Urban growth and water

We adapt the neoclassical growth model to examine the problem of water provision in an urban economy. Our model delivers testable hypotheses regarding the effect of a change in public provision of water, population growth, and total water availability on per capita economic growth. Increases in population growth and public water supply enhance per capita economic growth, but an increase in water availability lowers per capita economic growth along the trajectory towards the steady state. The results of the economic model are tested empirically by using a panel data set of urban counties in the U.S. We find that Ceteris paribus higher water use and population growth are associated with greater per capita economic growth in urban areas, but urban areas with higher total water availability are not experiencing lower per capita economic growth, as the model predicts.