Water and Economic Growth
AbstractSeveral hydrological studies forecast a global problem of water scarcity. This raises the question as to whether increasing water scarcity may impose constraints on the growth of countries. The influence of water utilization on economic growth is depicted through a growth model that includes this congestible public good as a productive input for private producers. Growth is negatively affected by the government's appropriation of output to supply water but positively influenced by the contribution of increased water use to capital productivity, leading to an inverted-U relationship between economic growth and the rate of water utilization. Crosscountry estimations confirm this relationship and suggest that for most economies current rates of freshwater utilization are not yet constraining growth. However, for a handful of countries, moderate or extreme water scarcity may affect economic growth adversely. Nevertheless, even for water-scarce countries, there appears to be little evidence that there are severe diminishing returns to allocating more output to provide water, thus resulting in falling income per capita. These results suggest caution over the claims of some hydrological-based studies of a widespread global "water crisis".
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Adelaide, Centre for International Economic Studies in its series Centre for International Economic Studies Working Papers with number 2002-28.
Length: 38 pages
Date of creation: Oct 2002
Date of revision:
Congestible public goods; cross-country regressions; economic growth; freshwater; water scarcity.;
Other versions of this item:
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
- Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Bhaduri, Anik & Perez, Nicostrato D. & Liebe, Jens, 2008. "Scope and Sustainability of Cooperation in Transboundary Water Sharing of the Volta River," Discussion Papers 43324, University of Bonn, Center for Development Research (ZEF).
- Fang, Xiangming & Roe, Terry L. & Smith, Rodney B.W., 2006. "Water Shortages, Water Allocation and Economic Growth: The Case of China," Conference Papers 6629, University of Minnesota, Center for International Food and Agricultural Policy.
- Elisa Gatto & Matteo Lanzafame, 2005. "Water resource as a factor of production - water use and economic growth," ERSA conference papers ersa05p227, European Regional Science Association.
- Lenzen, Manfred & Bhaduri, Anik & Moran, Daniel & Kanemoto, Keiichiro & Bekchanov, Maksud & Geschke, Arne & Foran, Barney, 2012. "The role of scarcity in global virtual water flows," Discussion Papers 133478, University of Bonn, Center for Development Research (ZEF).
- Bhaduri, Anik & Manna, Utpal & Barbier, Edward B. & Liebe, Jens, 2009. "Cooperation in transboundary water sharing under climate change," Discussion Papers 51303, University of Bonn, Center for Development Research (ZEF).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dmitriy Kvasov).
If references are entirely missing, you can add them using this form.