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Disentangling water usage in the European Union: A decomposition analysis

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  • Valeria, Di Cosmo
  • Marie, Hyland
  • Maria, LLop

Abstract

The Water Framework Directive defines common objectives for water resources throughout the European Union (EU). Given this general approach to water preservation and water policy, the objective of this paper is to analyse whether common patterns of water consumption exist within Europe. In particular, our study uses two methods to reveal the reasons behind sectoral water use in all EU countries. The first method is based on an accounting indicator that calculates the water intensity of an economy as the sum of sectoral water intensities. The second method is a subsystem input-output model that divides total water use into different income channels within the production system. The application uses data from the year 2005 on water consumption in the production system of the 27 countries of the EU. From our analysis it emerges that EU countries are characterized by very different patterns of water consumption. Mediterranean and central/eastern European countries use water mainly for agriculture whereas northern European countries use it mainly for electricity, gas and water supply. In most countries, the water used by the fuel, power and water sector is consumed to satisfy domestic final demand. However, our analysis shows that for some countries exports from this sector are an important driver of water consumption. Focusing on the agricultural sector, the decomposition analysis suggests that water usage in Mediterranean countries is mainly driven by final demand for, and exports of, agricultural products, whereas domestic final demand is the main driver of water consumption in central/eastern European countries. Given these heterogeneous water consumption patterns, our analysis suggests that Mediterranean and central/eastern European countries should adopt specific water policies if water consumption in the European Union is to be efficient.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 42865.

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Date of creation: 15 Nov 2012
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Handle: RePEc:pra:mprapa:42865

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Keywords: Water use; Subsystem input–output model; Water intensity; European Union;

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  1. Llop, Maria & Tol, Richard S. J., 2011. "Decomposition of Sectoral Greenhouse Gas Emissions: A Subsystem Input-Output Model for the Republic of Ireland," Papers WP398, Economic and Social Research Institute (ESRI).
  2. Pasinetti, Luigi L, 1988. "Growing Subsystems, Vertically Hyper-integrated Sectors and the Labour Theory of Value," Cambridge Journal of Economics, Oxford University Press, vol. 12(1), pages 125-34, March.
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  6. Butnar, Isabela & Llop, Maria, 2011. "Structural decomposition analysis and input-output subsystems: Changes in CO2 emissions of Spanish service sectors (2000-2005)," Ecological Economics, Elsevier, vol. 70(11), pages 2012-2019, September.
  7. Roberto Scazzieri, 1990. "Vertical Integration in Economic Theory," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 13(1), pages 20-46, October.
  8. Alcántara, Vicent & Padilla, Emilio, 2009. "Input-output subsystems and pollution: An application to the service sector and CO2 emissions in Spain," Ecological Economics, Elsevier, vol. 68(3), pages 905-914, January.
  9. Erik Dietzenbacher & Esther Velazquez, 2007. "Analysing Andalusian Virtual Water Trade in an Input-Output Framework," Regional Studies, Taylor & Francis Journals, vol. 41(2), pages 185-196.
  10. Mendiluce, María & Pérez-Arriaga, Ignacio & Ocaña, Carlos, 2010. "Comparison of the evolution of energy intensity in Spain and in the EU15. Why is Spain different?," Energy Policy, Elsevier, vol. 38(1), pages 639-645, January.
  11. Guan, Dabo & Hubacek, Klaus, 2007. "Assessment of regional trade and virtual water flows in China," Ecological Economics, Elsevier, vol. 61(1), pages 159-170, February.
  12. Morilla, Carmen Rodriguez & Diaz-Salazar, Gaspar Llanes & Cardenete, M. Alejandro, 2007. "Economic and environmental efficiency using a social accounting matrix," Ecological Economics, Elsevier, vol. 60(4), pages 774-786, February.
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