Balancing regional freshwater boundaries and carbon neutrality goals in China’s water-energy-environment nexus

China faces challenging issues of water scarcity, energy security, and climate change in this century. The Chinese government has committed to reaching carbon peak by 2030 and carbon neutrality by 2060 and this requires ambitious energy transition strategies. It has also deployed the Three Red Lines (TRLs) policy which aims to limit total annual water use to below 700 km3 by 2030, with different targets for each province. Yet, these water guidelines fail to consider the local water endowment of each province and do not shed light on how current and future water use could put stress on our water resources. This gap could be filled by considering regional freshwater boundary (RFB) instead, which sets a limit for freshwater use based on monthly flow and corresponding environmental flow requirements. By comparing the TRLs targets with RFB, we could identify the gap between these policy-based goals and their practical implementation, and thus design specific regional economic strategies to achieve water targets in a carbon-neutral future. In this study, we first calculate RFBs for each Chinese province using a bottom-up approach by aggregating grid level (0.5°) RFB obtained from 15 different hydrological models to the provincial level. This is then used alongside the TRLs targets within a computable generable equilibrium (CGE) model. The CGE model evaluates the economic and environmental impacts of various scenarios considering carbon neutrality, water use targets, and solutions aimed at mitigating RFB exceedance, such as the South-to-North Water Diversion Project, water efficiency improvement and water reuse strategies. The holistic assessment of China’s climate and water policies reveals opportunities for coordinated policymaking among provinces and elucidates possible pathways for China to balance water, energy, climate and economic goals.