On the Evolution of Water Use Efficiency among Spanish Regions and its Determinants

Abstract

Abstract Water scarcity is prone to be an important source of stress and conflict in the coming future. In the case of Spain, economic growth has relied, to a large extent, on some water-intensive sectors, such as construction, leisure, and agriculture. Spanish regions display important heterogeneities both in terms of water stress and economic structure. In this paper we analyze the determinants of water efficiency in Spain, differentiating by groups of agents (companies, households and municipalities) and paying particular attention to inter-regional differences and, most specifically, to the sectoral structure of these regions. Our objective is to identify the main socio-economic forces that explain the observed differences in the evolution of efficiency across regions. This is done by means of a panel data Tobit model combined with efficiency measures obtained using Data Envelopment Analysis (DEA) methodology. In turn, the efficiency measures are obtained under two different approaches: with and without considering the circular aspects of water. Our results suggest that considering these aspects tends to provide more credible and accurate efficiency measures as well as more robust results about the key driving factors to explain them.