Water use and economic growth: reconsidering the Environmental Kuznets Curve relationship

Predictions of national and global water use have been criticized for being inaccurate and for not taking into consideration economic development. Of the little research that does address water use as a function of economic development, results are inconsistent, but much claims to find clear evidence of an Environmental Kuznets Curves (EKC) or “inverted U” type relationship. This research attempts to elucidate the relationship between income growth and freshwater use by a) evaluating a variety of cross-sectional and panel datasets on water withdrawals and consumptive use, b) employing both traditional least squares and non-parametric regression analysis, the latter of which offers the advantage of not assuming a given functional form, c) testing both per capita and total water use, and d) comparing water withdrawals to consumptive use. The research finds some support for the existence of an EKC, but results are highly dependent on choice of datasets and statistical technique. Results are also sector specific and EKC curves prove to be poor indicators of individual country behavior. As such, the study points to limitations of EKCs in terms of water use policy and planning.