Water availability, resulting from either a lack of water or poor water quality is a key factor contributing to regional water stress. This study proposes a set of sector-wise characterization factors (CFs), namely consumptive and degradative water stresses, to assess the impact of water withdrawals with a life cycle assessment approach. These CFs consider water availability, water quality, and competition for water between domestic, agricultural and industrial sectors and ecosystem at the watershed level. CFs were applied to a case study of regional water management of industrial water withdrawals in Taiwan to show that both regional or seasonal decrease in water availability contributes to a high consumptive water stress, whereas water scarcity due to degraded water quality not meeting sector standards has little influence on increased degradative water stress. Degradative water stress was observed more in the agricultural sector than in the industrial sector, which implies that the agriculture sector may have water quality concerns. Reducing water intensity and alleviating regional scale water stresses of watersheds are suggested as approaches to decrease the impact of both consumptive and degradative water use. The results from this study may enable a more detailed sector-wise analysis of water stress and influence water resource management policies.