The article explores how water shortages in China affect its economy and supply chains. It introduces a new model to estimate the impact of water scarcity on cities and regions. The researchers also looked at the benefits of different water conservation actions that were part of a larger plan. The findings show that only 9% of the losses from water scarcity are direct, with 37% caused by impacts between regions. Some cities like Qingdao, Lanzhou, Jinan, and Zhengzhou are particularly at risk. Among the actions studied, saving water in agriculture provided the most benefits overall, while residential water conservation was most cost-effective. This study offers useful insights for managing water scarcity, fostering cooperation between regions, and reducing economic fallout.