Freshwater Use, Freshwater Scarcity, and Socioeconomic Development

Abstract

Several influential studies suggest that population and income growth lead to increasing demands for freshwater and freshwater scarcity. Unfortunately, there is little rigorous empirical testing of this hypothesis. This article relies on a cross-country multiple regression framework pioneered by Kuznets, Chenery, and Chenery and Syrquin to analyze the structural transformation in water use as socioeconomic development occurs. Cross-country regressions are cross-checked by time-series (and cross-state) regressions for the United States. Results suggest that water use exhibits an inverted-U relationship with income per capita. The findings also suggest that this relationship is affected by the efficiency of water use in agriculture, by whether a country was in the former Soviet Union, and by a country's trade policy. Taken together, these findings suggest a need for a rethinking regarding freshwater use and freshwater scarcity as socioeconomic development proceeds.