Municipal Water Consumption and Urban Economic Growth in El Paso

Abstract

This study investigates the nexus between municipal water consumption and economic growth for El Paso, TX, USA. Located in the semi-arid southwestern United States, El Paso water consumption has been the subject of prior economic studies. However, the relationship between water consumption and economic growth has not been previously analyzed for El Paso or any other metropolitan economies in the region. Empirical results indicate that municipal water usage and real personal income are integrated of order one, but are not co-integrated. Given that, a vector autoregression model is estimated and a Granger causality test is performed. Estimation results show unidirectional causation from real income growth to water consumption, indicating that water conservation policies will not inhibit economic growth in this urban economy.