturers remain relatively low（ and ）. In the steady state, as depicted in Figure 3(a), blockchain implementation increased the technological sophistication of products by more than 28.57%. Similarly, Figure 3(b) indicates a corresponding 25.93% improvement in water efficiency. Moreover, Figure 3(a) indicates a monotonic increase in the product's technological advancement, while Figure 3(b) reveals a non-monotonic change in water-saving efficiency, initially decreasing and then increasing over time. Notably, at t = 3 in Figure 3(b), the water-saving efficiency reaches a minimum point (20.09 in ON mode and 22.07 in BC mode).

Government intervention plays a critical role in high-water-consumption industries through targeted policy mechanisms. Such interventions facilitate technological innovation, enhance water conservation efficiency, and optimize resource allocation. By implementing regulatory frameworks and incentive structures for technological advancement and water-saving investments, governments can promote sustainable industrial development while improving resource utilization efficiency. These findings corroborate previous research on the effectiveness of government intervention mechanisms (Kang et al. 2024).

While extensive literature has also been conducted (Song et al. 2021; Li et al. 2022) to examine firms' innovation decision-making, limited research has investigated the role of technological innovation in contributing to water-saving effects. This study focuses on high-water-consumption industries and investigates how companies can develop effective operational strategies for both technological innovation and water conservation. The results demonstrate that concurrent advancement in technological innovation and water conservation measures is essential in water-intensive manufacturing sectors. Manufacturers must pursue technological competitiveness while prioritizing water resource efficiency, enabling simultaneous economic and environmental optimization.

The implementation of blockchain technology in water-intensive industries represents a paradigm shift in operational practice. This study departs from previous discussions of the conditions for blockchain adoption (Leng et al. 2024). The findings suggest that, when retailers adopt blockchain, it can substantially benefit other stakeholders within the industry, demonstrating considerable altruistic effects. However, the decision of retailers to implement blockchain technology involves a careful trade-off between costs and benefits. Therefore, a comprehensive evaluation is essential when considering the integration of blockchain into high-water-consumption industries. This evaluation should combine market demand, water conservation efficiency, and technological innovation effectiveness to determine the optimal timing and economic feasibility of blockchain implementation.

This study presents a multidimensional analytical framework for enterprise operational decision-making under various government interventions, including tax incentives, subsidies, and emission standards. The framework provides decision support tools applicable to resource-intensive sectors, encompassing carbon-intensive industries, land resource management, energy production, and analogous policy-constrained environments. By examining cases from high-water-consumption industries, this study yields generalizable and applicable principles and strategies, such as resource optimization, cost-benefit analysis, and risk management. These insights can be utilized by other industries with resource constraints or adjusting to government policy changes to develop more scientific and sustainable operational plans.

This research, based on differential game theory, examines sustainable development strategies in high-water-consumption industries under government intervention, specifically investigating the impact of blockchain implementation and conditions conducive to its adoption. The analysis yields three principal findings: (1) Blockchain implementation demonstrates a positive effect by facilitating increased government intervention and incentivizing retailers to enhance promotional activities. Retailers' adoption of blockchain technology results in higher revenues for both the government and manufacturers, exhibiting significant altruistic effects. (2) Blockchain implementation facilitates technological advancement and improves water conservation measures in product development, highlighting its potential role in promoting sustainable development within water-intensive industries. (3) The study demonstrates the efficacy and necessity of government intervention strategies while identifying optimal economic parameters for successful blockchain implementation by retailers.

This research provides a comprehensive analysis of operational dynamics in high-water-consumption industries under government intervention. However, the study is constrained by its model assumptions. In practice, these industries encompass multiple stakeholders, including upstream and downstream enterprises and consumers, interconnected through complex networks and exhibiting heterogeneous strategic behaviors. These complexities merit further investigation. While this study primarily employs game-theoretical analysis, emerging technologies such as big data analytics and machine learning present novel approaches for management decision-making in water-intensive industries. Future research could leverage these technologies to extract insights from large-scale datasets, forecast industry trends, optimize resource allocation, and facilitate evidence-based management decisions.

We would like to express our sincere gratitude to Mr Wang Peng and Mr Cao Zeng for their invaluable suggestions. We also extend our appreciation to the anonymous reviewers and members of the editorial team for their constructive feedback.

All authors contributed to the conception and design of the study. J.L. assumed primary responsibility for writing, constructing models, and performing calculations for the document. D. H. checked and clarified the accuracy of the proposed results. Additionally, all authors provided feedback on earlier versions of the manuscript. All the authors have thoroughly reviewed and approved the final manuscript.

This study was supported by the Qihang Project of Zhejiang University (No. 202016).

We certify that the submission is an original work and is not published in any other publications.

All authors gave explicit consent to participate in this work.

All authors gave explicit consent to publish this manuscript.

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The authors declare there is no conflict.