In the face of increasingly strict water monitoring, how should enterprises adjust their strategies to adapt to competition and policies? Our research takes 300 Chinese listed companies from highly water sensitive industries from 2010 to 2016 to empirically examine how product market competition (industry competition intensity and enterprise market power) influences enterprise water information disclosure. The results show that there exists an inverted U-shaped relationship between industry competition and water enterprise disclosure; enterprises with the highest market power in a mildly competitive industry are more willing to voluntarily disclose water information and play an industry benchmarking role. Further tests find that having a state-owned identity has strengthened the impact of industry competition on corporate water information disclosure. These findings are of great significance for the government to guide enterprises in dealing with water issues.