Economic growth and the evolution of water consumption in Spain: A structural decomposition analysis

- Water consumption (WC) grew from 1980 to 2007 by 18,047 hm3.
- Demand, mainly households and exports, was the main factor (262%) driving WC growth.
- Water intensity and especially improvement in technology slowed WC growth.
- Also imports and changes in the sectoral structure of the economy pushed WC to fall.
- Agrarian changes are key for direct WC, food related sectors and hotels for the embodied.

The aim of this paper is to examine how technology, processes of input substitution, and changes in final demand, all of which underlie economic growth, influence water consumption. This analysis is undertaken for Spain during a significant socio-economic period, from 1980, the beginning of the democratic era, to 2007, the onset of the current economic crisis.To this end, we construct water consumption series linked to a time series of input-output tables generated for the Spanish economy, and we develop a structural decomposition analysis to study mainly changes in water consumption embodied in final demand.We find that the growth in Spanish demand (all other things being constant) would have implied an increase in water consumption almost three times the growth actually observed. However, this demand effect is largely offset by technology and intensity effects, mainly due to changes in agricultural crops. Given the importance of the demand growth, the final demand effect is also analyzed in detail, broken down by categories as well as level and composition. Household demand and the increase of exports appear as key explicative factors.